OPTION COMBINATION STRATEGIES

 

  • Options may be combined so that their payouts produce a desired risk profile. Some combinations are primarily trading strategies, but option combinations can be useful in, for example, allowing investors to construct a strategy to take advantage of a particular view they have of the market. Other strategies allow purchasers to reduce their premiums by giving up some of the benefits they may have received from market movements.

 

Related Terms:

Put spread        Straddle        Strangle

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