1. One-leg strategy
It is to buy and sell only one call or put option strategy.
Since options are divided into call options and put options, there are two buying and selling directions.
Therefore, the one-leg option strategy consists of four in total:
buying call options, buying put options, selling call options, and selling put options
Bullish strategy: Buy subscription, sell put
Put strategy: Buy put, sell subscribe
2. Straddle strategy
The straddle strategy is constructed by buying two call options and put options with the same expiration date and the same strike price.
When the stock price rises sharply, the call option can make a profit, and the put option is out of value;
when the stock price falls sharply, the put option can make a profit, and the call option is out of value;
The strategy is profitable when the volatility of the stock price exceeds the cost of construction.
Buy straddle (STRATEGY_TYPE_STRADDLE_BUY)
Construction cost = premium for buying call options + premium for buying put options
Since the straddle strategy has two breakthrough directions, regardless of whether it is up or down, as long as it reaches the cost line of the breakthrough, it can make a profit.
Upper breakeven point = execution price + construction cost
Lower breakeven point = execution price - construction cost
Sell straddle (STRATEGY_TYPE_STRADDLE_SELL)
Selling a straddle strategy is just the opposite of buying a straddle strategy, which is to sell two call options and put options with the same expiration date and the same strike price.
As long as there is no drastic change in market conditions, or the fluctuation range is narrowing, you can get the income of selling options, and there are two incomes.
Construction income = premium for selling call options + premium for selling put options
Upper breakeven point = execution price + construction cost
Lower breakeven point = execution price - construction cost
3. Wide-span strategy
The wide-span strategy, also known as the le-style strategy, is very similar to the straddle strategy.
There is one execution price that is different, so that a trading strategy with a lower cost than the straddle strategy is constructed, but at the same time, the space for breakthrough becomes larger.
Buy wide span (STRATEGY_TYPE_WIDESPAN_BUY)
Sell wide span (STRATEGY_TYPE_WIDESPAN_SELL)
Under normal circumstances, choose the middle position of the shock range, one is that there is no preference for upward and downward breakthroughs, and the other is to realize the lowest construction cost of the strategy.
Wide-span strategy, as a typical strategy of volatility trading strategy, is still used frequently.
When the volatility is at a low level and trending upwards, use the straddle strategy to do long volatility, and
when the volatility is at a high level and fall downwards, use the straddle strategy to short the volatility.
4. Bull market spread strategy (STRATEGY_TYPE_BULL)
The bull-bear market spread is widely used through the combination of buying and selling options, sacrificing excess return space to reduce the cost of hedging risks for manufacturers, and limiting the maximum loss.
At the same time, investors can earn benefits in terms of direction, volatility, and time through the bull-bear market spread combination in moderately rising and falling markets.
Bullish Call Spread Strategy:
Buy a call option with an exercise price of K1
Sell a call option with an exercise price of K2 (K2>K1) Profit
and loss curve for a bull market call option:
Bullish Put Spread Strategy:
Sell a put option with strike price K2
Buy a put option with strike price K1 (K1<K2) Profit
and loss curve for bullish put options:
5. Bear market spread strategy (STRATEGY_TYPE_BEAR)
Bearish Bullish Spread Strategy:
Sell a call option with strike price K1
Buy a call option with strike price K2 (K2>K1)
Bear market call option profit and loss curve:
Bearish Put Spread Strategy:
Buy a put option with an exercise price of K2
Sell a put option with an exercise price of K1 (K1<K2)
Bear market put option profit and loss curve:
