Easy Option Trading Strategies

There are dozens of option trading strategies.  Some are extremely simple to understand.  Others take an advanced degree in mathematics to full grasp.

This is the beauty of option trading.  It can be as simple or complex as you would like to make it.  While it’s easy to understand options and some option trading strategies, actually making money from investment options can be a completely different story.

One of the easiest ways to trade options is to trade them in conjunction with basic technical analysis.

Here are three of the most basic option trading strategies in conjunction with technical analysis.

1. Buying Calls At Technical Support

Technical support often results in price bouncing higher from the support level.  This can be an ideal situation for buyers of at the money call options.  You see the dropping price to the support level will likely lower the price of the stock option.  This means it will cost you less when you buy it at or near the support level on the technical price chart.

As price bounces higher off of support, the call should increase in value in conjunction with the higher share price.

2. Buying Puts At Resistance

This is the opposite of the first strategy.  The option trader waits for price to move to resistance then buys puts on the stock in anticipation of lower prices.  The initial climbing stock price will lower the price of the put allowing you to purchase it at a discount.  As the price moves lower from resistance, the put option should increase in value providing profits for the investor.

3. A Combination

Both one and two can be combined into a highly effective channel trading strategy utilizing both puts and calls.

Source:

http://tradingtips.com/daily/day-trading/easy-option-trading-strategies/