What do all options strategies have in common?

But what all options strategies have in common are that they’re based on the two basic types of options: calls and puts. Below are five more advanced strategies, their risks and rewards and when traders might use them.

What are options trading strategies?

Options trading might sound complex, but there are basic strategies that most investors can use to enhance returns, bet on the market's movement, or hedge existing positions. Covered calls, collars, and married puts are used when you already have an existing position in the underlying shares.

What is a risk defined option strategy?

Options strategies can benefit from directional moves or from stock prices staying within a defined range. Strategies vary significantly from single-leg options to more complex multi-leg positions with long and short options. Risk defined strategies are positions where the maximum loss is defined at trade entry.