Stock Option Strategy-Six Basic Strategies

Purchase subscriptionoption
    Investors who anticipate an increase in stock prices but do not want to bear the losses caused by a decline can pay a premium and purchase a call option at a certain exercise price, giving them the right to choose to buy or not to buy the relevant underlying assets on the maturity date.
    Buying call options has the advantage of high leverage and controllable maximum losses.
    If the price rises above the exercise price, the right can be exercised at maturity to obtain the underlying securities at a low price, and then sell them at a high price based on the rising price level to obtain a profit on the price difference; It is also possible to sell options in advance to close the position, thereby obtaining income from the premium price difference.
    If the price drops below the exercise price, the right can be waived or the position can be closed to limit losses.

Put Call Option
    Investors expect the underlying securities to slightly decline in the short term or maintain their current levels, and can sell their call options on the stock to receive premium income. If the expiration date price rises above the exercise price, the option seller will be assigned to exercise, buy the underlying securities from the market at a high price, and sell the underlying assets at the exercise price. The loss may be significant, and the premium will partially compensate for the price difference loss.
    Usually, sellers of call options tend to buy and close their positions in the secondary market of options, rather than waiting to fulfill their obligations.

long put
    Investors who anticipate a decrease in the price of the underlying securities can pay a premium to buy a certain exercise price stock put option, and then have the right to choose to sell or not to sell the relevant underlying securities on the expiration date. If it falls below the exercise price on the expiration date, the right can be exercised to purchase the underlying securities from the market at a low price and deliver them to the obligor at a high price, obtaining a profit on the difference; It is also possible to sell options in advance to close the position, thereby obtaining income from the premium price difference.
    If the price does not fall but rises instead, the right can be waived or the position can be closed to limit losses.

Sell put options
    Investors expect the underlying security to rise slightly in the short term or maintain its current level, and can sell put options on the stock to receive premium income. If the stock price drops below the exercise price on the expiration date, the option seller will be assigned to exercise, buy the underlying securities at the exercise price, and sell them in the market at a low price, which may result in significant losses. The premium will partially compensate for the price difference loss.
    Usually, sellers of put options tend to buy and close positions in the secondary market of options, rather than waiting to fulfill their obligations.

Reserve strategy
    Investors hold the underlying securities, but are expected to have little possibility of future appreciation. They can sell corresponding call options while owning the underlying securities, use the underlying securities as collateral for options, and earn royalty income. This strategy uses100%Cash coupon guarantee, no additional cash deposit required.

Protective strategy
    Investors have already held the underlying stock and are unable to sell it due to various reasons, or have already generated floating profits. They are concerned about the risk of short-term market decline and want to protect the gains they have received. You can buy a put option on a stock while holding it, similar to buying insurance for the stock. Compared to placing a stop loss order, the advantage of protective put is that it effectively limits losses, but has costs and a limited validity period.