Some of the most popular Singaporean options trading strategies are covered in this article. Options are contracts that allow buyers to trade at specific prices over a set period. They can be used for speculation or hedging, allowing traders to cut their losses on an investment product while still making some profit if they get it right.
There is always a buyer and seller in each option contract; this means that if you want to buy an option contract, someone else will have to write it out for you. You can sell options too, even if you don’t own them initially – put up some attractive terms, and some professional investors might feel like writing one out for you or just make use of some professionals like Saxo capital markets pte.
Here’s what you need to know about some common types of options trading strategies.
Rules of Options Trading Strategies
Singaporean traders often think that the rules of options trading strategies are just like buying and selling things: whatever is offered at whatever price will be accepted. If you want to purchase something, look out for it sold cheaply. It isn’t really how things work because there can always be unforeseeable events between when you start looking around for an options trading strategy and when you need to use it – so all your plans might suddenly come unstuck!
That’s why things that try to predict the future based on past events are called ‘technical analysis’ rather than ‘rules’. Here are some examples of common Singaporean options trading strategies with the essential techniques behind them explained.
Covered Call Options Trading Strategy
Covered call options come from standard stock trading strategies in Singapore and are often used by people who already have shares that they believe will increase in value over time. Rather than simply maintaining the status quo or selling off their holding when it starts to get more expensive, they can protect themselves with covered calls so that if the price tanks, they’ll lose less money.
Bull Call Spread Options Trading Strategy
The Singaporean option trading strategy known as a call spread is designed to benefit from rising stock prices. It involves buying an instrument at one price and selling another at a higher one; this means that if the price increases past the point where you purchased it, you’ll make money.
Put Options Trading Strategy
The Singaporean option trading strategy known as a put spread is designed around the idea of limiting losses in what appears to be a lousy stock market for your investments. It involves buying an instrument at one price and selling another at a lower one; this means that if the price tanks past where you purchased it from, you’ll make money.
What are some other strategies?
The covered call options trading strategy is one of many Singaporean option trading strategies that can help traders achieve their investment goals even if things don’t go quite as planned.
Common Singaporean option trading strategies
Bull Spread Options Trading Strategy
The Singaporean option trading strategy known as a bull spread is designed around the idea of buying at one price and selling another at a higher one; this means that if the price tanks past where you purchased it from, you’ll make money.
However, if they stay flat or go up by less than the amount that you sold off for, then your initial investment will be protected against loss. The essential technique here is waiting until there’s been a change in market sentiment between different stocks for about ten days or more. It shows that there will be a lasting trend and then buying the cheaper ones with a concise expiry date. You can then choose when to sell it to maintain a ‘bullish‘ strategy overall.
Bear Put Options Trading Strategy
A bear spread is designed around the idea of limiting losses in what appears to be a lousy stock market for your investments. It involves buying an instrument at one price and selling another at a lower one; this means that if the price tanks past where you purchased it from, you’ll make money. However, if they stay flat or even go up by less than the amount that you sold off for, then your initial investment will be protected against loss.
