Strategies managing options

Re-Publish this Article

<h1>Strategies managing options </h1><strong> Author: <a href='http://www.articleseen.com/profile_Linda .aspx'>Linda </a></strong><br /><p>All the forex traders might be aware of the options trading tool applied by the traders to hedge against the risk of the price value fluctuations of the currency pairs so there is no need to go under that concept to elaborate the options. Let’s begin with small introductory definition of option; option is a contract which gives traders right to sell off or buy the desired quantity of underlying asset or financial claims on some specified future date at the fixed price on or before the expiration date of the option contract and are not the obligation that is must to conduct. Option strategies are implemented at the Forex market for the attainment of the three objectives: speculation, hedging and spreading. The speculation of option involves the long and short of an option without any position in the underlying asset at the forex trading platform. Hedging involves an attempt to control or manage risk by combining the purchase or sale of the specified asset or financial claim with some position acquired at the forex trading platform. Spreading is the strategic tool of option which is applied within the options of same type that includes simultaneous buying or selling of same type of option. The combination of call and put option applied in varied forms can be a good idea of option strategy at the Forex trading platform that provides an ability to manage the trades rationally. The other option trading strategy that are very common at the Forex trading platform includes covered calls, straddle, protective put, spreads like bear spread, bull spread, butterfly spread, strangles, strips and straps. Lets look into the option strategies of covered calls, which is the first choice of the traders to apply at Forex trading platform. Covered calls: It involves the purchase of the specific quantity of the underlying asset like shares or selected currency pairs and sale of the desired call option on that selected currency pair or other asset. The position place at the Forex market in such way is refer to as covered because the investor owns the share or the currency pair and the right to deliver the pair on the call option, which he has sold and as it is exercised by the option holder. In covered call strategy, the investor is willing to sell the underlying asset at a fixed price, limiting the profits, if the price of the selected pair rises by the amount of the premium on sale of call options. This strategy can be formulated as [(+s) + (-c)] where‘s’ represents the buying the pair and ‘-c’ represents the selling a call option. This is the information about the covered call option trading strategies applied at the Forex trading platform to manage the Forex accounts. </p><strong>About the Author:</strong><br />I am Linda Green and have keen interest in financial investments and matters related to Forex trade. I am working in Forex trading and financial investments for Finexo.com. The site gives relevant information on currency trading and provides regular updates of the changes in <a rel="nofollow" href="http://www.finexo.com">Forex</a> currency pairs like USD/EUR. This help in learning through<a rel="nofollow" href="http://www.finexo.com/openDemoAccount">Forex demo</a>.<p> Article Source: <a href='http://www.articleseen.com/Article_Strategies-managing-options_12545.aspx'> http://www.articleseen.com/Article_Strategies managing options _12545.aspx</a></p>

Article Source : http://www.articleseen.com/Article_Strategies managing options _12545.aspx

Keywords : Forex, Forex demo, Forex trading, Forex online,

Category : Finance : Investing