BULLISH Market Option Trading Strategies

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BULLISH Market Option Trading Strategies

Key Points to Remember:

Bullish Market Strategies work best only in strongly trending bullish markets.
ALL options eventually lose ALL of their "time value."
ALL "Out-Of-The-Money" options expire worthless.
Markets only "trend" 1/3 of the time; they move sideways the other 2/3.

I have arranged the four bullish option market strategies as follows:

Option Strategy
Description
Reason to use
When to use

Buy a Call
Strongest bullish option position.
Loss limited to premium paid.
Undervalued option with volatility increasing.

Sell a Put
Neutral bullish option position.
Profit limited to premium received.
High volatility, bullish trending market.

Buy Vertical Bull Call Spread
Buy Call & sell Call of higher strike price.
Maximum loss limited to difference between buying a Call and selling a Call of higher strike price.
Small debit, bullish market.

Sell Vertical Bear Put Spread
Sell Put & buy Put of lower strike price.
Maximum loss limited to difference between selling a Put and buying a Put of lower strike price.
Large credit, bullish market.

 

[Manav Kole]

Bull Call Spread: Buy a call option while simultaneously selling a higher strike call option to profit from upward price movements with limited risk.

Covered Call: Sell a call option on an asset you already own, generating income while potentially limiting upside gains if the stock price rises above the strike price.