Three Strategies Covered in Advanced Option Education- By: Cris Robertson

Description : When traders first start trading on the options market, they often turn to various types of option education to help them understand the basics - what an option is, how to chart and how to use trading platforms and automated orders in their trading. Option education doesn't stop being important as you gain experience. If anything, taking some advanced courses in options trading strategies can seriously impact the bottom line of your portfolio. These are just five of the many strategies and techniques you can get to know and understand when you take courses in advanced option education courses.

Straddle vs. Strangle - Which Should You Use?
There are some well-established options strategies that get covered in option education courses, but sometimes the fine points are given short shrift. Straddles and strangles, for example, appear pretty similar on the surface. They both involve buying an equal number of call or put options with the same expiration date, and both allow you to make money whether the stock moves up or down in price. But they also have a significant difference - the strangle has two strike prices and the straddle has one. What determines when you use one versus the other?

That kind of topic is often covered in an advanced options trading course or seminar, or that you can get answered within a mentorship.

Why a Butterfly Strategy Doesn't Throw Caution to the Winds
The Butterfly Spread has a lot of moving parts, but the four legs of this strategy come together to support a low-risk strategy with a significant risk-to-reward ratio. It establishes a maximum loss and offers a maximum gain that is higher than the risk associated with entering into the position. But when is it a good idea? And is there a benefit to spreading the butterflies even further by, say, entering into a butterfly spread on one or more of the legs of the original position?

If that confuses you, a little advanced option education could make it all clear as sunlight, and add another important risk-management strategy to your trading toolbox.

When Does Collaring Risk Strangle Reward?
The Collar allows you to rein in risk, but it also puts a similar hold on the possible reward of the outcome. A Collar is a risk reduction strategy often used by stock investors to limit the risk of loss if the stock should drop in value. It involves buying Put and Call options that help offset the cost of buying the stock and reduce the risk of being stuck with a dog if the stock tanks. One of the down sides is that it also limits your potential gain in the transaction. Should you use a Collar or a Married Put strategy to limit loss in a stock transaction?

A good stock options education course can help you choose among many similar strategies to find the one that's best for a particular situation. The more you know, the more flexibility you'll have in your trading and investing.

These advanced topics won't be covered in most basic option education courses, but they're of special interest to intermediate and advanced traders who want to improve their performance in the markets. If that sounds like you, explore the many types of options courses, trading seminars and one-on-one mentorships available through various trading houses and educational websites.

Article Source : http://www.look4articles.com/

Author Resource : Chris Robertson is an author of Majon International, one of the world's MOST popular internet marketing companies on the web.

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