Option trading strategy
Before doing an option trade it is a good idea to learn a strategy about the trends for the underlying asset. For instance a share. The price of the option will follow the underlying share price.
Basically there are four ways options can be used: One can buy or issue a put option. One can buy or issue a call option.
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To understand option trading, ask yourself these questions:
• Will the share price of the underlying share rise or fall?
• How much will the share price rise or fall?
• How long time will the changing take?
• How large profit or loss are you ready to take?
That’s a good strategy.