CHAPTER 8

Bullish Strategies

Bullish strategies in options trading are used when the investor expects the underlying asset price to move upwards. It is necessary to assess how high the asset price can go and the time frame in which the rally will occur in order to select the optimal trading strategy.

The most bullish strategies are the simplest ones where the investor executes a plain vanilla call option. These strategies are the ones that you would probably try out as a newbie options trader. However, call options have a limited life span. If the underlying stock price does not move above the strike price before the option expiration date, the call option will expire worthless.

Assume that it is May and you believe that the price (currently ...

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