Directionless option strategies

One of the most commonly used methods in portfolio options. The strategy is constructed by simultaneously buying a call option and a put option on the same stock with the same strike price and the same expiration date. First buy a call option, and second you need to buy a put option, and c and p need to have the same strike price.

In this strategy, you can make money when your stock goes up, and you can make money when your stock goes down. You will lose money if the price of the stock remains unchanged when it expires. The maximum loss of a strategy is equal to the sum of premiums, and its break-even point is equal to the strike price plus or minus the sum of premiums. Of course, the most important are the two advantages of this strategy.

You can make money without knowing the price change and direction of the underlying object. Losses are limited, but gains are unlimited. The most direct thing is the financial report. Before the financial report comes out, I don’t know the company’s profit, loss, debt, and changes in future expectations. Therefore, when a company releases its financial report, it often brings about large fluctuations in stock price. At this time, as investors, we don’t have to think about whether the stock price fluctuates upwards or downwards. As long as there is fluctuation, we can make money. In addition to financial reports, of course there are also press conferences or other events that have a major impact on the company. For example, when the company is about to be merged and acquired, the success of the merger will inevitably lead to sharp fluctuations in the stock price. All in all, when investors expect a major move in the stock price, but don’t know in which direction it will move.

Then you can consider using the option strategy. There are also several points to note here. In practice, investors also need to consider that when the stock price is expected to change sharply, the option cost of the stock will be relatively expensive, which means you buy a portfolio costs will be relatively high. At the same time, it should also be noted that the graph currently seen is the option profit and loss graph at the time of expiration, but in fact, using this strategy generally does not wait until expiration, but ends early.