Karim Rahemtulla, Head Fundamental Tactician, Monument Traders Alliance Dear Reader, In the current market, options are more expensive. These high costs might scare newer traders from trading altogether, especially if their account is smaller. But the truth is... There's one strategy that's perfect for this current market for a few reasons. For one, it can significantly reduce your risk. Two, it also significantly lowers your cost. This makes it an ideal strategy for growing a smaller portfolio. I'm talking about spread trading. Spread trading is one of my most used strategies in The War Room and Catalyst Cash-Outs. And in a market like this, I'm cranking out spread trades more and more. Since the options prices are so high right now, you need to use spreads to lower your price and offset some of your risk. Here's how they work... Spread Trading 101 Spreads are simply the difference between two prices. For example, say you want to trade a stock, and it's currently priced in the $80 range. In a spread trade, you could buy $80 calls in the company and sell the $95 calls against your position. Think of spread trading like using a wide net vs. using a spear. It allows you to make winning trades within a range of outcomes instead of having to hit a precise price point. This makes it a great strategy to use when you expect a moderate price move in a stock. |
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