Category: Neutral Option Strategies

The long butterfly is a three legged strategy. It is best for neutral outlook or when you are anticipating a very little change in the price of the stock during the life of the...

This is a good strategy for when you have a neutral feeling about a stock because it is trading on narrow range over a period of time. This is similar with the butterfly in...

The long straddle takes advantage of stocks moving in either direction. The short and long straddles are different in the way they respond to movement in the market. They are both neutral because the...

The short straddle, like the long straddle, is considered a neutral strategy. The short and long straddles are different in the way they respond to movement in the market. They are both neutral because...

The long strangle takes advantage of market movement from either direction. The short strangle and long strangle are different in the way they respond to movement in the market. They are both neutral because...

The put ratio spread is considered a neutral strategy because you do not want movement in stocks in this strategy. The ratio spread is a good strategy if you are anticipating a relatively stable...

The calendar spread is also known as the time spread or horizontal spread because this profits on time decay of options with different expiration dates. The horizontal spread is called as such because the...

The short strangle is a neutral strategy since profit is achieved from sideway movements of stocks. Short strangles are the same with the short straddles because you can both profit from a stagnant market....

Reversal is similar with the arbitrage and conversion strategies. This involves purchasing one option and selling another to make money from the difference between the two. This strategy is often used by traders to...

Conversion is basically a floor trader strategy. The principle behind this strategy is known as creating a synthetic short position and then offsetting it with long position of the same stock. Floor traders, in...

In order to protect a stock, investors and traders use the collar. The collar, also known as cylinder strategy or fence strategy, is like insurance for stocks. You can create a collar by using...