Strategies

 

Index Option Strategies

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S & P 500 Strategies (SPX)

Buying an SPX call is one of the simplest and most popular strategies used by option investors employing SPX index options.


Buying an SPX put is one of the simplest and most popular bearish strategies used by investors employing SPX index options.


Buying an SPX straddle combines the benefits of both an SPX call and an SPX put purchase.


This spread allows an investor the opportunity to profit to a limited extent from a limited move in the level of the SPX, while having less capital at risk than with the outright purchase of a call option.


This spread allows an investor the opportunity to profit to a limited extent from a limited move in the level of the SPX, while having less capital at risk than with the outright purchase of a put option.


An investor who is bullish on stock market prices over the next couple of years could consider index LEAPS (Long-term Equity AnticiPation SecuritiesTM) calls.


Purchasing stock index put options permits an investor to hedge equity market risk by limiting downside risk while retaining upside potential.


The protective S&P 500 collar strategy provides downside protection through the use of index put options, and finances the purchase of the puts through the sale of short index call options, in effect trading away some upside potential.


S&P 500 index option contracts can provide an investor with the market exposure necessary to participate in upside gains at a fraction of the cost of transacting in the index components.




Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options (ODD). Copies of the ODD are available from your broker, by calling 1-888-OPTIONS, or from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, Illinois 60606. The information on this website is provided solely for general education and information purposes and therefore should not be considered complete, precise, or current. Many of the matters discussed are subject to detailed rules, regulations, and statutory provisions which should be referred to for additional detail and are subject to changes that may not be reflected in the website information. No statement within the website should be construed as a recommendation to buy or sell a security or to provide investment advice. The inclusion of non-CBOE advertisements on the website should not be construed as an endorsement or an indication of the value of any product, service, or website. The Terms and Conditions govern use of this website and use of this website will be deemed acceptance of those Terms and Conditions.