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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
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