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OPTION NEUTRAL STRATEGY

Below, we have listed a range of neutral options trading strategies that are commonly used by options traders. We’ve included a little information about each one, but for further details you should click on the relevant link. If you are struggling to choose a suitable strategy, you may like to take a look at our Selection Tool.

Covered Call

This is relatively simple and would typically be used if you already own a security and want to profit from it being in a neutral trend. It's suitable for beginners.

Covered Call Collar

This is fairly simple and you would generally use it if you already own a security and want to profit from it being in a neutral trend and protect it against any losses should it fall in price. It is suitable for beginners.

Covered Put

This is reasonably complex and combines short selling a security and writing put options. It's not suitable for beginners.

Short Straddle

This is a relatively simple trading strategy, but it's not really suitable for beginners due to the high trading level required. It involves two transactions and creates a credit spread.

Short Strangle

This is quite straightforward but requires a high trading level so it's not suitable for beginners. It creates a credit spread and involves two transactions.

Short Gut

This combines two transactions to create a credit spread. It's quite simple, but it requires a high trading level meaning it isn't suitable for a beginner.

Calendar Call Spread

This is simple enough to be used by beginners. Two transactions are involved and a debit spread is created.

Calendar Put Spread

This is straightforward and involves two transactions. It creates a debit spread and is suitable for beginners.

Call Ratio Spread

This is a complicated trading strategy that is not suitable for beginners. There are two transactions involved and a credit spread is created.

Put Ratio Spread

This is complex and not for beginners. It creates a credit spread with two transactions.

Calendar Straddle

This involves four separate transactions to create a debit spread. It isn't suitable for beginners.

Calendar Strangle

This creates a debit spread. There are four transactions involved and it isn't suitable for beginners.

Butterfly Spread

This is complex and involves three transactions to create a debit spread. It isn't suitable for beginners.

Condor Spread

This is complex and it creates a debit spread using four separate transactions. It isn't suitable for beginners.

Albatross Spread

This involves four transactions and is complicated. It creates a debit spread and is not suitable for beginners.

Iron Butterfly Spread

This is complex and creates a credit spread. It involves four transactions and it's not suitable for beginners.

Iron Condor Spread

This is complex, involving four transactions, and it's not suitable for beginners. It creates a credit spread.

Iron Albatross Spread

This is complicated and not suitable for beginners. It involves four transactions and creates a credit spread.

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