Common Complex Strategies | |
There are numerous common option strategies that require holding more than one security. Each security, or leg, must be in an option or in the underlying stock. Multi-leg strategies are also commonly referred to as complex option strategies. They can be used to achieve different objectives such as discounting the cost of a call (bull spread), collecting time premium in a neutral market (short straddle), or trying to supplement the return on a stock position (covered call). Many option brokers support trading complex options strategies in a single transaction. This may result in reduced commissions, lessen the margin required to enter a transaction, and reduce the risk of one leg of a transaction moving away from a profitable price between trades.
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