Profit from Binary Options strategies

Binary Options StrategyProfit generating option strategies is an option strategy that makes money when you enter the position. The profits are generated when you sell options, either selling put option or buying put option.Unlike other binary options strategies, the profit generating option strategies are different because they deal with the point when you enter a position on an underlying asset.

Below, we explain some such profit generating strategies that can be easily implemented by new and professional traders alike.

Selling naked puts

You will get income by selling put.  Naked put is an option put where the option writer does not have a position in the underlying stock. This strategy is used when you want to buy stock, but you think the price is too high. By writing a put, you will get a premium. If the stock price rise, you will keep the premium, but if the stock drop, you can buy the stock at strike price.

You can see that the potential profit is limited to the option premium, and the potential loss is unlimited if the stock falls all the way to zero. So this strategy is very dangerous if you didn’t know what you are doing.

The key of this strategy is very simple. A smart put-option seller will only sell put option contracts at a strike prices at which you would like to buy the stock. The secret is to pick a stock that you would like to own at a cheaper price than it is now. Here’s what I do, I look for stocks that just rise because of good earning result. Since the price has rise, I want to buy it at lower price, so I just write a put option at lower strike price and wait until it expires.

This is a perfect strategy if you want to buy stocks at lower price. Selling naked puts is a bullish strategy.

Iron condor Options

Iron Condor has minimal risk and higher probability of success. With Iron Condor, you don’t need to guess the direction of stock. This strategy is used when we have a neutral outlook on stock. You will make money if the price don’t move much. It’s a good idea to implement this strategy on security (stock) with low volatility, because their price tend not to move much. Iron Condors is usually used by traders who seek income from their trading capital. They will construct the position so that it will still profit for a much more price movement. For example if the current price is $40, instead of creating a position where it will profit when the price moves up/down $10 (price between $30 – $50), a trader can create a position where he can still profit when the price moves up/down $20 (price between $20 – $60). By using the Iron condor strategy, a trader would generate monthly income.

The bull put spread is implemented by selling an in-the-money (ITM) put option (has higher price) and buying an out-of-the-money (OTM) put option (has lower price) on the same underlying stock with the same expiration date. While the bear call spread strategy is implemented by selling an in-the-money (ITM) call option (has higher price) and buying an out-of-the-money (OTM) call option (has lower price) on the same underlying stock with the same expiration date. Both bull put spread and bear call spread has limited profit and risk.

Covered Call

Covered Call is an options strategy where an investor holds a long position in an asset or stock and writes call options on the same asset. This strategy is used when investor has neutral to bullish overview of underlying stock. Although they believe it has bullish overview in long term, investor also believe it will only have limited price change during the contract life or short term. So to gain additional income they sell call option.

The Money Covered Call is an options strategy where an investor holds a long position in an asset or stock and writes (sells) call options on the same asset. This is also known as a “buy-write” strategy if this stock is purchased simultaneously when writing the call. Usually the stock is held in the same brokerage account from which the investor writes the option call.

This strategy is used when investor has neutral to bullish overview of underlying stock. Although they believe it has bullish overview in long term, investor also believe it will only have limited price change during the contract life or short term. So to gain additional income they sell call option.

This strategy can only offer limited protection from a decline in stock price and also limited profit when stock increase in price because it will need to cover the option. Investor can also get the benefits of underlying stock ownership, like dividends and voting rights.

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