Slower, Moderate Move
If you’re expecting a stock to go up or down, but you expect the move to be moderate or slower, then spreads are a great strategy for this.
For example, a bull call spread involves buying a nearby strike and selling a farther out one. If the stock goes up, but slowly, the nearby call you bought should increase in value, in spite of some time decay loss. But the call option you wrote will benefit from time decay, thus making the spread more profitable than had you only purchased a call.
Value style stocks and even Growth and Income stocks can produce some good picks for a bull call spread strategy. Stocks expected to move higher, but maybe not with a big splash. Zacks Rank #2s (Buys) and Zacks Rank #3s (Holds) are good stocks to consider for this strategy.
The Option is Yours
These are just some of the ways to profit with options. And there are many more. As you can see, options give the investor numerous ways to make money in the market — and in any direction. And you don’t always have to wait for the next bull market to make money. And a down or sideways market can be just as profitable.
Want to take advantage of these and other profit opportunities? I invite you to look at our Zacks Options Trader. It takes the guesswork out of options trading by doing all the research for you and presenting it in plain language with easy-to-understand signals.
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This portfolio has been extremely productive. During bullish July alone, we closed out 17 double-digit gains and already added three more in August. No need to stop profiting now, but if the market turns we see the correction as yet another profit opportunity.
Thanks and good trading.
Vice President, Zacks Investment Research
Kevin Matras is our world-class research expert who has developed more than 30 market-beating strategies using the Zacks Rank. He also directs our service that combines the Zacks Rank with the best options strategies for today’s uncertain market, Zacks Options Trader.