As a bull market emerges, the confidence of investors grows and specific stock trading strategies are implemented. Bull markets are representations of increased investing in anticipation of future price increases. If timed correctly investors will invest in stock at the beginning of an emerging bull market and sell at strike price to make the biggest gains. Below is information regarding bull market stock trading strategy.
The most common bull market stock trading strategy is buying calls. Investors have the ability to control more shares of a stock while also having less capital at risk. Investors are able to profit from buying calls in a bull market because the risk is limited and the reward possibilities are high. The maximum loss of this stock trading strategy is the amount paid for the call. When using this strategy investors will need to accurately estimate the time of the stock prices rising prior to the expiration date.
Sell Naked Puts
A higher risk stock trading strategy is to sell naked puts. In hopes that the stock price remains above the strike price, investors collect premiums for selling contracts. If the stock price is able to remain above the strike price it renders the contract valueless and the investor is able to retain the entire premium.
Bull Call Spreads
Bull call spread is a stock trading strategy with low risk but limited reward. It can be executed through buying at-the-money calls and selling the same number of out-the-money calls. Investors limit their risk in this stock trading strategy by collecting premiums.
Pull Put Spreads
A pull put spread stock trading strategy begins when investors start selling puts and buying the same number of puts at a lower strike price. The lower buy curbs the risk of the spread. Investors earn profits by premiums received for the trade.
Call Back Spreads
Our final stock trading strategy includes buying calls at a high strike price and selling other calls at a lower strike price. The premium received for the sell should offset paying for the buys. Investors profit from this strategy when the stock rises above the higher strike price.
As investors place more confidence into the market and stocks begin to rise, it is your opportunity to take advantage early. Find valuable stocks in the early stages of a bull market and utilize the above stock trading strategy tips to earn returns.