Options Questions...

[asura]

Good day,

I was curious, if i was had bought a Call and then I wanted to secure some of my profits, but I didn't want to exit the Call position. Could I buy Put to protect against any major down side move there after?

Is this a legal move and would it be concidered a straddle?

Are options strategies actual order types, or are they just names for someone who happens to buy a Put and a Call, in a straddle example.

Thanks,
alex

 

[vega]

Yes to all of the above alex. Buying a call and put of the same strike, same month is known in the biz as buying the straddle. It is also one of many different ways that you can both hedge your profits, and also let a winning trade keep going. Not only is it legal, but very common.



Vega

 

[omcate]

Quote from asura:

Good day,

I was curious, if i was had bought a Call and then I wanted to secure some of my profits, but I didn't want to exit the Call position. Could I buy Put to protect against any major down side move there after?

Is this a legal move and would it be considered a straddle?

Are options strategies actual order types, or are they just names for someone who happens to buy a Put and a Call, in a straddle example.

Thanks,
alex

I would just sell the call to close the position. Options have relatively large bid-ask spreads. Hence, trading less frequently is a virtue.

Just my two cents.