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U.S. Options

Nasdaq-100® Index Options Strategies

Long Calls

Buying Call Options is a strategy investors use looking to profit from an expected rise in the level of the NASDAQ-100 Index (NDX) over the term of the options contract or to hedge a short market position.

Long Puts

Buying long Put Options is a strategy investors use looking to profit from an expected decline in the level of the NASDAQ-100 Index (NDX) over the term of the options contract or to hedge a long market position.

Long Straddle

A Long Straddle, buying one Call Option and one Put Option with identical strikes and expirations, is a strategy for an investor who looks for the chance to participate in an expected sharp or prolonged move in either direction of the level of the NASDAQ-100 Index (NDX) over the expiry term of the options contracts.

Long Strangle

A Long Strangle, buying one Call Option and one Put Option with identical expirations, but different strikes, is a strategy for an investor who looks for the chance to participate in an expected sharp or prolonged move in either direction in the price of the NASDAQ-100 Index (NDX) over the expiry term of the option contracts.

Bull Call Spread

The Bull Call Spread strategy employs buying one Call Option and selling one Call Option with a higher strike price, to help fund the cost of the lower strike call.

As with a Long Call, the Bull Call Spread strategy gives an investor the chance to participate as the level of the NASDAQ-100 Index (NDX) rises, but only to the point where the short call caps additional gains.

Bull Put Spread

The Bull Put Spread strategy employs selling one Put Option and buying one put Option with a lower strike price. The short put generates income, whereas the long put's main purpose is to offset assignment risk and protect the investor in case of a sharp move downward. Because of the relationship between the two strike prices, the investor will always receive a premium (credit) when initiating this position.

The Bull Put Spread strategy gives an investor the chance to participate as the level of the NASDAQ-100 Index (NDX) stays neutral or rises, and is limited in profit to the credit received.

Bear Call Spread

The Bear Call Spread strategy employs selling one Call Option and buying one Call Option with a higher strike price. The short call generates income, whereas the long call's main purpose is to offset assignment risk and protect the investor in case of a sharp move upward. Because of the relationship between the two strike prices, the investor will always receive a premium (credit) when initiating this position.

The Bear Call Spread strategy gives an investor the chance to participate as the level of the NASDAQ-100 Index (NDX) stays neutral or declines, and is limited in profit to the credit received.

Bear Put Spread

The Bear Put Spread strategy employs buying one NDX Put Option and selling one Put Option with a lower strike price, to help fund the cost of the higher strike put.

As with a Long Put, the Bear Put Spread strategy gives an investor the chance to participate as the level of the NASDAQ-100 Index (NDX) declines, but only to the point where the short put caps additional gains.

Protective Collar

To hedge downside exposure to a synthetic long underlying position, a Protective Collar strategy employs buying one Put Option, and selling one Call Option with a lower strike, to help fund the cost of the put. The put strike sets the minimum selling price, and the call strike provides a maximum price.

A Protective Collar strategy gives an investor the chance to participate as the level of the NASDAQ-100 Index (NDX) declines, but only to the point where the short call caps additional gains.

Short Iron Condor

The Short Iron Condor employs selling one call while buying another call with a higher strike and selling one put while buying another put with a lower strike. Typically, the call strikes are above and the put strikes below the current level of underlying stock, and the distance between the call strikes equals the distance between the put strikes. It could also be considered as a bear call spread and a bull put spread.

The Short Iron Condor strategy gives an investor the chance to participate as the level of the NASDAQ-100 Index (NDX) stays within a narrow range, and is limited in profit to the credit received.

Butterflies

Short Call Butterfly strategy consists of buying two Call Options with a middle strike (body) and selling one Call Option each at a lower and upper strike (wings). The upper and lower strikes must both be equidistant from the middle strike, and all options must have the same expiration date.

This strategy gives an investor the chance to participate as the level of the NASDAQ-100 Index (NDX) rises or declines towards expiration date. This strategy attempts to minimize the net debited price.

Short Iron Butterfly

The Short Iron Butterfly employs buying a call at an upper strike while selling a call and a put at a middle strike, and buying a put at a lower strike. The upper and lower strikes (wings) must both be equidistant from the middle strike (body) It could also be considered as a bear call spread and a bull put spread.

The Short Iron Butterly strategy gives an investor the chance to participate as the level of the NASDAQ-100 Index (NDX) stays within a narrow range, and is limited in profit to the credit received.

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