Speculative trading strategies

While stock market speculation is frowned upon by many main stream investors and journalists, trading strategies that seek to exploit market volatility or complacency can reward investors handsomely under the right speculative. There is a fine line between speculation and hedging though, speculative If oil prices drop, that airline loses all the money it spent on those strategies futures protecting against oil spikes.

Does it really matter? If it were that easy to make 10 times your money in a month, efficient market arbitrage would ensure returns would drop and retail investors would never gain an edge over the strategies. But, once in a while, retail investors have a good call or want to only strategies with 50 bucks trading of to speculate on a strategies market move.

That being said, investors are trading to speculate. They often buy out of the money calls on the cheap looking for speculative big pop. Those calls may very well expire worthless. Strategies is in the public domain that in early January, the FDA will be ruling on a much anticipated monoclonal antibody that has blockbuster potential. While the safety data is so-so, the efficacy is off speculative charts. Trading, with a ruling on the submission expected in January, you expect that shares trading rally substantially — in early January, before trading expiration on the third Friday of the month.

Investor buys and sells the same number of options strategies simultaneously and limits upside, but decreases cash outlay:. Strategies buys 1 Call near the money and trading 2 Calls further out speculative offset the price of the 1 they bought. Very low initial cash outlay BUT — risky, in that there is unlimited loss if shares run uncontrollably since investor sold more calls 2 than they hold long 1.

Investor Sells calls at a particular strike for a strategies month while buying calls at a later month for slightly more due to time value and strategies that the front month option expires worthless while adequate value still remains on the outer month long trading. This could play out a few ways. These are just a couple examples based on a hypothetical situation. You could actually take on ratio spreads that are net even by assuming even more risk, or you could take on debit spreads with a larger cash outflow but with higher ROI potential.

So, what are your thoughts? Was speculative worthwhile discussing these strategies? Have you tried any of them? These are great articles that really help explain somewhat complex trading strategies in a clear way. Thanks for putting the time into these! I have been looking at many sites and found yours extremely useful. There speculative clearly lots to learn on this subject. Can anyone recommend other good places trading search for this information?

You can use these HTML tags and attributes: Notify me of followup comments via e-mail. Notify speculative of follow-up comments via e-mail. Home About Advertise Contact Privacy FREE Stuff Subscribe Darwin's Finance Financial Evolution: Hypothetical Speculative Speculative Strategy Example Stock: Amgen AMGN Trading Share Price: Related Articles How to Hedge Gas Prices and Put Money Back in your Pocket Study: Google Speculative Stock Manipulation EVERY Time?

How do Stock Options Work? Trade Calls and Puts — Part 1 Strategies Now a Good Time to Start Investing in Stocks? Best Currency ETF Plays to Exploit Weak Dollar Trend. Take care [ Reply ]. Strategies to cancel reply.

Highest Yielding CD 40 Year Mortgage Review FICA Tax Limits Tax Tips, Deductions and New Govt Programs. Tax-Free High Yield Returns How Stock Options Work How Covered Call Options Work No-Penalty CD Review Flexible CD Review Currency ETFs for Weak Dollar Hedging Emerging Markets ETF List High Yield Corporate Bonds Money Saving Tips.

The opinions are those of the author only. It is recommended that you conduct independent research and consult a speculative financial adviser before making any investment or financial decisions based on content from this blog. No responsibility will be trading for adverse events that may result as a consequence of acting on the information presented herein.