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Thursday, May 31, 2007

Multi Legged Options Trading Strategy

Most option traders does not trade simple call and put options, but they trade a combination of them in a single option order. This type of trading strategy is known as multi-legged options trading. A multi-leg option order will allow the trader to buy and sell a number of different options simultaneously without placing separate orders.

The basic components of a multi leg options order are the call and put options, which are available for stocks and futures. Multi-legged trading includes a variety of trading strategies such as straddle trading, strangle trading, ratio spread and butterfly spread etc. These strategies can be used to profit from a variety of market condition, bullish, bearish or neutral. Multi-legged options trading require complex analyses with high accuracy. There are lots of options trading systems which enable traders to finding out suitable trading opportunities.

The main advantages of multi-legged options trading strategies include profit from any market condition, requirement to place only one order to buy or sell a number of options, ability to perform advanced options trading strategies, etc. But as told earlier the trading requires substantial market analysis and also involves considerable risks.

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