The Everyday Finance blog recently discussed an options trading strategy that he uses to limit his risk – a credit spread. It involves selling a Put option at a given strike price and buying protection from another put option at a lower strike price.
If the option remains above the sold option strike price, you make money on the trade. This is a strategy that I do not use myself at this time, but the more I learn about it, the more intriguing it is.
More on this topic
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The Basics of Options Trading
(Wealth Daily, 1/12/10)
Entries from the Blogosphere
(The Essentials of Trading, 12/2/09)
12 Intermediate Option Terms Every Investor Should Know
(Stock Trading To Go, 3/9/09)
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