We're launching 2 NEW options strategies on moomoo!
When it comes to options trading, there are a variety of strategies that traders can use to help meet their investment goals and objectives. One popular approach is to use a combination of options strategies, which involve taking positions across multiple options contracts simultaneously in an effort to help limit risks, but in doing so, may also cap potential returns.
The 11 Original Combination Strategies
Moomoo originally offered 11 combination options strategies for traders to choose from (see below).
Options trading subject to eligibility requirements. Strategies available will depend on options level approved.
These included bullish strategies such as the long call and the short put, as well as bearish strategies like the short call and the long put.
There were also more sophisticated strategies like long strangle, collar, and vertical spread that could be used with the intention of taking advantage of volatility or market movements.
Now we're adding 2 new strategies to the mix.
Moomoo has now expanded by adding an additional two new combination options strategies: the Calendar Strategy and the Diagonal Strategy.
App images are provided for illustrative purposes only and is not a recommendation.
The calendar strategy, also known as the time spread, involves buying and selling options with different expiration dates. This strategy aims to take advantage of expected differences in volatility and time decay between the two options, while minimizing the impact of movements in the underlying security.
To execute the calendar strategy, traders would buy a longer-term call or put option while simultaneously selling a shorter-term call or put option. The goal is to profit from the difference in price between the two options, which increases as time goes on and the expiration date approaches.
The diagonal strategy is similar to the calendar strategy, but it involves buying and selling both options with different expiration dates and strike prices. This strategy can be used to potentially take advantage of both time decay and changes in the underlying stock's price.
To execute the diagonal strategy, traders would buy a call or put option with a longer expiration date and an In-the-Money (ITM) or At-the-Money (ATM) strike price, while simultaneously selling a call or put option with a shorter expiration date and an Out-of-the-Money (OTM) strike price. This creates a diagonal spread that has the ability to generate a profit if the stock price moves in a favorable direction.
Diagonal spreads and calendar spreads share a similar characteristic in the sense that they both have long and short strikes at different expirations.
A calendar spread's long and short strikes share the same strike price, which tends to make it a more cost effective trade on entry compared to a diagonal spread.
A diagonal spread's long and short strikes are on different strikes and typically mimic a setup of a traditional vertical debit spread.
Calendar spreads are much more about theta decay and IV changes, whereas a diagonal spread has more of a directional nature to it.
How to place a Calendar Strategy in moomoo?
Step 1: Select options from the individual stock detail quote, and go to the "option chain" page, tap [single option] to choose the [Calendar Spread].
Step 2: Tap the icon underneath on the right to view the Profit and Loss analysis of the option strategy.
Step 3: Fill in your order info and begin trading.
With the 2 new additional strategies, experienced traders now have even more options when it comes to combination options strategies.
By using these sophisticated techniques, traders can potentially generate profits while better managing their risks. As always, it's important to fully understand how each strategy works and to carefully consider the potential risks before executing any trades. In general, more complicated options strategies are appropriate only for experienced investors.
Have you tried any of these combination options strategies before? What were some of the results? What strategies do you want to learn more about on moomoo?
We would love to hear your thoughts and experiences in the comments below!
Disclaimer:
Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options (https://j.us.moomoo.com/00xBBz) before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request.Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy.The Option Profit and Loss Diagram (the “P/L Analysis”): The P/L analysis assumes positions will be held until expiration. Your actual losses may exceed calculated theoretical values due to changes in implied volatility, early assignment and ex-dividend dates, among other factors.The P/L Analysis is for informational purposes only and should not be considered a personalized recommendation or investment advice. The P/L Analysis performs hypothetical calculations based on model assumptions and other inputs you select, which may not reflect actual market conditions and do not guarantee future results. The maximum loss on a spread position remains limited only as long as the integrity of the spread is maintained.All contents such as comments and links posted or shared by users of the community are the opinion of the respective authors only and do not reflect the opinions, views, or positions of Moomoo Financial Inc., Moomoo Technologies, any affiliates, or any employees of MFI, MTI or its affiliates. Please consult with a qualified financial professional for your personal financial planning and tax situations. Please consider that users will have different risk profiles, financial understanding, financial objectives, investment time horizons and tolerance for potential losses and they should consider these factors when comparing performance, advice or recommendations from other users.This article is for educational use only and is not a recommendation of any particular investment strategy. Content is general in nature, strictly for educational purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. All investing involves risks.Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. In the U.S., investment products and services on Moomoo are offered by Moomoo Financial Inc., Member FINRA/SIPC.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Silverbat : Call Opt are very cheap
71780680 : I've looked at them. any strategy can be a valuable tool. in (my opinion) learning , and understanding the charts is the key to success
thetime_1998 : nice, would like to learn something new.
Larry H : Another way to profit when direction unclear or stock trading sideways
TobbyStock : I need to know about combination strategies.
iSpyderTrader : Awesome!!! Glad moomoo is adding these strategies. There are other good ones that still missing and hope it will be added. Will make moomoo platform much better and robust.
TSWAIN : love to know
Eth Scanner : I've used straddles on highly volatile, low priced stocks.
71750344 : I know absolutely nothing about options…
Billions : thank you
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