O'Reilly logo

Trading Options For Dummies, 2nd Edition by Joe Duarte

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 16

Trading Profitably When Markets Move Sideways

In This Chapter

arrow Boosting current returns

arrow Trading sideways markets

arrow Understanding spread impact

The headlines always capture those periods when the markets move up or down. But the fact is that major averages, sectors, and individual securities all display varying degrees of trending (up or down) and trendless (sideways) conditions. As a straight stock or ETF trader, these trendless market periods are difficult to handle, especially if you use the markets as part of your overall income.

Option strategies are unique because they allow you to realize profits when markets move sideways. By using options, you can reap additional rewards on existing positions or trade the markets with limited risk. Long butterflies and condors are two such strategies introduced here. And although these strategies are complex, they are ideal for sideways markets because they can produce income or moderate gains as you manage the position, while limiting risk. Thus, there are two question to be answered as a trader during sideways markets: Am I willing to take limited chances, in most cases, to make limited rewards, which may be better than ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required