Combination options are an advanced option trading strategy that involves combining multiple option contracts to construct a portfolio with specific risk and return objectives. This strategy can be used for risk hedging, increasing returns, or seeking investment opportunities under specific market conditions.In simple terms, combination options involve strategically combining option contracts to achieve investment goals in various market scenarios.Common combination options strategies typically include:Protective Put: Investors simultaneously hold stocks and a corresponding quantity of put options to protect their stock investment from price declines.Covered Call: Investors hold stocks while selling call options, primarily to reduce the risk for stockholders and generate additional premium
100 Must-Know Finance Terms
Fundamental lexicon explained,Glossary for finance beginners.
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