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chapter5/1 common complex strategies

Chapter 5

Common Complex Strategies

There are numerous common option strategies that require holding more than one security. Each security, or leg, must be in an option or in the underlying stock. Multi-leg strategies are also commonly referred to as complex option strategies. They can be used to achieve different objectives such as discounting the cost of a call (bull spread), collecting time premium in a neutral market (short straddle), or trying to supplement the return on a stock position (covered call).

Many option brokers support trading complex options strategies in a single transaction. This may result in reduced commissions, lessen the margin required to enter a transaction, and reduce the risk of one leg of a transaction moving away from a profitable price between trades.


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