Options: Options Strategies

Feeling like a married put? How about a long straddle?

While these may sound like rather kinky propositions, they actually are just two of the scores of options strategies that investors use in an effort to secure or maximize profits. Options traders have devised these strategies for a variety of reasons; some offer a kind of insurance against a decline in a stock you own. Some are ways to make risky bets with big upside and downside potential.

Options let you make a bet on the direction of an underlying investment -- such as a stock, a stock index or a currency -- without shelling out the full amount to buy the actual underlying investment. Part of the appeal options hold for investors is leverage. When investors leverage an investment, they pay a small amount out in the hopes that they get a return much larger than their original money down. (For more on the basics of options, please read the entry on Getting Started With Options .) ...