September 28, 2022

Profitable options strategies when the Belgium market is quiet

Belgium is a small country in Western Europe. The Belgian stock market is not as big as other European countries, such as the United Kingdom or Germany.

It is not always easy to find profitable options strategies when the market is quiet.

However, there are still a few strategies that can be profitable when the market is quiet in Belgium.

Options Strategies

Cover Calls

One approach is to sell covered calls. You collect a premium from the buyer when you sell a covered call, and you agree to sell your shares of stock at a specific price by a certain date.

If the stock price rises above the price you decided to sell it at, the buyer of the call option can exercise their choice and buy your shares at the agreed-upon price, allowing you to keep all of the appreciation in your claims.

Of course, if the stock price plummets below that price, the call option will expire worthlessly, and you won’t be forced to sell.

Calendar Spread

Another strategy that can work when the market is quiet in Belgium is a calendar spread.

A calendar spread consists of buying one option with a specific expiration date and selling another chance with the same strike price but with an expiration date that’s further out in time.

If prices move favourably, one of your options will increase in value while the other expires without exercising its right to buy or sell your stock. At this point, you’ll want to close out the position by buying back the expiring option while simultaneously selling another longer-term option with a higher strike price.

This strategy can be profitable if you’re correctly able to predict the price movement of the underlying security – remember that it’s only beneficial when the implied volatility is lower than usual so that individual options are cheaper.

Butterfly Spread

Another strategy that can work when the market is quiet in Belgium is the butterfly spread.

This strategy aims to sell three near-term call options and buy two further out-of-the-money calls of the same type and number of contracts to create limited risk and defined profit potential.

You would do this by buying one contract at a specific strike price, selling two contracts with a higher strike price, and buying another contract at yet another strike price that is even further out-of-the-money.

This bullish strategy profits when the underlying security moves higher but has a limited loss potential.

Binary Options

But there are also opportunities during quiet periods to trade binary options as well. You have to look closer at them because they might be hidden behind other signals that are more obvious at first glance.

Take this example of a potential binary option on an asset with little volatility:

The market is quiet in Belgium, and you’re looking for a binary option to trade. You find an asset that has been stuck in a range for the last few hours, and it seems like it might break out soon. What do you do?

In this case, you would want to look for a binary option with a short expiration time. This is because you want to profit from a small price move, and if the asset takes too long to make that move, your option will expire worthlessly. So, in our example, you might want to look for an option that expires within the next 30 minutes or so.

Once you’ve found a suitable option to trade, your next step is to decide on which direction you think the stock is going to move.

If you think the stock will rise, you will buy a call option. If you believe the stock will fall, you will buy a put option.

However, when the market is quiet in Belgium, it can be challenging to determine the stock’s direction. That’s why it’s essential to use options strategies that profit regardless of which direction the stock moves.

Straddle

One such strategy is the straddle. You buy both a call and a put option with the same strike price and expiration date with a straddle. This strategy profits if the stock moves up or down, but it also has some risks.

In Summary

Although some strategies can work when the market is quiet in Belgium, it’s important to remember that success with any of these strategies depends on correctly predicting the price movement of the underlying security.

And as always, be sure to consult with a professional financial advisor, like Saxo, before implementing any of these or any other options trading strategies.

Previous post Personalizing Custom Boxes to Increase Your Customer Base
Next post Tips to Make Your Moving Less Expensive