Trading Olympics: Event 4 - Options


So far this week in the Fast Money trading Olympics, you've hurdled over the Chartology obstacle course and scored a perfect 10 in the valuation vault.

But now you face the ultimate challenge. The fastest financial market in the world: options.

The difficulty level here is steep - using complex strategies with strange names such as the short-straddle, the condor spread and the iron butterfly.

They’re all designed to super-charge your returns, and safeguard your profits.

Don’t worry if you’re a beginner. Pete Najarian is the Bella Karolyi of options coaching. There are few people more capable of spotting a winner than the Pit Boss.

And he wants to let you in on a little secret. By simply watching what the pros are doing - and where they're buying - you too can nail a profit-packed landing.

Pete's Options Tips

1. Buy-Write - Buying the stock and selling the upside call because the premium you get from selling the call lowers your cost basis.

2. Buying Stock With a Put – Buy a put to protect yourself. It’s an insurance policy if the stock starts to plummet.

3. Spreads – Buy an underside call and sell an upside call to reduce the risk.

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Trader disclosure: On Aug 20, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MSFT), (WMT); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (MS), Najarian Owns (AAPL) And Is Short (AAPL) Call, Najarian Owns (ANR) And Is Short (ANR) Call, Najarian Owns (JOYG) Call Spread, Najarian Owns (LEH) Put Spread, Najarian Owns (NOK) And Is Short (NOK) Calls, Najarian Owns (XLY) Puts; Terranova Owns (AAPL), (BNI), (CME), (EOG), (FCX), (GS), (GOOG), (INTC), (KOL), (NOV), (POT), (RIMM), (SA), (XLF), (SU), (X), (VLO), (YHOO); Terranova Owns (AIG) Puts; Terranova Is Short Crude Oil Time Spread (Short Dec. 2009, Long Dec. 2012); Terranova Is Long Crude Oil Futures (Dec. 2012)

Terranova Is Chief Alternatives Strategist Of Phoenix Investment Partners, Ltd.; Phoenix Investment Partners Owns More Than 1% Of (ABD), (ARE), (BRE), (CNTY), (CLB), (OFC), (DLR), (ESS), (EXR), (FL), (IAT), (IGE), (LNET), (MAC), (OIIM), (PSPT), (DBC), (DBV), (SLB), (SKT), (BLV); Terranova Is Co-Portfolio Manager Of The Phoenix Diversifier PHOLIO; Phoenix Diversifier PHOLIO Owns (IGE), (DBC), (DBV)