Overview

Longbridge offers two levels of options trading access for all clients, Level 1 or Level 2 strategies. All options trading requires prior approval and is subject to eligibility and risk review.

Options Trading Levels

Level 1 — Covered and Income Strategies

These are conservative strategies designed to generate income or enter stock positions at favorable prices.

Available strategies:

  • Covered Calls: Sell call options against stocks you already own.

  • Buy-Writes: Simultaneously buy stock and sell a call option on that stock.

  • Cash-Secured Puts: Sell puts while holding enough cash to buy the shares if assigned.

Level 2 — Long and Protective Strategies

Includes all Level 1 strategies plus long (directional) and hedging strategies.

Available strategies:

  • Long Calls: Buy calls to benefit from a rise in the stock price.

  • Long Puts: Buy puts to benefit from a decline in the stock price or to hedge existing holdings.

  • Protective Puts: Purchase puts to limit downside risk on shares you already own.

  • Long Straddles: Buy a call and a put with the same strike price and expiration to benefit from large price moves in either direction.

  • Long Strangles: Buy a call and a put with different strike prices but the same expiration to capture potential volatility with less upfront cost than a straddle.

Risk Considerations

Options involve significant risk and are not appropriate for all investors.

  • Option buyers risk the entire premium paid if the option expires worthless.

  • Option sellers face potential assignment risk and must be prepared to buy or sell shares if assigned.

  • Leverage can magnify both gains and losses.

Please review the Characteristics and Risks of Standardized Options (ODD) before trading.