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Good morning team, Chris Conway your Head of Research here with your First Look. The Aussie market is expected to open lower later this morning, after Wall Street closed in nega...
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TRADING STRATEGIES

At HC Securities, we employ a number of different trading strategies which span across different financial products and are suitable for various market conditions. Each strategy has its own unique risk profile to help guide you in choosing the strategy that best suits your investment goals.

We welcome you to browse the strategy summaries below and download the full overview documents. If you are interested in discussing any of these strategies please don’t hesitate to Contact Us to speak to one of our Client Advisors. 

Credit Spreads

A Credit Spread is a directional options trade that is opened for a credit using either calls or puts depending on your view of the underlying. The maximum possible loss is known at the time of opening the trade, however the strategy is still considered medium risk as without careful consideration and monitoring losses can be incurred quickly. Credit Spreads are a limited risk, limited reward strategy because whilst the loss from the trade is known and limited, so is the potential profit. The strategy can be entered with a bullish or bearish outlook on the market, and can be started with as little as $1,000 per trade. However it is recommended that around $10,000 is invested in the strategy.

Download the full Credit Spreads Strategy Overview

Debit Spreads

A Debit Spread is a directional options trade that is similar to a Credit Spread however it is entered into for a debit to the investors account, not a credit. It can be created using calls or puts and can have either a bullish or bearish outlook on the market. Again, the maximum possible loss is known at the time of opening the trade and so is the maximum possible profit. This strategy can also be entered with as little as $1,000 per trade. However it is recommended that around $10,000 is invested in the strategy.

Download the full Debit Spreads Strategy Overview

Covered Calls

Generally employed over the medium term, Covered Calls are traded primarily to generate income. Involving the purchase of the underlying shares and the sale of call options, Covered Calls can generate high returns however the tradeoff is a high level of capital investment. $25,000 is an ideal trading bank to start however investors with existing blue chip portfolios would also benefit from the strategy.

Download the full Covered Calls Strategy Overview

Equity Recommendations

This straightforward strategy simply involves purchasing ordinary shares in a particular company. Equity recommendations are generally of a longer term nature and are used by investors looking to lock away some funds in an investment that is intended to grow over time. The risk associated is in the exposure to the movements of the share price. In order to appropriately diversify an investor's portfolio, a diverse selection of between 5 and 10 individual shares would be recommended. An investment size of $5,000 per stock would provide the investor with a reasonable potential for upside.

Download the full Equity Recommendations Strategy Overview

IPOs

An Initial Public Offering (IPO) represents an opportunity to purchase shares in a company before it is listed on the ASX. Whilst there is risk associated with purchasing shares in a company with no track record as a listed company, there is potential upside as in many cases, companies under-price their shares to ensure a successful listing. The level of investment can vary as it is often dictated by the listing company but is often as little as $2,000.

Download the full IPOs Strategy Overview

Straddles and Strangles

This strategy combines the purchase of both call and put options; Straddles require the purchase of at-the-money options, while strangles require the purchase of out-of the-money options. These types of trades are commonly used when market volatility is low, allowing for options to be purchased relatively cheaply. With an initial outlay of as little as $1,000 the risks lie in a sideways trending underlying stock and time decay slowly reducing the value of purchased options. However the major benefit of the strategy is that the direction of movement of the underlying stock is irrelevant; all that is required is a sustained move in either direction.

Download the full Straddles and Strangles Strategy Overview

Directional CFDs

This strategy, using a technical approach, involves predominantly intraday directional trading to take advantage of short term trends in major globally traded contracts using CFDs. The strategy can take advantage of a market that trends in either direction and risk is minimised due to the short term nature of this strategy and the use of stops. We recommend clients start with a minimum investment of $5,000.

Download the full Directional CFDs Strategy Overview

Important: HC Securities provides general advice only and does not consider your personal financial situation, risk profile and investment objectives. For this reason you should consider your own situation prior to adopting any of these strategies to ensure that they are appropriate for you.