Advanced Strategies

Advanced Long/short equity strategies involve simultaneously taking long positions (betting on growth) and short positions (betting on decline) on different stocks.

Market neutral hedging to earn returns regardless of the market direction.

Arbitrage (statistical, merger, convertible) profits from price differences of the same asset in different places.

Pair trading involves taking a long position on a strong company and a short position on a weak company within the same sector.

Factor investing means investing in risk factors (value, momentum, quality, size).

Smart beta uses factors, but at a lower cost than active management.

Risk parity creates a portfolio in which all assets contribute the same risk (not the same returns).

Tactical asset allocation rapidly reallocates the portfolio based on short-term signals.

Strategic asset allocation focuses on long-term allocation (60% stocks, 40% bonds).

Core-satellite approach consists of a main core (index) plus speculative positions around it.

Barbell strategy invests in safe assets (bonds) and risky assets (options), avoiding anything in the middle.

Laddering (bond ladder) involves purchasing bonds with different maturities for stable income.

Covered call writing means you own the stock and sell a call option on it (for income, but you lose growth potential).

Cash-secured puts involve selling a put option and holding enough money to buy if the price drops.

Iron condor simultaneously sells call and put options within a limited range (profit if the price doesn't move).

Collar strategy involves buying a put (protection from decline) and selling a call (pays for the protection).

Calendar spreads involve buying a long-term and selling a short-term option on the same asset.