Stock Markets Exposed

What does it mean by Single-Leg & Multiple Leg in Stock Trading?

i found out this term when browsing about online stock investing. could anybody explain what it is all about? TQ.

Public Comments

1. Most option traders does not trade simple call and put options, but they trade a combination of them in a single option order. This type of trading strategy is known as multi-legged options trading. A multi-leg option order will allow the trader to buy and sell a number of different options simultaneously without placing separate orders. The basic components of a multi leg options order are the call and put options, which are available for stocks and futures. Multi-legged trading includes a variety of trading strategies such as straddle trading, strangle trading, ratio spread and butterfly spread etc. These strategies can be used to profit from a variety of market condition, bullish, bearish or neutral. Multi-legged options trading require complex analyses with high accuracy. There are lots of options trading systems which enable traders to finding out suitable trading opportunities. The main advantages of multi-legged options trading strategies include profit from any market condition, requirement to place only one order to buy or sell a number of options, ability to perform advanced options trading strategies, etc. But as told earlier the trading requires substantial market analysis and also involves considerable risks.
2. A simple buy or sell of a stock requires one trade. A "pair trade" requires two trades -- in a pair trade, you short one stock while long the other stock in the same industry. Anytime you have a complex trade that requires multiple trades, each prequisite trade is called a "leg." Right now, iron condors in options are very popular that that overall trade requires four legs: buy a call, sell a call, buy a put, sell a put; keep in mind that all (four) legs must be executed at once or the complex trade is not executed. In summary, it's just a term we use in the industry to describe a complex trade that requires two or more trades with each prerequisite trade being a leg of the complex trade.