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OPTION STRATEGIES IN TRADING SHAILESH SHINDE (M) 9870381515 Email : [email protected]
S.NO. PARTICULARS Expectations Position Break EvenRisk Reward
1 Strategy - 1 :- Long Call Bullish - market goes up Buy call Option Premium Unlimited Strike Price + Premium
2 Strategy - 2 :- Short Call Bearish - market goes down Sell Call Option Unlimited Premium Strike Price + Premium
3Strategy - 3 :- Synthetic Long Call / Protective Call
Conservatively BullishBuy Stock + Buy Put
Option
Stock Price + Put Premium - Strike
PriceUnlimited
Put Strike Price + Put Premium + Stock Price - Put Strike Price
4 Strategy - 4 :- Long Put Bearish - market goes down Buy Put Option Premium Unlimited Strike Price - Premium
5 Strategy - 5 :- Short Put Bullish - market goes up Sell Put Option Unlimited Premium Strike Price - premium
6 Strategy - 6 :- Covered CallShort term neutral to
moderately bullishBuy Stock + Sell Call
OptionStock Price - Call
Premium
(Call Strike Price - Stock Price) + Premium Paid
Stock Price - Premium
7 Strategy - 7 :- Long Combo Bullish on stockSell Put Option + Buy
Call OptionUnlimited Unlimited Higher Strike Price + Net Debit
8Strategy - 8 :- Synthetic Long Put / Protective Put
Conservatively BearishShort Stock + Buy Call
Option
Call Strike Price - Stock Price +
Premium
Stock Price - Premium
Stock Price - Call Premium
9 Strategy - 9 :- Covered Put Neutral to BearishShort Stock + Short Put
OptionUnlimited
(Stock Price - Strike Price) + Put Premium
Stock Price + Put Premium
10Strategy - 10 :- Long Straddle
short term significantly volatile
Buy Put Option + Buy Call Option
Premium Unlimited Upper Break Even = Strike Price + Premium Lower Break Even = strike Price - Premium
11Strategy - 11 :- Short Straddle
Very Little VolatilitySell Put Option + Sell Call Option
Unlimited Premium Upper Break Even = Strike Price + Premium Lower Break Even = strike Price - Premium
12Strategy - 12:- Long Strangle
Very High Level of VolatilityBuy OTM Put + Buy
OTM CallPremium Unlimited Upper Break Even = Strike Price + Premium Lower
Break Even = strike Price - Premium
13Strategy - 13 :- Short Strangle
Very Little VolatilitySell OTM Put + Sell
OTM CallUnlimited Premium Upper Break Even = Strike Price + Premium Lower
Break Even = strike Price - Premium
Option Buyer
S.NO. PARTICULARS Expectations Position Break EvenRisk Reward
Option Buyer
14 Strategy - 14 :- Collar Conseratively BullishBuy Stock + Buy Put +
Sell CallLimited Limited
Stock Price - Call Premium + Put Premium
15 Strategy - 15 :- Bull Call Spread Strategy Moderately bullish
Buy ITM Call + Sell OTM Call
Unlimited if stock price falls below lower strike price
Strike Price of OTM - Strike Price of ITM -
net Debit
Strke Price of call Purchased + Net Debit Paid
16 Strategy - 16 :- Bull Put Spread Strategy Moderately bearish
Sell ITM Put + Buy OTM Put
Unlimited if stock price falls below lower strike price
Strike Price of ITM - Strike Price of OTM -
net DebitStrke Price of short Put - Net Premium
17 Strategy - 17 :- Bear Call Spread Strategy mildly bearish
Sell ITM Call + Buy OTM Call
Strike Price of OTM - Strike Price of ITM -
net Debit
Net Premium received
Lower Strike +Net credit
18 Strategy - 18 :- Bear Put Spread Strategy mildly bearish
Buy ITM Put + Sell OTM Put
Net Premium paidStrike Price of OTM - Strike Price of ITM -
net DebitStrke Price of Long Put - Net Premium
19Strategy - 19 :- Long Call Butterfly
Neutral on Mkt direction and bearish on volatility
Sell 2 ATM call + Buy 1 ITM Call + buy 1 OTM
callNet Premium paid
Diff between 2 strikes - Net Premium
Upper Break Even = Strike Price(H) - Net Premium Lower Break Even = strike Price(L) + Net Premium
20Strategy - 20 :- Short Call Butterfly
Neutral on Mkt direction and bullish on volatility
Buy 2 ATM call + Sell 1 ITM Call + Sell 1 OTM
call
Diff between 2 strikes - Net Premium
Net Premium paid Upper Break Even = Strike Price(H) - Net Premium Lower Break Even = strike Price(L) + Net Premium
21Strategy - 21 :- Long Call Condor
Low volatility
Buy 1 ITM Call(LS) + Sell 1 ITM Call(LM) +
Sell 1 OTM Call(HM) + Buy 1 OTM Call(HS)
Limited Limited Upper Break Even = Strike Price(H) - Net Premium Lower Break Even = strike Price(L) + Net Premium
22Strategy - 22 :- Short Call Condor
Breakout expected but direction not sure
Sell 1 ITM Call(LS) + Buy 1 ITM Call(LM) +
Buy 1 OTM Call(HM) + Sell 1 OTM Call(HS)
Limited Limited Upper Break Even = Strike Price(H) - Net Premium Lower Break Even = strike Price(L) + Net Premium
Note :- LS = Lower Strike Price; HS = Higher Strike Price; LM = Lower Medium Strike Price & HM = Higher Medium Strike Price Buyer of call and seller of put benefits when market goes up. Profits of Buyer are unlimited whereas profits of seller are limited upto premium received. In adverse situation, buyer suffers losses upto max premium paid whereas seller suffers unlimited losses.
SHAILESH SHINDE (M) 9870381515 Email : [email protected]