Limited Risk Option trading strategies

What are the most used limited Risk Option Strategies ?

Below are the Limited Risk Option trading strategies with links for most famous ones of all on Quick Hack.

Limited Risk Option Strategy Cheat Sheet
Option Strategy
Price Outlook
Volatility Outlook
Profit Potential
Risk
Long Calls(Naked Call Buy)
 Bullish Rising Unlimited Limited
Long Puts(Naked Put Buy)
 Bearish Rising Unlimited Limited
Protective Put
 Bullish Stable Unlimited Limited
Bull Put Spread
 Bullish Rising Limited Limited
Bear call Spread
 Bearish Falling Limited Limited
Bull Call Spread
 Bullish Rising Limited Limited
Bear Put  Spread
 Bearish Falling Limited Limited
Iron Condors Neutral Falling Limited Limited
Iron Butterfly Spreads Neutral Falling Limited Limited
Calendar Spreads
 Neutral Rising Limited Limited
Double Calendars
 Neutral Rising Limited Limited
Long
… Read the rest

Successful Weekly Options Strategies – Greeks work for you !

How does this tricks work for Successful trading?

The trick works by making the Greeks work for you but not against you like Theta, Delta, Vega.

How to make a Trade on Options based on Trading day

Highest decay in Option premiums happen closer to the expiry.

For weekly options

  1. On Start of weekly options say Friday and Monday you can look for buy strategies with limited risk and limited reward using the Option strategies like Bull Call spread etc.. based on market outlook. Or even long iron condor if you anticipate a huge movement on any side.  Long straddle and Long straddle can also be used.
  2. On Towards end of Week that is Wednesday and Thursdays, time decay is
… Read the rest

Option Greeks for Weekly Options – Way to success ?

What are Option Greeks?

If you trade options, you are probably familiar with the concept of option Greeks. 
These are sensitivities scales. 
Option Greeks effectively measure the sensitivity of the option price to various parameters that influence the value of an option. 
Such sensitivity can be on either the positive or negative side. 
When we talk about the option price, we’re referring to the option’s value as calculated by the Black & Scholes model.

What questions we need answer to?

  1. nifty option greek values
  2. option greeks zerodha
  3. greek option trading strategies pdf – Will be provided soon upon request in comments
  4. what is a good delta for options – 0.4 to 0.6
  5. option greeks explained
  6. what is a good theta
… Read the rest

Option Strategies with Greeks

Option Strategies with Greeks

What are the main Greeks to know for option trading ?

  1. Gamma is the rate that delta will change based on change in the stock price for every point. So if delta is the “speed” at which option prices change, you can think of gamma as the “acceleration.” Options with the highest gamma are the most responsive to changes in the price of the underlying stock.
  2. Theta is the time remaining of options. Options intinsric, extrinsic and time value in the option premiums.
  3. Vega is the volatility (IV or VIX) of the stock or index.

The Advanced Option Strategies with the affect Greeks

Option Strategies with Greeks 2
Option Strategies with Greeks 3

1. Long Straddle option strategy

Here we buy or long a call … Read the rest

Secret of Weekly Option Strategy?

Secret of Weekly Option Strategy?

This is due to the general characteristics of options. The greatest time decay occurs at the end of an option’s life. Prior to the availability of weekly options, the benefits of accelerated time decay could only be obtained once a month. There is now a continuous ability to benefit from accelerated time decay. This is due to the general characteristics of options.

Secret of Weekly Option Strategy

Price of option is affected by Theta Greek everyday till expiry but its affect is more near to expiry.

If we divide our Price of option per day then Price per day decay/decline is most near to expiry.

Always remember that price movement can negate the time decay arbitrage, which is why it … Read the rest

Why Theta is important for Option Traders?

Why Theta is important for Option Traders?

Options Theta is one of the important options Greeks and it can be used to help you predict how the prices of options change in relation to various factors. The theta value is the Greek which indicates how the price of an option changes as the expiration date gets closer and closer.

Why Theta is important for Option Traders

How Theta is helpful for option traders?

Neutral Strategies

Theta is especially important for traders who use trading strategies for a neutral market, because those strategies are typically used to profit from the effects of time decay. When employing these strategies, it is critical that the overall theta value of your position be at the appropriate level in order to benefit … Read the rest

Advice for Option traders for success?

First Advice:

Plan your trade and trade your plan. Nifty Market preys on peoples’ fear and greed, and these two emotions can be detrimental to your portfolio. With flexibility, it is easy to change your mind or strategy, and then you end up chasing the market constantly.

Second piece of advice?

Diversify your options portfolio into different strategies. Option trading is a business and it needs to be treated as such. When creating a stock portfolio, it is important to diversify. There are times in the market when it makes sense to buy options and there are times when selling options is a better decision. Become a buyer and seller of options depending on market conditions.

Third piece of advice:

… Read the rest

How to plan a Bear Call Spread? When to plan Bear Call Spread?

How to plan a Bear Call Spread? When to plan Bear Call Spread?

For Example, say SBICARD is going to give some back in the short term with some of the uncertainty surrounding the release of various card regulations/interest rates and some profit takings. On the technical side, the 20 day MACD is diverging to the down side and RSI is indicating an overbought condition.
We had some technical indicators and some fundamental uncertainty we thought would lead skittish traders to take some profits off the table. The Commit Criteria is short, sweet and it made sense. Little did we know at the time but this was a turning point for SBICARD and it is off about 20% since this … Read the rest

Option Buyer or Seller ? What makes things work?

Option Buyer or Seller ? What makes things work?

Option buyer

Why would a trader elect to take the risk the money on buying options or selling options for premiums.

The main Greeks that work against Option buyer is Theta / Time Decay.

Next comes with owning negative-Gamma positions. For the option owner to earn a profit, the underlying stock must move in three ways.

Move in the right direction (up for calls, down for puts)
Move quickly to prevent the loss of too much money to Theta (time decay)
Move far enough to overcome the cost of buying the option
That is a lot of movement and most traders have a difficult time predicting market direction without a time … Read the rest

Options Cheatsheet with Greeks

Options Cheatsheet with Greeks

Option basics explained

1. Open Interest

  • How many options exist in totality.

2. Implied Volatility

  1. Represents the expected volatility of the price of the stock.
  2. Used as a proxy of market risks.
  3. Increases when bearish, declines when bullish.
  4. Directly proportional to the demand of the asset, time left for option expiry.

Option Volatility Vs Stock/Index Valuation for picking strategies

  1. When valuation is under priced than there is scope of price coming up by buying.
  2. When valuation is Fair priced than there is scope of price coming to a range bound.
  3. When valuation is Over than there is scope of price coming down by selling.

Above compared to Volatility or IV we can plan strategies

For example

… Read the rest