Option Strategies – Iron Butterfly Option Strategy ?

What is the Iron Butterfly Option Strategy ?

Options provide a variety of money-making tactics that cannot be matched with traditional equities, and not all of them are high-risk endeavors. The iron butterfly technique, for example, can provide consistent income while limiting risks and profits.
Because each strategy is named after a flying species like a butterfly or condor, the iron butterfly option strategy approach is part of a collection of option strategies known as “wingspreads.” A bear call spread and a bull put spread with the same expiration date that converge at a middle strike price make up the strategy.

The “body” of the butterfly is formed by a short call and put sold at the middle strike price, … Read the rest

Option Strategies- what is Iron Condor Strategy

Option Strategies- what is Iron Condor Strategy

These are captivating times we are living in, especially if you are an alternatives trader in India Starting 1st June 2020, NSE’s new margin framework is live, which essentially brings down the margin requirement for the hedged position.

What is a hedged position?

Like riding a bike without carrying a helmet. The risk of market-moving against your position, causing capital erosion is high. However, if you hedge your position, then the danger of losing capital reduces drastically. Now, think about this – if your capital loss is minimal, then it implies that the risk for your broking is also minimum right? Now, if the risk for the broking reduces, it also means the … Read the rest

Option Strategies – How to do “The Long & Short Strangle” ?

Option Strategies – How to do “The Long & Short Strangle” ?

Option Strategies – How to do “The Long & Short Strangle” ?

If you have understood the straddle, then grasp the ‘Strangle’ is quite straightforward. For all practical purposes, the thought method behind the straddle and strangle is quite similar. Strangle is an improvisation over the straddle, mainly to minimize the cost of implementation.

Setup

Nifty is trading at 15921, which would make 15900 the ATM strike.  If you have been to set up the long straddle here, you would be required to buy the 15900 CE and 15900 PE.

The premiums for both these alternatives are 66 and 57 respectively. Net cash outlay = 66 + 57 … Read the rest

Option Strategies – What is “The Short Straddle” ?

Option Strategies – What is “The Short Straddle” ?

Those who already read our “Long Straddle” Strategy would understood that for the long straddle to be profitable, we need a set of things to work in our favor, reposting the identical for your quick reference – The volatility should be relatively low at the time of approach execution
The volatility should increase during the conserving period of the strategy
The market should make a large go – the direction of the move does not matter
The predicted large move is time bound, should manifest quickly – well within the expiry

Long straddles are to be setup round major events, and the outcome of these events to be extensively different from … Read the rest

Option Strategies – The Long Straddle Strategy

Options Strategies – The Long Straddle

Number of times times have you been in a situation where you take a trade with great confidence, either long or short, and the market immediately reverses direction after you begin the trade? Your entire strategy, planning, effort, and capital are thrown out the window. I’m sure we’ve all been in a position like this. In fact, this is one of the reasons why most expert traders go beyond standard directional bets and develop systems that are resistant to market volatility. “Market Neutral” or “Delta Neutral” tactics are those whose profitability isn’t entirely dependent on market direction.

Long straddle is perhaps the simplest market neutral strategy to implement. Once implemented, the P&L is not … Read the rest

Option Strategies – Bear Call Ladder Strategy

Options Strategies – Bear Call Ladder Strategy ?

The word “Bear” in the “Bear Call Ladder” should not fool you into thinking it’s a bearish approach. The Bear Call Ladder is a variation on the Call ratio back spread; this plainly indicates that you use this method when you are 100% bullish on the stock or index. The cost of purchasing call options is covered by selling a ‘in the money’ call option in a Bear Call Ladder. Furthermore, the Bear Call Ladder is frequently set up for a ‘net credit,’ which means that the cash flow is always better than the call ratio back spread’s cash flow. However, keep in mind that while each of these techniques have similar … Read the rest

Support and Resistance in Trading

Support and Resistance in Trading Stocks, Indices – Importance

Support and Resistance in Trading Stocks, Indices – Importance

Now we Cover here are below important must know elements in Trading Stocks

  1. Support and Resistance Defined
  2. The Basics on how they are calculated
  3. Trendlines
  4. Moving Averages
  5. Other Indicators

Significance of Support and Resistance Zones

Support and resistance levels are used by technical analysts to identify price points on a chart where the odds favour a pause or reversal of a prevailing trend.

Trading level support and resistance are undoubtedly two of the most hotly debated aspects of technical analysis. These terms are used by traders to refer to price levels on charts that act as barriers, preventing the price of an asset from being pushed in a particular direction.

 … Read the rest

NR4 Candle Strategy 5

NR4 and NR7 Trading Strategy – contraction and expansion technique

Narrow Range 4 and Narrow Range 7 (NR4 and NR7 Trading Strategy)  – contraction and expansion technique

The NR4 and NR7 Trading Strategies assist us in locating stocks ahead of time so that we can prepare for and profit from impending stock movement. The market goes through regular contraction and expansion cycles, which is where the NR4 and NR7 Trading Strategies excel.

In this trade setup, you should patiently wait for the market to enter into contraction, which means for the range of the bars to narrow. When we see NR4 or NR7, we can expect a larger price movement and direction. It is a breakout and reversal pattern that aids in profit generation after a range.

What we cover

… Read the rest

Option Chain Analysis in Trading

Option Chain Analysis in Trading

First lets cover the basics of Option chain….

  1. What is open interest?
  2. How to study option chain table
  3. The element of the option chain table
  4. How to interpret option open interest
  5. Use of open interest
  6. Market Structure Principles

Price moves within a structural framework of the supply and demand zone. A breakout of the structural framework supply and demand zone will lead to price movement in the next area of the framework of the supply and demand zone

CPR with Resistance and support levels

OPTION CHAIN COMPONENT

Option Chain Analysis in Trading 4

WHAT are ITM (IN THE MONEY) OPTIONS?
  1. A call option is said to be in ITM if the strike price is less than the current spot price of the security.
  2. A put option is
… Read the rest

Advice, Tips and Tricks for New Stock Investor ?

What percentage of your portfolio should be invested in stocks?

There is no hard and fast rule, but as you get older and closer to retirement, you should lower your stock exposure in order to preserve your cash. As a general rule, subtract your age from 110 to determine the percentage of your portfolio that should be invested in equities, and alter this percentage up or down depending on your risk tolerance.

Individual stocks vs. index funds?

An index fund allows you to invest in a variety of equities with just one purchase. An index fund, for example, gives you exposure to all 500 stocks in the index.

Index funds can help you diversify your portfolio while also lowering your … Read the rest