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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

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 – 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 – 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 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

Nifty Trading strategies for options

What exactly is an option trading strategy?

An option trading strategy is a hybrid combination of futures and options, or of two different options, that results in a product with defined risk, returns, or both. Option strategies are possible due to the unique nature of options, which are volatile in nature.

Options strategies are generally classified into six categories, which are as follows:

  1. Bullish strategies
  2. Bearish strategies
  3. Moderately bullish strategies
  4. Moderately bearish strategies
  5. Volatile strategies
  6. Range bound strategies

Protective Puts, Covered Calls and Collars

These are the three most fundamental strategies that are employed on a regular basis. These three options strategies are simple to understand and execute in the F&O Market, despite the fact that they are part of … Read the rest