OPTION STRATEGIES IN TRADING S.NO.
PARTICULARS
Expectations
SHAILESH SHINDE (M) 9870381515 Email :
[email protected] Position
Break Even
Option Buyer Risk
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
3
Strategy - 3 :- Synthetic Long Call / Protective Call
Conservatively Bullish
Buy Stock + Buy Put Option
Stock Price + Put Premium - Strike Price
Unlimited
Put Strike Price + Put Premium + Stock Price - Put Strike Price
4
Strategy - 4 :- Long Put
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 Call
Short term neutral to moderately bullish
Buy Stock + Sell Call Option
Stock Price - Call Premium
(Call Strike Price Stock Price) + Premium Paid
Stock Price - Premium
7
Strategy - 7 :- Long Combo
Bullish on stock
Sell Put Option + Buy Call Option
Unlimited
Unlimited
8
Strategy - 8 :- Synthetic Long Put / Protective Put
Conservatively Bearish
Short Stock + Buy Call Option
Call Strike Price Stock Price + Premium
Stock Price Premium
9
Strategy - 9 :- Covered Put
Neutral to Bearish
Short Stock + Short Put Option
Unlimited
10
Strategy - 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
11
Strategy - 11 :- Short Straddle
Very Little Volatility
Sell Put Option + Sell Call Option
Unlimited
Premium
Upper Break Even = Strike Price + Premium Lower Break Even = strike Price - Premium
12
Strategy - 12:- Long Strangle
Very High Level of Volatility
Buy OTM Put + Buy OTM Call
Premium
Unlimited
Upper Break Even = Strike Price + Premium Lower Break Even = strike Price - Premium
13
Strategy - 13 :- Short Strangle
Very Little Volatility
Unlimited
Premium
Upper Break Even = Strike Price + Premium Lower Break Even = strike Price - Premium
Bearish - market goes down
Sell OTM Put + OTM Call
Sell
Higher Strike Price + Net Debit
Stock Price - Call Premium
(Stock Price - Strike Stock Price + Put Premium Price) + Put Premium
S.NO.
PARTICULARS
Expectations
Position
Break Even
Option Buyer Risk
Reward Limited
Conseratively Bullish
Buy Stock + Buy Put + Sell Call
Limited
Moderately bullish
Buy ITM Call + Sell OTM Call
Unlimited if stock price falls below lower strike price
Strike Price of OTM Strke Price of call Purchased + Net Debit Strike Price of ITM Paid net Debit
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 - Strke Price of short Put - Net Premium net Debit
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
18
Strategy - 18 :- Bear Put Spread Strategy
mildly bearish
Buy ITM Put + Sell OTM Put
Net Premium paid
Strike Price of OTM Strike Price of ITM - Strke Price of Long Put - Net Premium net Debit
19
Strategy - 19 :- Long Call Butterfly
Sell 2 ATM call + Buy 1 Neutral on Mkt direction and ITM Call + buy 1 OTM bearish on volatility call
Net Premium paid
Diff between 2 Upper Break Even = Strike Price(H) - Net Premium strikes - Net Premium Lower Break Even = strike Price(L) + Net Premium
20
Strategy - 20 :- Short Call Butterfly
Buy 2 ATM call + Sell 1 Neutral on Mkt direction and Diff between 2 ITM Call + Sell 1 OTM bullish on volatility strikes - Net Premium call
21
Strategy - 21 :- Long Call Condor
14
Strategy - 14 :- Collar
15
Strategy - 15 :- Bull Call Spread Strategy
22
Strategy - 22 :- Short Call Condor
Net Premium received
Stock Price - Call Premium + Put Premium
Lower Strike +Net credit
Net Premium paid
Upper Break Even = Strike Price(H) - Net Premium Lower Break Even = strike Price(L) + Net Premium
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
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]