Archive for the ‘Option Strategies’ Category

Covered Call v/s Short Put ?

This item was filled under [ FAQ, Option Strategies ]

Many stock investors start in options with covered calls strategy. This options strategy is also sold by many trainers as “collecting rent on your stock portfolio” and generating regular monthly income. But what you rarely find is someone telling you that it is same as selling Naked Put option, with no protection. The benefits of […]

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How to hedge Short Futures Position using options ?

This item was filled under [ How-To, Option Strategies ]

In this post I am trying to answer a question asked by my trader friend who wants to capitalise of long term bearish view with Short Futures position, but want to explore how it can be hedged using options to safegaurd against and dead-cat bounce from the fall. Scenario: Let’s say I expect the markets […]

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How to trade bearish view with options ?

This item was filled under [ FAQ, Option Strategies ]

One of my trader friend asked me following question – Lets say I am bearish for the next 2-3 months. What strategy can I use? The Nifty PE of July 2010 are trading at, 5000PE @156.8 4900PE @124 4800PE@101 Now, If I am expecting levels of 4800 minimum in July, how do I use this […]

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Comparison of “Short Straddle” and “Short Strangle” strategies

This item was filled under [ Option Strategies ]

One of the most popular strategies to enjoy time decay is Short Straddle. Short Strangle strategy has lot of similarity to this. Let’s look at them from different perspective and see the differences:   Hope this helps you in selecting right strategy.  Feel free to express your views by leaving comment below.

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Bullish Option Strategy – Short Put

This item was filled under [ Option Strategies ]

This is another simple bullish strategy. Note – I will not suggest it to use it until you understand the risk involved with of Naked Short Options. For freshers, it is better to use simple Long Call strategy. Strategy = Short PUT Construction = Sell one PUT option Suitable Market Condition = Bullish trend (medium […]

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Learning Option Strategies

This item was filled under [ FAQ, Option Strategies ]

Option trading gives trader tremendous flexibility to construct a position by combining 4 basic option strategies (Long Call, Long Put, Short Call, Short Put). It is always difficult to find nice interactive tool to learn all of them in interactive way. Here is the link to interactive strategy scanner on www.888optionsnet.com site. Here you can […]

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What are different types of Spread strategies ?

This item was filled under [ Option Strategies ]

Spreads are classified by following parameters Expiry date of each leg 1) Vertical Spread – Expiry of both legs are in same month (eg – buy 1 Call 5000, Sell 1 Call of 5100 of same contract month) 2) Diagonal Spread – Expiry of both legs are in Different month. If strikes are same, then […]

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Comparision of “Long Call” and “Short Put” strategies

This item was filled under [ Option Strategies ]

Both these strategies are bullish strategy. Hence traders are always confused on which one to use. Lets look at them from different perspective and see the difference Attribute Long Call Short Put Nature of Strategy Debit i.e. your account is debited when the position is opened Credit i.e. your account is credited when the position […]

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Options Strategy for trading Increase in Volatility

This item was filled under [ Option Strategies ]

There are times when option IV goes down, market VIX also languish in lower band indicating low fear i.e. complecency in the market. In such situation, option premium falls down and hence the Short Options strategies do not collect high premium. But what next, these condition are perfect setup for forthcoming days of high volatility […]

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Selecting Right Options Strike Price

This item was filled under [ Option Strategies ]

One of the important consideration for options trading is the selection of strike and right strategy.. Lets look at the factors that affect the selection of strike price for SPREAD trade. Once we have used the technical analysis and form our view about the market direction, we need to start looking at right option strategy […]

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