Call and Put Options Strategies
by PRASHANT SHAH -
Payoff graphs We discussed that the initial investment is less when we buy option contract. We can plot payoff chart of any option position and check our risk-reward levels for the position. Check the below image of Nifty Option price. A = Spot price of Nifty (cash segment). B = Future price of Nifty. It ... Read more
Straddles & Strangles Options Strategies
by PRASHANT SHAH -
You must now have a clear understanding of the pros and cons of buying and selling options. But they can complement each other. We can define strategies by trading them together. When we buy options, we have to pay the premium. It’s a debit position. When we sell options, we receive the premium, it’s a ... Read more
Options Payoff Analysis
by PRASHANT SHAH -
I am intentionally talking about pay-off after covering a couple of strategies. It will give you a better perspective now. The shape and width capture a lot about the pay-off graph and with practice you will gain better insight into your strategy by simply looking at the pay-off graph. Let’s understand it in more detail. ... Read more
Vertical Spreads – Debit Strategies
by PRASHANT SHAH -
Spreads help us to take advantage of the nature of each option position and help us to create positions based on your market views. When your view of the market is not very strong. Let’s say you’re bullish but unsure about it. Not very bullish. Bearish but not very bearish. Often, we come across this ... Read more
Vertical Spreads – Credit Strategies
by PRASHANT SHAH -
Bear Call spread – Credit When you have a semi-bullish (not very bullish) or semi-bearish (not very bearish) market, debit call spreads are effective. The strategies are net debit, which means in the event of time decay, you lose the option value (premium). The opposite of a bull call spread is a bear call spread. ... Read more
Ratio spreads, Strip & Strap Options Strategies
by PRASHANT SHAH -
Ratio spreads The ratio spreads discussed above are a decent strategy. We discussed debit and credit spreads. We discussed that credit spreads can be converted into ratio spreads by increasing the positions in OTM options. If the OTM strike price premium is too small for bear call or bull put credit spreads, you can write ... Read more
