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
Synthetic Options Strategy
by PRASHANT SHAH -
Synthetic Long By now, you should be familiar with how payoff graphs behave. Think about it – how does the payoff chart for buying a future contract look? Risk is unlimited and profit is unlimited. Below is a payoff graph of future contact for a long position. Options are dynamic instruments. Wouldn’t it be interesting ... Read more
Butterfly Options Strategy
by PRASHANT SHAH -
Butterfly We discussed both bull and bear spread strategies. We do them when we have a strong or moderate bullish or bearish view of the market price. If we don’t have the view and we want to consider multiple scenarios, and design the strategy, we can combine the spreads. Strategies based on a view of ... Read more
Iron Fly and Iron Condor Options Strategies
by PRASHANT SHAH -
Iron Fly In the same way as butterfly options, iron fly options and iron condor options are multi-leg options. In the butterfly, we discussed a strategy involving three strike price options. In the iron fly and iron condor, there are four strike price options. Iron fly is also a non-directional strategy that should be executed ... Read more
