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
Calendar Spread Options Strategy
by PRASHANT SHAH -
A calendar spread is also known as a horizontal spread or a time spread. Unlike vertical spreads, we trade options of different expiries in case of a Calendar spread. You can trade it for weekly expiry options as well. Ideally, At-the-money (ATM) strike prices are used for trading calendar spreads. With calendar spreads, the margin ... Read more
Diagonal Spread Options Strategy
by PRASHANT SHAH -
When we choose different strike prices in a calendar spread instead of ATM, it becomes a diagonal spread. In a standard diagonal spread, the front-month OTM or far OTM option strike is sold instead of ATM and the back-month ITM or ATM option strike is bought. Diagonal spreads are called ‘Diagonal’ because they are a ... Read more
