Super Simple Options Trading
All stock options have respective lot sizes, different strikes and multiple expiry periods. Also we have to keep in mind that not all stocks will have respective options or futures derivatives, only select few stocks are allowed by SEBI to have derivatives in options and futures. Save my name, email, and website in this browser for the next time I comment.
Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account. Stock Options Definition A stock option is a type of option where the underlying asset is a stock. Things to remember while trading stock options and building options trading strategies in India Illiquidity — In India, the depth of trading in stock options is still relatively shallow.
This winning strategy requires a net cash outlay or net debit at the outset. A bear call spread is done by buying call options at a specific strike price. At the same time, the investor sells the same number of calls with the same expiration date but at a lower strike price. In this way, the maximum profit can be gained using this options strategy is equivalent to the credit got when starting the trade.
This approach is best for those with limited risk appetite and satisfied with limited rewards. The put ratio back spread is also a bearish strategy in options trading. It involves selling a number of put options and buying more put options of the same underlying stock expiration date, but at a lower strike price. The put ratio back spread is for net credit. The word straddle in English means sitting or standing with one leg on either side.
As options strategy, a long straddle is a combination of buying a call and buying a put importantly both have the same strike price and expiration. Together, this combination produces a position that potentially profits if the stock makes a big move, either up or down. The long straddle is one of the strategies whose profitability does not really depend on the market direction.
So, it is a market neutral options strategy. Do remember that a long straddle can be a winning strategy if its implemented around major events, and the outcome of these events is different than general market expectations. A short straddle is an options strategy where you will have to sell both a call option and a put option with the same strike price and expiration date.
This approach is a market neutral strategy. This signifies that the investor is placing a bet that the market won't move and would stay in a range.
SImilar to long straddle, a short straddle should be ideally deployed around major events. A strangle is a tweak of the straddle. This is done to lower the cost of trade implementation. A strangle requires you to buy out-of-money OTM call and put options.
Options Strategy
The short strangle is the exact opposite of the long strangle. This is a delta neutral options strategy. It is insulated against any directional risk. You have read about popular options strategies. To succeed in the options field, here are the things you need to know.
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Options Strategy | Complete Strategy Of Call/Put/Call Ladder | Guide & Best Practice
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