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Getty Images However, the risk becomes unlimited above 21, because of the sale of the extra 21, call. Mumbai: Traders with a keen eye have spotted a strategy of earning a quick buck on June 25 expiry Bank Nifty Options , while actually getting paid for undertaking it. Called a bull call ladder, it involves buying a 20, call and selling a 20, call and a 21, call.
The provisional closing rate of a 20, call on Monday was a share 20 shares make a contract , while the sale of the 20, and 21, calls fetches the trader 1, a share based on closing rates Monday. Apart from covering her cost for the 20, call, the trader is left with a credit of a share. Let us now understand through this example how to fetch the data from the website and how to determine the Payoff schedule for Long Call Strategy.
The next step is to find the Premium. For this, you will have to select some of the data according to your requirements. So In the case of the Long Put options trading strategy, we will select the following data. Once you have got the Current Nifty Index Price and the Premium data, you can proceed further to calculate your Input-output data as follows in an Excel Spreadsheet.
Top 5 Nifty Options Trading Tips
Next, we come to the Payoff schedule. This basically tells you how much profit you will make or how much you will lose at a specific Nifty index. Note that in case of options, you are not obliged to exercise them, and hence you are able to limit your loss to the amount of Premium paid. The formula used in this case is the IF function of excel. This is how the formula works:.
Options Strategy | Complete Strategy Of Call/Put/Call Ladder | Guide & Best Practice
You can check the formula used in the image above, in case you want to use it in your Spreadsheet. This has been a guide to Options Trading Strategies. You can learn more about derivatives and trading from the following articles —. Free Investment Banking Course. Login details for this Free course will be emailed to you. This website or its third-party tools use cookies, which are necessary to its functioning and required to achieve the purposes illustrated in the cookie policy. By closing this banner, scrolling this page, clicking a link or continuing to browse otherwise, you agree to our Privacy Policy.
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Forgot Password? Buying calls can be an excellent way to capture the upside potential with limited downside risk.