Day Trading Stocks & Futures
- Thread starter TraderRavi
- Start date
- Tags banknifty bnf daytrading nifty future
re: Day trading Nifty & Banknifty Futures
St Sirji,
One can sell 1 otm call and buy 2 far otm call for upperside protection if needed.
If somebody want to take less risk one can use the following strategies
A collar is an options trading strategy that is constructed by holding shares of the underlying stock while simultaneously buying protective puts and selling call options against that holding. The puts and the calls are both out-of-the-money options having the same expiration month and must be equal in number of contracts.
Collar Strategy Construction
Long 100 Shares
Sell 1 OTM Call This month or next Month
Buy 1 OTM Put This month or next Month
I prefer this strategy. You buy put from the premium received for selling next month call
Long 1 ITM Call which have delta amost 1
But 1 Atm Put thismonth
Sell 1 Atm Call/Otm next month
Technically, the collar strategy is the equivalent of a out-of-the-money covered call strategy with the purchase of an additional protective put.
The collar is a good strategy to use if the options trader is writing covered calls to earn premiums but wish to protect himself from an unexpected sharp drop in the price of the underlying security.
The beauty of using a collar strategy is that you know, right from the start, the potential losses and gains on a trade. While your returns are likely to be somewhat muted in an explosive bull market due to selling the call, on the flip side, should the stock heads south, you'll have the comfort of knowing you're protected.
St Sirji,
One can sell 1 otm call and buy 2 far otm call for upperside protection if needed.
If somebody want to take less risk one can use the following strategies
A collar is an options trading strategy that is constructed by holding shares of the underlying stock while simultaneously buying protective puts and selling call options against that holding. The puts and the calls are both out-of-the-money options having the same expiration month and must be equal in number of contracts.
Collar Strategy Construction
Long 100 Shares
Sell 1 OTM Call This month or next Month
Buy 1 OTM Put This month or next Month
I prefer this strategy. You buy put from the premium received for selling next month call
Long 1 ITM Call which have delta amost 1
But 1 Atm Put thismonth
Sell 1 Atm Call/Otm next month
Technically, the collar strategy is the equivalent of a out-of-the-money covered call strategy with the purchase of an additional protective put.
The collar is a good strategy to use if the options trader is writing covered calls to earn premiums but wish to protect himself from an unexpected sharp drop in the price of the underlying security.
The beauty of using a collar strategy is that you know, right from the start, the potential losses and gains on a trade. While your returns are likely to be somewhat muted in an explosive bull market due to selling the call, on the flip side, should the stock heads south, you'll have the comfort of knowing you're protected.
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