Options Trading Strategies

[Sunil]

answer can given by to style, one is bookish answer, n second is hidden messages in it.
1) today call options been mostly traded, most guys buy calls and most guys sell calls compare to put option.
2) to complete a trade there need to be a buyer for every seller, so if one has to buy a call then one has to sell that call, selling calls need more margin and buying call need less margin, so option sellers r smart crowd ( its just loose consideration, though things vary as per personal style), also one buy call to hedge his/her short nifty,here more margin requires to do that as well, so this type of buyer is also considered to be a smart money, all in all when open interest in call option increases its bearish, suggests smart money expecting market may go down.
Hope this helps as its not a 2 para concept one need to go deep to study everything.This is the best way i can clarify.

exactly...
today nifty broke some key levels which were crucial for further uptrend. After those levels broke, put writers (who were bullish & expecting further upmove) had to exit their positions (leading to reduction in OI of puts), and instead 3100+ calls were written, as after closing below 3000, these levels would be tough to break again soon & easily

By the way, check out today's top traded nifty options:
3200 Call & 3000 Put

 

[tomdickpary]

3200 call & 3000 put .so tomrrow nifty will down .u want to told that na

 

[sethrohit]

2. Long Straddle + Put

Buy Put 4000 @ 178 (1 lot)
Buy Call 4000 @ 176 (1 lot)
Sell Put 3800 @ 104 (1 lot)

Total cost of above = 12500

Max loss at nifty 4000 = 12500
At or below 3800, loss limited to Rs 2500

Breakeven at nifty 4250

Above 4250, profit rises proportionaltely
at 4300 = 2500
at 4400 = 7500
at 4500 = 12500
and so on

Hi,

I am a newbie trader and would like to under stand these strategies, can you explain these calculations and logic behind them?

 

[praveen taneja]

sUNIL i AM TOO A NEW TO OPTIONS PLS CAN U TELL ME WAT CAN B THE BEST STRETEGY TO EXIT FROM STRANGLE?????????????/
AS I DONT HAV MUCH FUND LEFT ALL EATEN BY LINE BABA
i CANT SELL CALL OR PUT SO I CAN HEDGE MY CALL N PUT BUT MOSTLY IT ENDED UP IN A LOSS OR AT MINI MUM PROFIT
IF I TRACK DELTA DAILY THE TARGET IS MOVE AWAY DAY BY DAY IF VOLATALITY IS NOT AS PER EXPECTATION BCOZ ON THAT COLUMBUS AND ALEX KEEP AN EYE
SO SUGGEST ME WAT TO DO
LIKE IF I HAV 2600 PUT N 3000 CALL ???
WAT TO DO IF NIFTY MOVE BETWEEN 2700 AND 2900????
THNX IN ADVANCE

 

[S S]

But, all other strategies, ESPECIALLY THE COMPLEX ONES USING TWO LEG OF OPTIONS.......

Gurudeo.... one leg of option of staying away from loging-in into this forum has been excersized by you already.

We all are waiting for the second leg of option of the re-entry.

The situation is no more as Complex, as was initially appeared to have been.

PLEASE do NOT dis-appoint us

SS
NB : We all are responsible for putting in our thoughts, and for this, we all have the facility of starting a thread, we do NOT own it though. The Traderji does. So, PLEASE do NOT hesitate in barging-in into any of the threads of your choice.... just like you used to do earlier. THANKS.

 

[sachuc]

a long 2700put 3000call laid off with short 3200call and short2500put (a combi of bull spread and bear spread)this strategy how does it work what is it called when do losses start and when max gains when should this strategy be used and adjustment should be made
Sachuc

 

[sachuc]

a long 2700put 3000call laid off with short 3200call and short2500put (a combi of bull spread and bear spread)this debit strategy how does it work what is it called when do losses start and when max gains when should this strategy be used and adjustment should be made how is it differ from iron condor which ich is credit inflow
Sachuc

 

[sachuc]

SHORT PUT
a long 2700put 3000call laid off with short 3200call and short2500put (a combi of bull spread and bear spread)this debit strategy how does it work what is it called when do losses start and when max gains when should this strategy be used and adjustment should be made how is it differ from iron condor which ich is credit inflow
Sachuc

 

[AW10]

SHORT PUT
a long 2700put 3000call laid off with short 3200call and short2500put (a combi of bull spread and bear spread)this debit strategy how does it work what is it called when do losses start and when max gains when should this strategy be used and adjustment should be made how is it differ from iron condor which ich is credit inflow
Sachuc

Spreads are made with Buying a call and selling a call. or (buy put + sell put). U don't get spread by buying call and selling put.
so effectively what u have
1) bearish put spread of 2700 short 2500 long and
2) bull call spread of 3200 short 3000 long

This pack is called as Butterfly strategy. You can find all ur answer on the net if search on butterfly.

Happy Trading.

 

[arnav_rulz]

Another Strategy that can be used near expiry.(obv risk will be very less here, and maybe the reward therefore may be a bit less..)

I usually use this Between Wed-Fri of the 2nd last week of expiry and i only trade in nifty cause of liquidity..

1)Sell OUT of the money Option (of the direction market will go, i.e if you are bearish, Sell a Put) And
2)Buy the next month's Buy same Option(i.e Put in the above case) of the same strike Price.


Aim:- Eat all the Out of the money Premium with only a few trading days remaining and at the same time try and earn from the next month's Option That you Brought.

Chances of Loss :- If the Market Moves up heavily in the Opposite Direction and you lose more in the Next Month's Option than the Premium you received in the Current Month's Option you Sold.

Max Profit :- Nifty closes @ the strike Price(on expiry) of which you brought and sold the Option.

Even if Nifty Moves a Bit in the Opposite Side of the side you were betting on, still you would not lose and may easily end in profit only.



Example Say currently you are bearish on the market especially with the break of all recent supports..

Right Now current month 2600 put is trading @ 33 and Next month 2600 Put is trading @ 133.

Now what you do is ..
Sell 100 2600 Current Month Put @ 33
Buy 100 2600 Next month Put @ 133


Rationale --> Nifty closes @ 2600. You gain 30 Points(from 2600 put sold) + Premium from the fall in the next months Put that you brought.
Nifty closes @ 2570 ---> You gain premium from fall of next month's Put. You are break Even in the Current months Put

Below 2570 -- You start loosing one one point in from the current 2600 Put sold but u are simuntaniously earning a bit from the next Month's Put.

If the Market Moves up, Keep a stop of 100 on the next month's Put and you can get out Break-even Cause with so lil time left in expiry, the 2600 Put Of current Month Will expire @ 0 bucks.. (most prolly!!)