Options Strategies that works in Bullish Market trend. There are 8 Strategies which suites to various risk return profile investors and traders. These Strategies works in both Index Options & Stock Options.
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2. 2
Buy Call / Long Call
Sell Put / Short Put
Bull Call Spread
Bull Put Spread
Call Ratio Back Spread & Call Ratio Back Spread Ladder
Covered Call (Buy Stock + Sell Call)
Protective Put (Long Stock + Long Put)
Bullish Market Strategies
3. 3
Buy Call / Long Call
Market Scenario: Bullish
Risk: Limited
Reward: Unlimited
BEP: Call Strike + Premium
Investor uses long Call when he is
bullish about the market. A long
Call is simply the purchase of one
Call Option.
4. 4
Sell Put / Short Put
Market Scenario: Bullish
Risk: Unlimited
Reward: Limited to premium
BEP: Strike - Premium
Investor uses Short Put when he
is bullish on the market direction
and bearish on market volatility.
A Short Put is simply the selling
of one Put Option.
5. 5
Bull Call Spread
Market Scenario: Bullish
Risk: Limited || Reward: Limited
BEP: Strike Price of Purchased Call + Net Debit Paid
Bull: This Strategy will earn profit when
market is Bullish and will lose money
when market is Bearish.
Call: We will use Call Options to make
this Spread.
Spread: Spread means combination of
Bought and Sold Options.
6. 6
Bull Put Spread
Market Scenario: Bullish
Risk: Limited || Reward: Limited
BEP: Higher Strike - Net Premium Received
Bull: This Strategy will earn profit when
market is Bullish and will lose money
when market is Bearish.
Put: We will use Put Options to make this
Spread.
Spread: Spread means combination of
Bought and Sold Options.
7. 7
Call Ratio Back Spread
Market Scenario: Bullish || Risk: Limited || Reward: Unlimited
Lower BEP: Lower Strike + Net Premium Received
(in case trader has received net Premium otherwise there will not be any lower BEP)
Upper BEP: Upper Strike + (Upper Strike - Lower Strike) - Net Premium Received
(in case trader has received net Premium otherwise we will add the Net Premium paid amount)
Call: We will use Call Options to make this
Spread.
Ratio: The proportion of quantity bought and
Quantity sold is there in some Ratio.
Back Spread: When we buy more quantity of one
Strike compare to Quantity sold of other Strike, it
is called Back Spread.
8. 8
Call Ratio Back Spread Ladder
Market Scenario: Highly Bullish || Risk: limited || Reward: Unlimited
Cost of Spread: Total premium received || Spread Range: Sell Strike - Lower Buy Strike
Lower BEP: Call sell Strike + Cost of Spread || Upper BEP: Call higher buy Strike + Maximum loss
Maximum Profit: Unlimited || Maximum Loss: Spread range - Cost of Spread
Call: We will use Call Options to make this Spread.
Ratio: The proportion of quantity bought and Quantity
sold is there in some Ratio.
Back: We will buy more Options and sell less Options
Spread: Combination of Buy and Sell Options
Ladder: the quantity of trade which will be more (e.g.
we buy more in Back spread) will use 2 different strikes
instead of the same.
9. 9
Covered Call (Buy Stock + Sell Call)
Market Scenario: Neutral to Bullish
Reward: Strike + Premium
BEP: Stock Price Paid - Premium
Risk: if stock is moving down you will lose your stock value but you will gain the premium as buyer is not going
to buy. If stock is moving up beyond the Strike, you have to give up all the gain.
The covered Call is a strategy in which an
investor sells a Call Option on a stock he
owns. The Call Option sold is usually an OTM
Call.
10. 10
Protective Put (Long Stock + Long Put)
Market Scenario: Bullish
Reward: Unlimited
BEP: Put Premium + Stock Price
Risk: Losses limited to Stock price + Put Premium – Put Strike price
In Protective Put, we purchase a stock since we
feel bullish about it, but what if the price of the
stock goes down. You wish you had some
insurance against the price fall. So buy a Put on
the stock.