This document provides an overview of hedging strategies using options. It discusses using protective puts when long on a stock to minimize downside risk. It also discusses covered calls, where an investor long on a stock can sell call options to generate income and reduce their cost basis if the stock remains flat. The document also introduces bull call spreads and bear put spreads as directional strategies to benefit from upside in a bullish view or downside in a bearish view, while limiting risk. Examples are provided to illustrate each strategy.
Price action trading strategy is where investment instruments are bought or sold for short-term period based solely on price movement. Click to know more
Intraday trading formulae, Strategies and rulesBikramjit Singh
Intraday Trading Formulae, strategies and Rules for trading in stock markets. These formulae along with technical analysis are quite useful for day trading.
Stop Trading Support And Resistance The Wrong WayNetpicksTrading
Stop Trading Support And Resistance The Wrong Way
- See more at: http://www.netpicks.com/support-resistance/
Support and resistance trading is a popular technical analysis method of trading. The bad part is that many traders enter trades blindly at these levels without a firm understanding of what they mean.
Learn about trading support and resistance and see if your trading results improve.
- See more at: http://www.netpicks.com/support-resistance/
- Visit our website: http://www.netpicks.com/
- Download the free indicator blueprint: http://www.netpicks.com/blueprint/
- Options Hot List PLUS Training: http://www.netpicks.com/oftbrightbreakthroughs
support, resistance, support and resistance trading, reversals, trend
The best swing trading strategies are the ones that allow you to trade and profit from your beliefs about the market. I have added some of the most popular swing trading indicators as a guide for you to explore. The swing trading indicators listed here focus on trend trading, volatility, and overbought/oversold conditions.
Profit from trapped traders with 2 simple setupsNetpicksTrading
http://www.netpicks.com/tjgiveaway1 - YOUR FREE TRADING SYSTEM
The concept of trapped traders is a simple one to understand.
While there are two forms of trapped traders, I only want to focus on one.
The trader who is trapped in a losing position.
These traders, by virtue of being on the wrong side of the market, can help propel your trade when they hit the exits.
Issues Of Trapped Traders
The fear and panic by those who enter a trade only to find the market going against them can cause a sudden burst of price movement. This movement in price is caused by these traders exiting their positions and creating order flow in the opposite direction from which they entered the trade.
Whenever you look at the high of a green candle, picture someone hitting their buy button and entering the trade. Flash forward to the next candle being a red momentum candle and that trader who bought the high, is trapped.
To exit, they have to sell.
See more at: http://www.netpicks.com/trapped-traders/
Price action trading strategy is where investment instruments are bought or sold for short-term period based solely on price movement. Click to know more
Intraday trading formulae, Strategies and rulesBikramjit Singh
Intraday Trading Formulae, strategies and Rules for trading in stock markets. These formulae along with technical analysis are quite useful for day trading.
Stop Trading Support And Resistance The Wrong WayNetpicksTrading
Stop Trading Support And Resistance The Wrong Way
- See more at: http://www.netpicks.com/support-resistance/
Support and resistance trading is a popular technical analysis method of trading. The bad part is that many traders enter trades blindly at these levels without a firm understanding of what they mean.
Learn about trading support and resistance and see if your trading results improve.
- See more at: http://www.netpicks.com/support-resistance/
- Visit our website: http://www.netpicks.com/
- Download the free indicator blueprint: http://www.netpicks.com/blueprint/
- Options Hot List PLUS Training: http://www.netpicks.com/oftbrightbreakthroughs
support, resistance, support and resistance trading, reversals, trend
The best swing trading strategies are the ones that allow you to trade and profit from your beliefs about the market. I have added some of the most popular swing trading indicators as a guide for you to explore. The swing trading indicators listed here focus on trend trading, volatility, and overbought/oversold conditions.
Profit from trapped traders with 2 simple setupsNetpicksTrading
http://www.netpicks.com/tjgiveaway1 - YOUR FREE TRADING SYSTEM
The concept of trapped traders is a simple one to understand.
While there are two forms of trapped traders, I only want to focus on one.
The trader who is trapped in a losing position.
These traders, by virtue of being on the wrong side of the market, can help propel your trade when they hit the exits.
Issues Of Trapped Traders
The fear and panic by those who enter a trade only to find the market going against them can cause a sudden burst of price movement. This movement in price is caused by these traders exiting their positions and creating order flow in the opposite direction from which they entered the trade.
Whenever you look at the high of a green candle, picture someone hitting their buy button and entering the trade. Flash forward to the next candle being a red momentum candle and that trader who bought the high, is trapped.
To exit, they have to sell.
See more at: http://www.netpicks.com/trapped-traders/
http://www.marketgeeks.com/support-and-resistance-trading/ Download Your Free Swing Trading Report Today. Support and resistance trading is a great way for beginners to get their feet wet. Learn basic principles of trading that will help you increase your profits and decrease your losers.
http://www.CandlestickForums.com
Trading Strategies
Trading Strategies for Playing the Stock Market
Trading strategies discussed in this article include swing trading and day trading. Both are very similar but the main difference between theses two strategies is the time frame in which stocks are bought and held. In today’s article we will discuss both of these strategies as well as the advantages and disadvantages of each.
Swing trading typically involves a smaller position size than when day trading stock online. Additionally, swing traders will typically hold onto stocks for a few days to several weeks and then trade the stock on the basis of its intra-week or intra-month movements. Stop loss orders are placed wider than when day trading as well. When determining exits when swing trading there are rules that every trader should follow. It is very important that the trading strategies as well as the trading rules are understood before placing trades in this fashion. For instance, if the prior day’s low is taken out on the breakout day, or the high for shorts, then the trader should exit the trade. Also, once a trade is held overnight, a stop loss order should be placed no further away than below the recent consolidation area. A move beneath it would indicate a failure.
Swing trading stocks has its advantages and disadvantages as all trading strategies do. Some advantages include that swing traders can place fewer trades, therefore requiring fewer commissions and less chance of making a mistake. Additionally this type of stock trading provides the ability for successful traders to catch more significant multi-day profitable traders. A disadvantage to swing trading is the fact that the higher profit targets come with higher risk per trade. There is also overnight exposure that cannot be predicted.
Day trading stocks requires a larger positions size since you are looking for a smaller move within a short time frame. Unlike swing traders, a day trader may trade a few times per day or more! There are also rules with day trading that every investor should follow. For instance, they should always keep their profit objective at least 3 times greater than what they are willing to risk. Also, day traders should allow no more than 1% move against them from the entry point. There are many more trading strategies and rules when day trading that investors should learn in addition to these two rules.
Would you like to learn secrets of price action trading which is used in every day trading by a 15 years trader? Continue reading on to learn real examples of how price action trading works on Forex, stock futures and gold charts!
Japanese candlesticks are one of the most popular methods of the technical analysis. In this presentation, JustForex will teach you how to read Japanese candlesticks and trade according to it.
Auto Trendline Trader is a Forex Automatic Trading Robot which works in Metatrader 4 Platform. Also a Trend line EA that works well for trendline trading.
Looking for best intraday trading rules? Platinum Trading Systems presents simple, easy & golden rules for Intraday trading. Get This 7 Rules and Earn More Money in Intraday.
By www.ProfitableTradingTips.com
Scalping in Day Trading
Traders who engage in rapid momentum trades are often scalping in day trading. These traders make their profit from the difference between bid and ask prices. Even in a flat market traders can profit from scalping in day trading. In order to successfully make a business out of scalping in day trading the trader needs to pay close attention to the market, always be aware of market fundamentals, and keep abreast of technical analysis. Despite the theoretical possibility of trading in an absolutely flat market the price of a stock constantly moves to some degree throughout the trading day. Thus when scalping in day trading one acts as a mini trend trader as well.
In and Out of Positions in a Hurry
There is a rhythm to scalping in day trading and it is fast. Traders seek to profit from the actions of traders to simply take the bid and ask prices of a stock. This strategy guarantees a profit if the trader acts quickly. It can result in losses if the stock price moves too quickly. As an example, Xyz Corporation has a bid price of $10.10 and ask price of $10.15. If the scalper can buy at the bid price and sell at the ask price he gains $0.05 per share, a small amount but a lot if repeated many times throughout the day. However, the market might move lower before he can complete his trade. Let’s say that the stock moves so that the bid price is now $9.90 and the ask price is $9.95. The trader who purchased for $10.10 now needs to sell at $9.95 if he wants to quickly exit his trade. The other choice is to continue the trade in hopes that the market will turn upward and not fall farther. This later course is anathema to scalping in day trading. When scalping a trader is never trying to outguess the market but simply helping to make the market and make repetitive small profits.
The Nature of Bid and Ask Prices
Bid and ask prices are available on markets across the world. By using this price system traders are able to execute trades immediately, so long as there are enough bid prices to match ask prices. The difference between bid and ask prices is called the spread. Gaining the spread on every trade is the goal when scalping in day trading. The ideal scalping trade would be instantaneous. Buy at the low price and sell at the high. Getting in and out in an instant would seem to be the ideal situation if dealing with absolutely static bid and ask prices. However, the market is never static so traders must look to market direction even when scalping in day trading. A successful scalper also engages in trend following in day trading.
Think of the Spread as a Bonus
Scalping in day trading takes advantage of market movement as well as the bid to ask spread. While trend traders use technical analysis to read market sentiment they attempt to ride out a trade to gain the maximum profit.
What are some of the advantages of using a scalping strategy to trade the forex market? - Quick profits Entry and exit is usually done within a couple of minutes. This allows for quick profits but can lead to quick losses as well. - Exit is usually within 20 minutes or less - Lots of trades Strategy uses 3 Indicators The strategy uses 3 indicators: pivot points, Fibonacci retracement and the Stochastic Oscillator. The 3 main pivot points both above and below the pivot are used for this system: S1, S2, S3 and R1, R2, R3. The Fibonacci retracement values used are the 0.618, the 0.382 and the 0.500 levels. The Stochastic Oscillator is set at 5,3,3.
http://www.marketgeeks.com/support-and-resistance-trading/ Download Your Free Swing Trading Report Today. Support and resistance trading is a great way for beginners to get their feet wet. Learn basic principles of trading that will help you increase your profits and decrease your losers.
http://www.CandlestickForums.com
Trading Strategies
Trading Strategies for Playing the Stock Market
Trading strategies discussed in this article include swing trading and day trading. Both are very similar but the main difference between theses two strategies is the time frame in which stocks are bought and held. In today’s article we will discuss both of these strategies as well as the advantages and disadvantages of each.
Swing trading typically involves a smaller position size than when day trading stock online. Additionally, swing traders will typically hold onto stocks for a few days to several weeks and then trade the stock on the basis of its intra-week or intra-month movements. Stop loss orders are placed wider than when day trading as well. When determining exits when swing trading there are rules that every trader should follow. It is very important that the trading strategies as well as the trading rules are understood before placing trades in this fashion. For instance, if the prior day’s low is taken out on the breakout day, or the high for shorts, then the trader should exit the trade. Also, once a trade is held overnight, a stop loss order should be placed no further away than below the recent consolidation area. A move beneath it would indicate a failure.
Swing trading stocks has its advantages and disadvantages as all trading strategies do. Some advantages include that swing traders can place fewer trades, therefore requiring fewer commissions and less chance of making a mistake. Additionally this type of stock trading provides the ability for successful traders to catch more significant multi-day profitable traders. A disadvantage to swing trading is the fact that the higher profit targets come with higher risk per trade. There is also overnight exposure that cannot be predicted.
Day trading stocks requires a larger positions size since you are looking for a smaller move within a short time frame. Unlike swing traders, a day trader may trade a few times per day or more! There are also rules with day trading that every investor should follow. For instance, they should always keep their profit objective at least 3 times greater than what they are willing to risk. Also, day traders should allow no more than 1% move against them from the entry point. There are many more trading strategies and rules when day trading that investors should learn in addition to these two rules.
Would you like to learn secrets of price action trading which is used in every day trading by a 15 years trader? Continue reading on to learn real examples of how price action trading works on Forex, stock futures and gold charts!
Japanese candlesticks are one of the most popular methods of the technical analysis. In this presentation, JustForex will teach you how to read Japanese candlesticks and trade according to it.
Auto Trendline Trader is a Forex Automatic Trading Robot which works in Metatrader 4 Platform. Also a Trend line EA that works well for trendline trading.
Looking for best intraday trading rules? Platinum Trading Systems presents simple, easy & golden rules for Intraday trading. Get This 7 Rules and Earn More Money in Intraday.
By www.ProfitableTradingTips.com
Scalping in Day Trading
Traders who engage in rapid momentum trades are often scalping in day trading. These traders make their profit from the difference between bid and ask prices. Even in a flat market traders can profit from scalping in day trading. In order to successfully make a business out of scalping in day trading the trader needs to pay close attention to the market, always be aware of market fundamentals, and keep abreast of technical analysis. Despite the theoretical possibility of trading in an absolutely flat market the price of a stock constantly moves to some degree throughout the trading day. Thus when scalping in day trading one acts as a mini trend trader as well.
In and Out of Positions in a Hurry
There is a rhythm to scalping in day trading and it is fast. Traders seek to profit from the actions of traders to simply take the bid and ask prices of a stock. This strategy guarantees a profit if the trader acts quickly. It can result in losses if the stock price moves too quickly. As an example, Xyz Corporation has a bid price of $10.10 and ask price of $10.15. If the scalper can buy at the bid price and sell at the ask price he gains $0.05 per share, a small amount but a lot if repeated many times throughout the day. However, the market might move lower before he can complete his trade. Let’s say that the stock moves so that the bid price is now $9.90 and the ask price is $9.95. The trader who purchased for $10.10 now needs to sell at $9.95 if he wants to quickly exit his trade. The other choice is to continue the trade in hopes that the market will turn upward and not fall farther. This later course is anathema to scalping in day trading. When scalping a trader is never trying to outguess the market but simply helping to make the market and make repetitive small profits.
The Nature of Bid and Ask Prices
Bid and ask prices are available on markets across the world. By using this price system traders are able to execute trades immediately, so long as there are enough bid prices to match ask prices. The difference between bid and ask prices is called the spread. Gaining the spread on every trade is the goal when scalping in day trading. The ideal scalping trade would be instantaneous. Buy at the low price and sell at the high. Getting in and out in an instant would seem to be the ideal situation if dealing with absolutely static bid and ask prices. However, the market is never static so traders must look to market direction even when scalping in day trading. A successful scalper also engages in trend following in day trading.
Think of the Spread as a Bonus
Scalping in day trading takes advantage of market movement as well as the bid to ask spread. While trend traders use technical analysis to read market sentiment they attempt to ride out a trade to gain the maximum profit.
What are some of the advantages of using a scalping strategy to trade the forex market? - Quick profits Entry and exit is usually done within a couple of minutes. This allows for quick profits but can lead to quick losses as well. - Exit is usually within 20 minutes or less - Lots of trades Strategy uses 3 Indicators The strategy uses 3 indicators: pivot points, Fibonacci retracement and the Stochastic Oscillator. The 3 main pivot points both above and below the pivot are used for this system: S1, S2, S3 and R1, R2, R3. The Fibonacci retracement values used are the 0.618, the 0.382 and the 0.500 levels. The Stochastic Oscillator is set at 5,3,3.
Stock trading strategy - when to sell your hot stockPractice of Law
Stock trading tips on hot stocks to buy now, stock market strategy, picking hot stocks, picking penny stocks, and how to buy cheap stocks. From “How to Find a Home Run Stock” and “How to Pick Hot Reverse Merger Penny Stocks” and also “How the Shorts Raid Your Stock, Destroy Your Company and What to Do About It” all by John Lux.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
Yes of course, you can easily start mining pi network coin today and sell to legit pi vendors in the United States.
Here the telegram contact of my personal vendor.
@Pi_vendor_247
#pi network #pi coins #legit #passive income
#US
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
How Does CRISIL Evaluate Lenders in India for Credit RatingsShaheen Kumar
CRISIL evaluates lenders in India by analyzing financial performance, loan portfolio quality, risk management practices, capital adequacy, market position, and adherence to regulatory requirements. This comprehensive assessment ensures a thorough evaluation of creditworthiness and financial strength. Each criterion is meticulously examined to provide credible and reliable ratings.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Abhay Bhutada Leads Poonawalla Fincorp To Record Low NPA And Unprecedented Gr...Vighnesh Shashtri
Under the leadership of Abhay Bhutada, Poonawalla Fincorp has achieved record-low Non-Performing Assets (NPA) and witnessed unprecedented growth. Bhutada's strategic vision and effective management have significantly enhanced the company's financial health, showcasing a robust performance in the financial sector. This achievement underscores the company's resilience and ability to thrive in a competitive market, setting a new benchmark for operational excellence in the industry.
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
1. Derivative Classroom
Option Strategies Part I- Series VII
October 22, 2009
Derivative Classroom -Series V `
Hedging Strategies
In our earlier derivative classroom- “Portfolio Hedging”, we discussed about
hedging and its need . We discussed in length the mechanism to do portfolio
hedging with Nifty futures.
Today we will be discussing on HEDGING via OPTIONS.
Implied Volatility
In our classroom ‘OPTION BASICS’ we discussed on options and its types-
Call/Put. WE also studied the usefulness of option in term of exposure to risk. As
ssss options are cheaper in terms of premium, it provides good platform to reduce
the risk.
Hedging Strategies:
A) LONG ON STOCK
(i) Long Stock/Future, Buy a Put ( Protective Put)
(ii) Long Stock/Future, Sell a Call (Covered Call)
B) SHORT ON STOCK
(i) Short Stock/Future, Buy a Call
Long on stock, Buy Put (ii) Short Stock/Future, Sell a Put
View: Extremely bullish
Long Stock
I- Protective Put
This strategy can be used when an investor is holding a stock and feels that
correction is due in the short term. But long term view on the stock still remains
bullish. So instead of selling the stock, he can buy a Put. By buying a Put his
900 930 945
downside loss will be minimized.
Long Put Illustration 1
Hedged Suppose Mr. Shah has 1100 shares of Reliance Capital in his portfolio bought at
Rs.930. He is bullish on the stock in the long term but short term trend seems to
be negative. So instead of selling the stock he can buy an OTM Put of strike 900
with the premium outflow of Rs.15 and hedge his position.
Karun Mutha
Sr. Vice President& Head Derivatives
Tel +91-22-67897833
Email: Karun.mutha@hsbcinv.com
Action Scrip Type Strike Price Premium
Tina Khetan Buy Rel Capital Stock @ - -
Analyst - Derivatives 930
Tel +91-22-67897828
Email: Tina.khetan@hsbcinv.com Buy Rel Capital Put 900 15.00
Page 1
2. Derivative Classroom
Option Strategies Part I- Series VII
Derivative Classroom -Series V
Implied Volatility II- Covered Call
Long on stock, sell a call option
View: Neutral/ moderately bullish This strategy can be used when an investor is holding a stock and works best for
ssss the stocks for which investor do not expect a lot of upside or downside.
Essentially, we expect stock to stay sideways so as to collect the premiums and
reduce average cost every month. Thus one can hedge its long position in stock
by writing an option. Writer of an option has a limited profit to the extent of
margin received; however loss is unlimited.
Illustration 1
Long Stock
Suppose Mr. Mehta has 300 shares of Reliance Infra bought at Rs. 1,300. He
feels that Reliance Infra will rise in future. However in the market volatility stock
Short Call
comes down and losses are huge, Mr. Mehta writes a call at 1,350 with the
Hedge position
premium inflow of Rs. 25, so that his average will come down (at Rs.1,275).
. Scrip Type Strike Price Premium
Action Inference
1300
1275 1350 1375 Buy Reliance Stock @ - -
Infra 1300
Sell Reliance Put 1350 25.00
Infra
Directional Strategies
In hedging strategies we discuss how to hedge the position having owned the
stock in cash or in future. However option comes handy in designing the
strategy with defined risk- reward ratio. Directional spread like Bull Call spread
and Bear Call spread is best suited for the conservative investor who wants to
Buying a lower strike Call and selling capitalize on the opportunity available in the market, yet limiting the loss.
higher strike call
View: Bullish
Bull Call Spread
When the investor is bullish on the stock, he goes for creating a spread. The
spread has the advantage of being cheaper to establish than the purchase of a
Page 2
single call, as the premium received from the sold call reduces the overall cost.
The spread offers a limited profit potential if the underlying rises and a limited
loss if the underlying falls.
4. Derivative Classroom
Option Strategies Part I- Series VII
Derivative Classroom -Series V Illustration III
Hedged position
Profit Ms. Kiran is bullish on IT sector and feels that the prices of TCS will move ahead
12 1 therefore she buys one ATM call at 680 with premium outflow of Rs. 15 and
7 Stock price sells one OTM Call at 700 with premium inflow of Rs. 7.
0 Implied Volatility
680 695 700 707
. Scrip Type Strike Price Premium
Action
-8 Long call Short call
-15
ssss
-8
Buy TCS Call (ATM) 680 15.00
Loss
Sell TCS Call (OTM) 700 7.00
Bear Put Spread
An investor who enters in bear spread is bearish and feels that stock price will
Buying a higher strike Put and selling
decline. In a declining market too investor can make profit both by using call
lower strike put
and put. The spread offers a limited profit potential if the underlying falls and a
View:bU
Bearish
limited loss if the underlying rises.
Illustration IV
Mr. Nitin Joshi is bearish on Banking sector and feels that the prices of ICICI
Bank will move down, therefore he buys one ATM put at strike price of 920 at
with premium outflow of Rs.11.00 and sells one OTM put at the strike of 900
Profit Hedged position
with premium inflow of Rs.4.00
13
. Action Scrip Type Strike Price Premium
Stock
Short put
0 Buy ICICIBANK PUT (ATM) 920 11.00
904 900 931 920
-7
Long put Sell ICICIBANK PUT (OTM) 900 4.00
Loss
Page 4
5. Disclaimer:
Issuer of the Document:- HSBC InvestDirect Securities (India) Limited*
Registered Office:-
Dhana Singh Processor Premises
J B Nagar, Andheri - Kurla Road
Andheri (East)
Mumbai – 400 059
Telephone: +91 22 6789 7830
Fax: +91 22 6789 7700
Website: www.hsbcinvestdirect.co.in
Disclosure
HSBC InvestDirect Securities (India) Limited (“HISL”), its associate and group companies, its directors, associates and employees may
have various positions in any of the stocks, securities and financial.
Instruments dealt in this document or may make sale or purchase or other deals in the securities from time to time or may deal in other
securities of the companies / organizations described in this document.
Certification
The views and opinions expressed by the author in the document are his own and do not reflect the views of HSBC InvestDirect
Securities (India) Limited or any of its associate and group companies.
Disclaimer Clause
The above is for customer information only and does not constitute investment advice or an offer to purchase or subscribe for any
investment. This document is not directed to or intended for display, downloading, printing, reproducing or for distribution to or use by
any person or entity who is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution,
publication, reproduction, availability or use would be contrary to law or regulation or would subject HSBC InvestDirect Securities (India)
Limited (HISL) or its associates or group companies to any registration or licensing requirement within such jurisdiction. If this document
is inadvertently sent or has reached any individual in such country, the same may be ignored and brought to the attention of the sender.
This document may not be reproduced, distributed or published for any purpose without prior written approval of HISL.
This document is not intended to provide legal, accounting or tax advice and should not be relied upon in that regard. Persons accessing
this document are advised to obtain appropriate legal, accounting or tax advice where necessary. Financial advice provided has not been
prepared taking into account the particular investment objectives, financial situation and needs of any particular investor. As a result,
investors using the advice should assess whether it is appropriate in the light of their own individual circumstances before acting on it.
* Formerly known as IL&FS Investsmart Securities Limited