The document discusses 12 investment strategies using derivatives:
1) Long call
2) Short call
3) Synthetic long call by buying stock and put
4) Protective call/synthetic long put by shorting stock future and buying call
5) Long put
6) Short put
7) Long combo by selling put and buying call
8) Long strangle
9) Short strangle
10) Covered call
11) Covered put
12) Long strangle
Each strategy is explained briefly with an example and payoff analysis. The strategies range from bullish to bearish positions using options.
FPA Conference Presentation in Anaheim, Ca 10-11-2009seaneheron
This document summarizes a presentation on enhancing investment practices with equity option strategies. The presentation was given by Rutgers University in partnership with The Options Industry Council. It provides an overview of options basics including defining derivatives, why investors use options, and describing call and put options. It also reviews specific option strategies like covered calls, protective puts, straddles, and strangles. The presentation aims to educate investors on how to use options to generate income, reduce risk, and take advantage of different market conditions.
The document provides an overview of options trading, including:
- Options allow investors to define the risk and reward profile of their investments. They create opportunities in changing market environments.
- The document defines option terminology like calls, puts, strike price, premium, expiration dates, and open interest.
- The four basic option positions are introduced: buying calls, selling calls, buying puts, and selling puts. Strategies, risks, rewards, and break-even points are discussed for each position.
- Exchanges where listed options trade and how to route orders are briefly mentioned.
The document discusses various down trending and neutral investment strategies that can be used when the market is expected to decline or move sideways. It outlines bearish strategies like protective puts, long puts, naked calls, and bear spreads that profit when prices fall. Neutral strategies mentioned include covered calls, collars, long/short straddles and strangles, butterflies, and condors. The document recommends paper trading new strategies and provides website links for more details on typical strategies.
This document provides an overview of various types of financial derivatives, including their uses and examples. It defines derivatives as financial products whose value is based on an underlying asset. Common types discussed include options, which give the right but not obligation to buy/sell an asset; quanto options which insulate from currency risk; swaps which exchange cash flows; and weather derivatives which bet on weather patterns. Uses include hedging risk or speculating to potentially profit from price movements.
The document discusses various option strategies including long calls, puts, straddles, strangles and spreads. It provides details on the construction and profit/loss potential of each strategy. In a bull call spread, the trader buys an ITM call and sells an OTM call. Maximum profit is limited while loss is limited to the net premium paid. A bear put spread involves buying an OTM put and selling an ITM put, with maximum loss limited to the difference in strike prices less net premium received.
This document discusses options and their key concepts. It defines options as contracts that give the buyer the right, but not the obligation, to buy or sell an asset at a predetermined price. The main types are calls, which are options to buy, and puts, which are options to sell. Key terms discussed include premiums, strike prices, expiration dates, and intrinsic and time value. The uses of options for hedging and speculation are also summarized. Overall, the document provides a high-level overview of options, their characteristics and applications.
This document provides an overview of futures and options. It defines derivatives as contracts between buyers and sellers, and notes the most common types are forwards, futures, options, and swaps. Futures contracts involve an agreement to exchange an asset at a later date for a price set now, while options provide the right but not obligation to buy or sell an underlying asset. The document discusses the advantages and disadvantages of trading derivatives over-the-counter versus on exchanges. It provides examples of how futures, calls, and puts work and concludes that derivatives have increasingly attracted investors for both hedging risks and speculative purposes.
The document discusses various options trading strategies including bull call spread, bear put spread, straddle, strangle, covered call, protective put, and calendar spread. For each strategy, it provides details on when to use it, the associated risks and rewards, and break-even points. Worked examples with numerical values are given to illustrate how to implement the strategies and analyze their potential payoffs.
FPA Conference Presentation in Anaheim, Ca 10-11-2009seaneheron
This document summarizes a presentation on enhancing investment practices with equity option strategies. The presentation was given by Rutgers University in partnership with The Options Industry Council. It provides an overview of options basics including defining derivatives, why investors use options, and describing call and put options. It also reviews specific option strategies like covered calls, protective puts, straddles, and strangles. The presentation aims to educate investors on how to use options to generate income, reduce risk, and take advantage of different market conditions.
The document provides an overview of options trading, including:
- Options allow investors to define the risk and reward profile of their investments. They create opportunities in changing market environments.
- The document defines option terminology like calls, puts, strike price, premium, expiration dates, and open interest.
- The four basic option positions are introduced: buying calls, selling calls, buying puts, and selling puts. Strategies, risks, rewards, and break-even points are discussed for each position.
- Exchanges where listed options trade and how to route orders are briefly mentioned.
The document discusses various down trending and neutral investment strategies that can be used when the market is expected to decline or move sideways. It outlines bearish strategies like protective puts, long puts, naked calls, and bear spreads that profit when prices fall. Neutral strategies mentioned include covered calls, collars, long/short straddles and strangles, butterflies, and condors. The document recommends paper trading new strategies and provides website links for more details on typical strategies.
This document provides an overview of various types of financial derivatives, including their uses and examples. It defines derivatives as financial products whose value is based on an underlying asset. Common types discussed include options, which give the right but not obligation to buy/sell an asset; quanto options which insulate from currency risk; swaps which exchange cash flows; and weather derivatives which bet on weather patterns. Uses include hedging risk or speculating to potentially profit from price movements.
The document discusses various option strategies including long calls, puts, straddles, strangles and spreads. It provides details on the construction and profit/loss potential of each strategy. In a bull call spread, the trader buys an ITM call and sells an OTM call. Maximum profit is limited while loss is limited to the net premium paid. A bear put spread involves buying an OTM put and selling an ITM put, with maximum loss limited to the difference in strike prices less net premium received.
This document discusses options and their key concepts. It defines options as contracts that give the buyer the right, but not the obligation, to buy or sell an asset at a predetermined price. The main types are calls, which are options to buy, and puts, which are options to sell. Key terms discussed include premiums, strike prices, expiration dates, and intrinsic and time value. The uses of options for hedging and speculation are also summarized. Overall, the document provides a high-level overview of options, their characteristics and applications.
This document provides an overview of futures and options. It defines derivatives as contracts between buyers and sellers, and notes the most common types are forwards, futures, options, and swaps. Futures contracts involve an agreement to exchange an asset at a later date for a price set now, while options provide the right but not obligation to buy or sell an underlying asset. The document discusses the advantages and disadvantages of trading derivatives over-the-counter versus on exchanges. It provides examples of how futures, calls, and puts work and concludes that derivatives have increasingly attracted investors for both hedging risks and speculative purposes.
The document discusses various options trading strategies including bull call spread, bear put spread, straddle, strangle, covered call, protective put, and calendar spread. For each strategy, it provides details on when to use it, the associated risks and rewards, and break-even points. Worked examples with numerical values are given to illustrate how to implement the strategies and analyze their potential payoffs.
To become a good Options investor, understanding the basic fundamentals and its pricing is key. In this session, we will discuss fundamentals of Options. This is an opportunity for beginners to ask the most basic questions on the working of CALL/PUT options and we will also put on trades (on a demo account).
We will discuss risks of buying and writing Options.
We can then talk about basic strategies involving single CALL/PUT contracts. We will see why writing PUTS can be so rewarding; so much so that Warren Buffet prefers selling PUT options.
The document discusses various options trading strategies, including:
1) Buying call options to profit from an expected rise in the market. This strategy has unlimited upside potential but limited downside risk of the premium paid.
2) Buying put options to profit from an expected fall in the market. This also has unlimited upside potential and limited downside risk of the premium.
3) Holding stock and selling covered calls to generate income from the stock holding when a neutral market is expected. This caps upside potential in exchange for the option premium received.
The document explains the mechanics and risk-reward profiles of these and other options strategies through the use of diagrams and payoff tables.
Madoff $65 billion Trap. A study in unlikely hedge fund economic returnsGaetan Lion
This document analyzes Harry Markopolos' findings regarding Bernie Madoff's $65 billion Ponzi scheme. It summarizes that Madoff claimed to use a "split-strike conversion" strategy to generate steady returns with low volatility, but in reality this should have earned close to the risk-free rate. The document outlines four red flags: 1) Madoff's returns were too high compared to what the strategy could produce. 2) He reported losses in only 6% of months which was improbable. 3) Option pricing skewness made his claimed strategy infeasible. 4) His equity positions far exceeded the size of the options market he said he hedged with.
The document discusses bull put spread and bear call spread strategies. A bull put spread involves selling a put option and buying a further out-of-the-money put. This strategy profits if the underlying asset stays above the higher strike price or rises. A bear call spread involves selling an in-the-money call and buying a further out-of-the-money call. This strategy profits if the underlying stays below the higher strike price or falls. The document also provides an example of each strategy, including the net premium, break-even price, and potential payoffs.
The document provides information on various market neutral investment strategies:
- Market neutral refers to strategies that aim to profit from both increases and decreases in stock prices through long and short positions.
- Common market neutral strategies include straddles, strangles, ratio spreads, and butterfly spreads. Straddles involve long calls and puts at the same strike price. Strangles use different strike prices.
- Ratio spreads and butterfly spreads use a combination of buying and selling options at different strike prices to limit risk and maximize potential profit within a price range. The maximum profit is generally the difference between strike prices plus any premiums received.
option market trading strategy
share market trading with options
buying and selling of options based upon strategy
derivative market trading strategy
how to trade in option market with different strategy
learn option market trading strategy with reference from NSE
making profit by trading in share market with different method and strategy
The document discusses various option strategies including long call, long put, short call, synthetic long call, and short put.
A long call strategy involves buying call options and profits if the underlying stock or index price rises above the strike price plus premium paid. A long put strategy involves buying put options and profits if the price falls below the strike price minus premium paid.
A short call strategy involves selling call options and profits if the price remains below or at the strike price, collecting premium as maximum profit. A synthetic long call strategy involves buying stock and buying protective put options to limit downside risk while retaining upside potential.
A short put strategy involves selling put options and profits as long as the underlying price remains above
The document describes two option strategies: a long combo and a protective call/synthetic long put.
A long combo is a bullish strategy that involves selling an out-of-the-money put and buying an out-of-the-money call on the same stock. This provides upside exposure similar to owning the stock but at a lower cost. Profits are made if the stock rises above the break-even point.
A protective call/synthetic long put involves shorting a stock and buying a call option to hedge against downside risk. If the stock falls, profits are made on the short position. The long call limits losses if the stock rises unexpectedly. This strategy hedges upside movement in the
This document provides an agenda and content for a meetup on disciplined trading. The summary includes:
- The meetup will introduce who the presenters are, discuss what disciplined trading is, demonstrate a non-directional practice trade, and provide content for the week.
- A non-directional trade example is given using an iron condor options strategy on the S&P 500 index between 2400-2600 over 3 weeks, with an average return of 8% and time decay as the guarantee.
- Risk management principles for disciplined traders are outlined as predefining risk before trades, cutting losses without hesitation, and using a systematic money management plan to make consistent profits.
Stock options allow more ways to earn money as well as more ways to lose money. They are elaborate financial instruments that often leave beginner and novice investors scratching their heads when something goes wrong.
The document provides an overview of options, including:
1. Options allow investors to hedge positions or profit from price movements regardless of market direction through various strategies.
2. Options originated as over-the-counter contracts and were standardized and exchange-traded starting in 1973 on the CBOE, with other exchanges following.
3. Options are defined by type, underlying asset, strike price, expiration date, and premium, and quotes provide real-time pricing information.
This document provides an introduction and overview to an options trading course. It explains that the course will provide students with a solid foundation of basic option terms and concepts using examples from both stock and futures options. It encourages students to review the material multiple times to fully understand the concepts and provides contact information for any questions.
option market details with option greeks
reference from zerodha varsity
details about option market and basic knowledge of option market
derivative product
This document provides an agenda and overview for a presentation on disciplined trading. It discusses:
1. Who is providing the presentation - Karim Adatia and his company PPIS.
2. What disciplined trading involves - having a conviction, catalyst, and plan for each trade as well as predefined risk management.
3. An example of an iron condor options strategy using SPX options to generate returns in a range-bound market without directional bias. Historical performance data is provided on a practice account.
The presentation emphasizes the importance of discipline, predefining risk, cutting losses, and using a systematic approach for consistent profits when trading options or other instruments. An upcoming workshop is announced for
This document provides an agenda and overview for an educational presentation on disciplined trading. The presentation will cover:
1) An introduction of the presenters and their background in trading and financial education.
2) A discussion of what disciplined trading entails, including predefining risk, cutting losses quickly, and using a systematic money management plan.
3) An example of a practice disciplined trade using an options strategy called an iron condor on the S&P 500 index.
4) Information on attending future educational workshops and following practice trades on an online discussion board.
The presentation is intended for educational purposes and does not constitute financial advice. Attendees are encouraged to apply trading strategies cautiously
This document provides an agenda and overview for a presentation on disciplined trading. It discusses:
- Who the presenters are and their backgrounds in trading and financial education.
- What disciplined trading involves, including having a conviction, catalyst, and complacency for each trade, as well as predefined risk management and cutting losses.
- An overview of the presentation agenda, which will cover who the presenters are, what disciplined trading means, and an example of a practice disciplined trade using options.
- Disclaimers that the presentation is for educational purposes only and no specific recommendations or advice are being provided.
This document provides an agenda and overview for a presentation on disciplined trading. It discusses:
- Who the presenters are and their backgrounds in trading and financial education.
- What disciplined trading involves, including having a conviction, catalyst, and compliance plan for each trade and cutting losses without hesitation.
- An overview of the presentation agenda, which will cover an introduction, what disciplined trading is, and an example of a practice disciplined trade using options.
- Disclaimers that the presentation is for educational purposes only and they are not providing individualized recommendations or advice.
This document provides an agenda and overview for a presentation on disciplined trading. The presentation will cover: who the presenters are, what disciplined trading involves, and an example of a practice disciplined trade using an options strategy called an iron condor. Key points include that disciplined trading requires predefining risk, cutting losses, and using a systematic plan. The example iron condor trade involves writing put and call options above and below a perceived trading range to benefit from volatility and time decay if the market stays within that range. Expectancy calculations show this strategy has the potential for consistent profits if done systematically.
This strategy involves being short on a stock future to take advantage of downward price movements, while purchasing a call option to limit losses from an unexpected price rise. The investor shorts a stock future and buys an at-the-money or slightly out-of-the-money call option. If the stock price falls, the investor profits from the short future position. However, if the price rises unexpectedly, the call option limits losses. The maximum risk is limited to the call strike price minus the stock price plus the premium paid. The maximum reward occurs if the stock price falls to the call strike price minus the premium.
The document summarizes various options strategies that can be used based on different market outlooks. It describes bullish, bearish, neutral, and volatile market strategies using calls, puts, spreads, and combinations. For example, it explains that buying a call is a bullish strategy that profits if the market rises above the strike price, while selling a put is also bullish but profits from premium received if the market stays flat or rises.
This document is a slideshow presentation on options trading. It introduces Prosperis Passive Income Strategies (PPIS) and its founder Karim Adatia. The presentation covers what options are, demonstrates a sample trade using the iron condor strategy, and reviews PPIS's track record of profitable trades using this strategy when implied volatility is low. It emphasizes that options allow leveraged profits when the underlying asset's price stays within a defined range.
The Options JumpStarter - A Beginner's Guide To Profitable Options Trading | ...ClayRoyer1
A Simple Way to Understand Options Trading
1. What The Important Terms Are—Instead of feeling confused and frustrated with all the terminology, you’ll learn exactly what to focus on.
2. The Best Time To Place Option Trades—There is an ideal time to place option trades. You’ll learn how to identify these entry points. This will help you achieve explosive gains!
3. How To Increase Your Probability Of Success—Many option buyers suffer small loss after small loss. You’ll learn the two big mistakes most option buyers make and how to correct them.
4. The 5-Step Option Profit System—Your system determines your success. You’ll learn the exact 5-step system we’ve taught thousands of investors, so you can begin to leverage your money and possibly double your annual returns vs just buying stocks.
https://vectorvest.com/jumpstart
To become a good Options investor, understanding the basic fundamentals and its pricing is key. In this session, we will discuss fundamentals of Options. This is an opportunity for beginners to ask the most basic questions on the working of CALL/PUT options and we will also put on trades (on a demo account).
We will discuss risks of buying and writing Options.
We can then talk about basic strategies involving single CALL/PUT contracts. We will see why writing PUTS can be so rewarding; so much so that Warren Buffet prefers selling PUT options.
The document discusses various options trading strategies, including:
1) Buying call options to profit from an expected rise in the market. This strategy has unlimited upside potential but limited downside risk of the premium paid.
2) Buying put options to profit from an expected fall in the market. This also has unlimited upside potential and limited downside risk of the premium.
3) Holding stock and selling covered calls to generate income from the stock holding when a neutral market is expected. This caps upside potential in exchange for the option premium received.
The document explains the mechanics and risk-reward profiles of these and other options strategies through the use of diagrams and payoff tables.
Madoff $65 billion Trap. A study in unlikely hedge fund economic returnsGaetan Lion
This document analyzes Harry Markopolos' findings regarding Bernie Madoff's $65 billion Ponzi scheme. It summarizes that Madoff claimed to use a "split-strike conversion" strategy to generate steady returns with low volatility, but in reality this should have earned close to the risk-free rate. The document outlines four red flags: 1) Madoff's returns were too high compared to what the strategy could produce. 2) He reported losses in only 6% of months which was improbable. 3) Option pricing skewness made his claimed strategy infeasible. 4) His equity positions far exceeded the size of the options market he said he hedged with.
The document discusses bull put spread and bear call spread strategies. A bull put spread involves selling a put option and buying a further out-of-the-money put. This strategy profits if the underlying asset stays above the higher strike price or rises. A bear call spread involves selling an in-the-money call and buying a further out-of-the-money call. This strategy profits if the underlying stays below the higher strike price or falls. The document also provides an example of each strategy, including the net premium, break-even price, and potential payoffs.
The document provides information on various market neutral investment strategies:
- Market neutral refers to strategies that aim to profit from both increases and decreases in stock prices through long and short positions.
- Common market neutral strategies include straddles, strangles, ratio spreads, and butterfly spreads. Straddles involve long calls and puts at the same strike price. Strangles use different strike prices.
- Ratio spreads and butterfly spreads use a combination of buying and selling options at different strike prices to limit risk and maximize potential profit within a price range. The maximum profit is generally the difference between strike prices plus any premiums received.
option market trading strategy
share market trading with options
buying and selling of options based upon strategy
derivative market trading strategy
how to trade in option market with different strategy
learn option market trading strategy with reference from NSE
making profit by trading in share market with different method and strategy
The document discusses various option strategies including long call, long put, short call, synthetic long call, and short put.
A long call strategy involves buying call options and profits if the underlying stock or index price rises above the strike price plus premium paid. A long put strategy involves buying put options and profits if the price falls below the strike price minus premium paid.
A short call strategy involves selling call options and profits if the price remains below or at the strike price, collecting premium as maximum profit. A synthetic long call strategy involves buying stock and buying protective put options to limit downside risk while retaining upside potential.
A short put strategy involves selling put options and profits as long as the underlying price remains above
The document describes two option strategies: a long combo and a protective call/synthetic long put.
A long combo is a bullish strategy that involves selling an out-of-the-money put and buying an out-of-the-money call on the same stock. This provides upside exposure similar to owning the stock but at a lower cost. Profits are made if the stock rises above the break-even point.
A protective call/synthetic long put involves shorting a stock and buying a call option to hedge against downside risk. If the stock falls, profits are made on the short position. The long call limits losses if the stock rises unexpectedly. This strategy hedges upside movement in the
This document provides an agenda and content for a meetup on disciplined trading. The summary includes:
- The meetup will introduce who the presenters are, discuss what disciplined trading is, demonstrate a non-directional practice trade, and provide content for the week.
- A non-directional trade example is given using an iron condor options strategy on the S&P 500 index between 2400-2600 over 3 weeks, with an average return of 8% and time decay as the guarantee.
- Risk management principles for disciplined traders are outlined as predefining risk before trades, cutting losses without hesitation, and using a systematic money management plan to make consistent profits.
Stock options allow more ways to earn money as well as more ways to lose money. They are elaborate financial instruments that often leave beginner and novice investors scratching their heads when something goes wrong.
The document provides an overview of options, including:
1. Options allow investors to hedge positions or profit from price movements regardless of market direction through various strategies.
2. Options originated as over-the-counter contracts and were standardized and exchange-traded starting in 1973 on the CBOE, with other exchanges following.
3. Options are defined by type, underlying asset, strike price, expiration date, and premium, and quotes provide real-time pricing information.
This document provides an introduction and overview to an options trading course. It explains that the course will provide students with a solid foundation of basic option terms and concepts using examples from both stock and futures options. It encourages students to review the material multiple times to fully understand the concepts and provides contact information for any questions.
option market details with option greeks
reference from zerodha varsity
details about option market and basic knowledge of option market
derivative product
This document provides an agenda and overview for a presentation on disciplined trading. It discusses:
1. Who is providing the presentation - Karim Adatia and his company PPIS.
2. What disciplined trading involves - having a conviction, catalyst, and plan for each trade as well as predefined risk management.
3. An example of an iron condor options strategy using SPX options to generate returns in a range-bound market without directional bias. Historical performance data is provided on a practice account.
The presentation emphasizes the importance of discipline, predefining risk, cutting losses, and using a systematic approach for consistent profits when trading options or other instruments. An upcoming workshop is announced for
This document provides an agenda and overview for an educational presentation on disciplined trading. The presentation will cover:
1) An introduction of the presenters and their background in trading and financial education.
2) A discussion of what disciplined trading entails, including predefining risk, cutting losses quickly, and using a systematic money management plan.
3) An example of a practice disciplined trade using an options strategy called an iron condor on the S&P 500 index.
4) Information on attending future educational workshops and following practice trades on an online discussion board.
The presentation is intended for educational purposes and does not constitute financial advice. Attendees are encouraged to apply trading strategies cautiously
This document provides an agenda and overview for a presentation on disciplined trading. It discusses:
- Who the presenters are and their backgrounds in trading and financial education.
- What disciplined trading involves, including having a conviction, catalyst, and complacency for each trade, as well as predefined risk management and cutting losses.
- An overview of the presentation agenda, which will cover who the presenters are, what disciplined trading means, and an example of a practice disciplined trade using options.
- Disclaimers that the presentation is for educational purposes only and no specific recommendations or advice are being provided.
This document provides an agenda and overview for a presentation on disciplined trading. It discusses:
- Who the presenters are and their backgrounds in trading and financial education.
- What disciplined trading involves, including having a conviction, catalyst, and compliance plan for each trade and cutting losses without hesitation.
- An overview of the presentation agenda, which will cover an introduction, what disciplined trading is, and an example of a practice disciplined trade using options.
- Disclaimers that the presentation is for educational purposes only and they are not providing individualized recommendations or advice.
This document provides an agenda and overview for a presentation on disciplined trading. The presentation will cover: who the presenters are, what disciplined trading involves, and an example of a practice disciplined trade using an options strategy called an iron condor. Key points include that disciplined trading requires predefining risk, cutting losses, and using a systematic plan. The example iron condor trade involves writing put and call options above and below a perceived trading range to benefit from volatility and time decay if the market stays within that range. Expectancy calculations show this strategy has the potential for consistent profits if done systematically.
This strategy involves being short on a stock future to take advantage of downward price movements, while purchasing a call option to limit losses from an unexpected price rise. The investor shorts a stock future and buys an at-the-money or slightly out-of-the-money call option. If the stock price falls, the investor profits from the short future position. However, if the price rises unexpectedly, the call option limits losses. The maximum risk is limited to the call strike price minus the stock price plus the premium paid. The maximum reward occurs if the stock price falls to the call strike price minus the premium.
The document summarizes various options strategies that can be used based on different market outlooks. It describes bullish, bearish, neutral, and volatile market strategies using calls, puts, spreads, and combinations. For example, it explains that buying a call is a bullish strategy that profits if the market rises above the strike price, while selling a put is also bullish but profits from premium received if the market stays flat or rises.
This document is a slideshow presentation on options trading. It introduces Prosperis Passive Income Strategies (PPIS) and its founder Karim Adatia. The presentation covers what options are, demonstrates a sample trade using the iron condor strategy, and reviews PPIS's track record of profitable trades using this strategy when implied volatility is low. It emphasizes that options allow leveraged profits when the underlying asset's price stays within a defined range.
The Options JumpStarter - A Beginner's Guide To Profitable Options Trading | ...ClayRoyer1
A Simple Way to Understand Options Trading
1. What The Important Terms Are—Instead of feeling confused and frustrated with all the terminology, you’ll learn exactly what to focus on.
2. The Best Time To Place Option Trades—There is an ideal time to place option trades. You’ll learn how to identify these entry points. This will help you achieve explosive gains!
3. How To Increase Your Probability Of Success—Many option buyers suffer small loss after small loss. You’ll learn the two big mistakes most option buyers make and how to correct them.
4. The 5-Step Option Profit System—Your system determines your success. You’ll learn the exact 5-step system we’ve taught thousands of investors, so you can begin to leverage your money and possibly double your annual returns vs just buying stocks.
https://vectorvest.com/jumpstart
The document provides an overview of options education content that will be covered across three levels - essential, seasoned, and master.
The essential level will cover basic options concepts like calls and puts, pricing, and strategies like the wheel. The seasoned level delves into more advanced topics such as calendars, diagonals, and understanding the Greeks. Finally, the master level covers complex multi-legged strategies and other advanced Greeks.
The goal is to build a foundation of options knowledge starting with single-legged strategies and basic concepts, then progressing to more sophisticated strategies and risk management techniques. Completing all three levels will provide a comprehensive options education.
This document discusses various options trading strategies, including:
1. Long call - buyer is bullish on the underlying asset and pays a premium for the right to buy it at a set price.
2. Short call - writer is bearish and collects premium but has obligation to sell the asset if exercised.
3. Covered call - involves buying the asset and writing a call to generate income but limits upside.
4. Long put - buyer is bearish and pays premium for right to sell the asset at a set price.
5. Short put - writer is bullish and collects premium but has obligation to buy the asset if exercised.
It provides details on the risk and reward
The document provides an introduction to corporate finance options, including:
- A brief history of options and their use in ancient Greece.
- Current options markets and regulators.
- Key terminology related to options contracts.
- The main types of options - calls and puts.
- Common valuation methods and strategies for options positions, including bullish, bearish, and neutral strategies.
Options Presentation Introduction to Corporate Financemuratcoskun
This document provides an introduction to corporate finance options, including:
1. A brief history of options and their evolution over time from ancient Greece to modern markets.
2. An overview of the key characteristics of options contracts, including the types of options (calls, puts), how they are valued, and common strategies (bullish, bearish, neutral).
3. Examples of how options work from the perspective of buyers and sellers, including payoffs and breakeven points. Valuation methods like the binomial tree approach are also introduced.
This document provides an agenda and overview for a presentation on disciplined trading. It discusses:
1. Who is providing the presentation - Karim Adatia and his company PPIS.
2. What disciplined trading involves - having a conviction, catalyst and plan for each trade, predefining risk, cutting losses quickly and using a systematic money management strategy.
3. An example of an iron condor options strategy using S&P 500 options to generate returns in a range-bound market with limited risk.
The presentation aims to educate attendees on option strategies and disciplined trading principles in a non-directional manner with positive expected returns.
This document provides an agenda and overview for a presentation on disciplined trading. It discusses:
1. Who is providing the presentation - individuals from Vancouver Disciplined Trading Hub and Prosperis Passive Income Strategies.
2. What disciplined trading involves - having a conviction, catalyst, and complacency for trades, predefining risk, cutting losses, and using a systematic plan.
3. An example disciplined trade using an iron condor options strategy on the S&P 500 index, which aims to profit from the index staying within a defined trading range over a short time period.
The document provides disclaimer information and outlines the presentation topics of who the presenters are, what disciplined
The document discusses currency option strategies for speculating on movements in exchange rates. It defines call and put options and describes how an investor named Barry Egan could use them to speculate on the Japanese yen. It then explains a long strangle strategy where Barry buys an out-of-the-money call and put on yen with the same expiration date. The strategy has break-even points above and below which Barry would profit if the yen rate moves, with unlimited upside beyond the break-evens.
This document provides an agenda and overview for a presentation on disciplined trading. It discusses:
- Who is hosting the presentation - Vancouver Disciplined Trading Hub and Prosperis Passive Income Strategies.
- What disciplined trading involves, including predefining risk, cutting losses, and using a systematic plan.
- An example of an iron condor options strategy using an index like the S&P 500 to generate returns while remaining non-directional.
- A practice trade is provided for attendees to work through. Past performance tracking iron condor trades on the S&P 500 is also shared.
- The presentation emphasizes the importance of discipline in trading and that options can provide leverage
The document provides an overview of various option trading strategies categorized by their risk-reward profile as low, neutral, or high risk. For each strategy, it outlines the maximum potential loss and gain. Some key strategies discussed include long calls, protective puts, covered calls, bull spreads, bear spreads, straddles, strangles, butterflies, condors, and more. It also includes an option pricing worksheet and inputs for creating option strategies.
Advance Option Trading Strategy Mentorship Program - For More Details Visit - https://www.ptaindia.com/advance-option-trading-strategies-mentorship-program/
Or Call +91 9261211003
Trading related book that will surely help youIshanBakshe1
1) This document describes a strategy for trading options on the stock market using support and resistance levels.
2) The strategy involves buying a call option at the resistance level 1 and a put option at the support level 1 when their prices are equal. Both positions should be opened at the same time, price, and quantity.
3) The goal is to profit from whichever direction the market moves. Positions should be closed once target profits are reached, such as 10% of capital applied. The strategy is intended for intraday trading only.
Straddles and strangles are options strategies that allow investors to benefit from price movements in either direction of an underlying asset. A straddle uses the same strike price for a call and put option, while a strangle uses different strike prices. For a long straddle/strangle, maximum loss is limited to the premium paid, while reward is unlimited. For a short straddle/strangle, risk is unlimited as losses exceed the premium received, while reward is limited to the premium. Both strategies have two break-even price points.
This document provides an agenda and overview of a presentation on disciplined trading. The presentation is given by Karim Adatia, a full-time stock options trader and financial educator. It discusses what disciplined trading involves, including predefining risk and cutting losses. It also covers the iron condor options strategy using the S&P 500 as an example. Practice trades are shown and the presenters' long-term track record is referenced. Attendees are encouraged to follow ongoing practice trades and attend future workshops for more in-depth training.
Derivatives emerged to help farmers and traders manage risks and have since become important risk management tools. The derivatives market in India has grown significantly since liberalization in the 1990s. Derivatives allow participants to hedge risks, speculate, and engage in arbitrage. Common derivatives contracts include forwards, futures, options, and swaps. Traders use various strategies like spreads and straddles to limit risks and maximize returns based on their market outlook. While still growing, India's derivatives market is becoming a major global exchange.
You don't have to have Thousands and Thousands to invest you just need this guide and a broker of your choice to start and look your already halfway there !
Methanex is the world's largest producer and supplier of methanol. We create value through our leadership in the global production, marketing and delivery of methanol to customers. View our latest Investor Presentation for more details.
UnityNet World Environment Day Abraham Project 2024 Press ReleaseLHelferty
June 12, 2024 UnityNet International (#UNI) World Environment Day Abraham Project 2024 Press Release from Markham / Mississauga, Ontario in the, Greater Tkaronto Bioregion, Canada in the North American Great Lakes Watersheds of North America (Turtle Island).
Cleades Robinson, a respected leader in Philadelphia's police force, is known for his diplomatic and tactful approach, fostering a strong community rapport.
World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4
World economy charts case
World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4
World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4World economy charts case study presented by a Big 4study presented by a Big 4
ZKsync airdrop of 3.6 billion ZK tokens is scheduled by ZKsync for next week.pdfSOFTTECHHUB
The world of blockchain and decentralized technologies is about to witness a groundbreaking event. ZKsync, the pioneering Ethereum Layer 2 network, has announced the highly anticipated airdrop of its native token, ZK. This move marks a significant milestone in the protocol's journey, empowering the community to take the reins and shape the future of this revolutionary ecosystem.
The E-Way Bill revolutionizes logistics by digitizing the documentation of goods transport, ensuring transparency, tax compliance, and streamlined processes. This mandatory, electronic system reduces delays, enhances accountability, and combats tax evasion, benefiting businesses and authorities alike. Embrace the E-Way Bill for efficient, reliable transportation operations.
2. Investment Strategies Using Derivatives
1) LONG CALL 11) COVERED PUT
2) SHORT CALL 12) LONG STRANGLE
3)SYNTHETIC LONG CALL: BUY STOCK, BUY PUT 13)SHORT STRANGLE
4) PROTECTIVE CALL / SYNTHETIC LONG PUT
5)LONG PUT
6) SHORT PUT
7)LONG COMBO : SELL A PUT, BUY A CALL
8)LONG STRADDLE
9)SHORT STRADDLE
10)COVERED CALL
NAGA
3. STRATEGY 1 : LONG CALL
For aggressive investors who are very bullish about the prospects for a stock / index, buying calls can be an excellent
way to capture the upside potential with limited downside risk.
When to Use: Investor is very
bullish on the stock / index.
Risk: Limited to the Premium.
(Maximum loss if market expires
at or below the option strike price).
Reward: Unlimited.
Breakeven: Strike Price + Premium
Example
Mr. XYZ is bullish on Apple on 6th July, when the Apple is at 183$. He buys a
call option with a strike price of $185 at a premium of 1$. expiring on 31st July.
If the Apple goes above 186$, Mr. XYZ will make a net profit (after deducting
the premium) on exercising the option. In case the Apple stays at or falls below
185$, he can forego the option (it will expire worthless) with a maximum loss
of the premium.
Strategy : Buy Call Option
Current Apple Stock 183$
Call Option Strike Price ($) 185$
Mr. XYZ Pays Premium ($) 1$
Break Even Point ($) (Strike Price + Premium). 185$+1 186$
NAGA
4. ANALYSIS: This strategy limits the downside risk to the extent of premium paid by Mr. XYZ ($1). But the potential return is
unlimited in case of rise in Apple. A long call option is the simplest way to benefit if you believe that the market will make
an upward move and is the most common choice among first time investors in Options. As the stock price / index rises the
long Call moves into profit more and more quickly.
The payoff schedule
The payoff chart (Long Call)
On expiry 31st
July Apple
closes at
Net Payoff from
Call
Option ($.)
175$ -1$
180$ -1$
185$ -1$
186$ 0
190$ 4$
195$ 9$
200$ 14$
NAGA
5. STRATEGY 2 : SHORT CALL
When you buy a Call you are hoping that the underlying stock / index would rise. When you expect the underlying stock /
index to fall you do the opposite. When an investor is very bearish about a stock / index and expects the prices to fall, he can
sell Call options. This position offers limited profit potential and the possibility of large losses on big advances in underlying
prices. Although easy to execute it is a risky strategy since the seller of the Call is exposed to unlimited risk.
Selling a Call option is just the
opposite of buying a Call option.
Here the seller of the option feels
the underlying price of a stock /
index is set to fall in the future.
When to Use: Investor is very
aggressive and he is very bearish
about the stock / index.
Risk: Unlimited.
Reward: Limited to the amount of
premium.
Breakeven: Strike Price + Premium
Example
Mr. XYZ is bearish about Apple and expects it to fall. He sells a Call option with a
strike price of $185 at a premium of $ 1, when the current apple is at 183. If the
Apple stays at 185$or below on expiry, the Call option will not be exercised by the
buyer of the Call and Mr. XYZ can retain the entire premium of $1
Strategy : Sell Call Option
Current Apple Stock 183$
Call Option Strike Price ($) 185$
Mr. XYZ Receives Premium ($) 1$
Break Even Point ($) (Strike Price + Premium). 185$+1 186$
NAGA
6. ANALYSIS: This strategy is used when an investor is very aggressive and has a strong expectation of a price fall (and
certainly not a price rise). This is a risky strategy since as the stock price / index rises, the short call loses money more
and more quickly and losses can be significant if the stock price / index falls below the strike price. Since the investor
does not own the underlying stock that he is shorting this strategy is also called Short Naked Call.
The payoff schedule
The payoff chart (Short Call)
On expiry 31st
July Apple
closes at
Net Payoff from
Call
Option ($.)
175$ 1$
180$ 1$
185$ 1$
186$ 0
190$ -4$
195$ -9$
200$ -14$
NAGA
7. STRATEGY 3 : SYNTHETIC LONG CALL: BUY STOCK, BUY PUT
In this strategy, we purchase a stock since we feel bullish about it. But what if the price of the stock went down. You
wish you had some insurance against the price fall. So buy a Put on the stock. In case the price of the stock rises you get
the full benefit of the price rise. In case the price of the stock falls, exercise the Put Option (remember Put is a right to
sell). You have capped your loss in this manner because the Put option stops your further losses.
When to Use: When ownership is
desired of stock yet investor concerned
about near-term downside risk. The
outlook is conservatively bullish.
Risk: Losses limited to Stock price + Put
Premium – Put Strike price
Reward: Unlimited.
Breakeven: Put Strike Price + Put
Premium + Stock Price – Put Strike Price
Example
Mr. XYZ is bullish about Apple stock. He buys Applestock. at current market
price of 183$ on 10th July. To protect against fall in the price of Apple. (his
risk), he buys an Apple Put option with a strike price $181 (OTM) at a
premium of $1 expiring on 31st July.
Strategy : Buy Stock + Buy Put Option
Buy Stock
(Mr. XYZ pays)
Current Market price Apple
Stock
183$
Strike Price ($) 181$
Mr. XYZ Pays (Buy Put) Premium ($) 1$
Break Even Point ($) (Put Strike Price + Put Premium +
Stock Price – Put Strike Price) (181+1+183-181)
184$
NAGA
8. Example :
Apple. is trading at $183 on 10th July 2018.
Buy 100 shares of the Stock at $18300
Buy (lot size100) July Put Option with a Strike Price of $181 at a premium of $1 put
▪ Net Debit (payout) =Stock Bought + Premium Paid
$18300 + $100= $18400
▪ Maximum Loss =Stock Price + Put Premium – Put Strike
= $183 + $1 – $181=3$ Per share.(Lot size is 100*3=300$)
▪ Maximum Gain = Unlimited (as the stock rises)
▪ Breakeven =Put Strike + Put Premium + Stock Price – Put Strike
$181 + $1 + $183 – $181 = $184.
NAGA
9. The payoff schedule
ANALYSIS: This is a low risk strategy. This is a strategy which limits the loss in case of fall in market but the potential profit
remains unlimited when the stock price rises. A good strategy when you buy a stock for medium or long term, with the
aim of protecting any downside risk. The pay-off resembles a Call Option buy and is therefore called as Synthetic Long
Call.
Apple
closes at ($)
on expiry
Pay off
from stock
Net pay off
from the
put
Net
payoff($)
175 -8 5 -3
180 -3 0 -3
181 -2 -1 -3
182 -1 -1 -2
183 0 -1 -1
184 1 -1 0
185 2 -1 1
190 3 -1 6
200 14 -1 16
NAGA
10. STRATEGY4: PROTECTIVE CALL / SYNTHETIC LONG PUT
This is a strategy wherein an investor has gone short on a stock future and buys a call to hedge. An investor shorts a
stock future and buys an ATM or slightly OTM Call. In case the stock future price falls the investor gains in the downward
fall in the price. However, incase there is an unexpected rise in the price of the stock the loss is limited. The pay-off from
the Long Call will increase thereby compensating for the loss in value of the short stock future position.
When to Use: If the investor is of the view
that the markets will go down (bearish) but
wants to protect against any unexpected rise
in the price of the stock.
Risk: Limited. Maximum Risk is Call Strike
Price – Stock Price + Premium
Reward: Maximum is Stock Price – Call
Premium
Breakeven: Stock Price – Call Premium
Example :
Suppose Apple stock. is trading at 184$ in June. An investor Mr. A
buys a $185 call for 2$ while shorting the stock or future at $184.
Strategy : Short Stock Future+ Buy Call Option
Sells Stock future Current Market Price ($) 184
Buys Call Strike Price ($) 185
Mr. A pays Premium ($) 2
Break Even Point ($) (Stock Price – Call Premium) 182
NAGA
11. Apple. closes
at ($)(Expiry)
Payoff from
the stock ($.)
Net Payoff
from the Call
Option ($)
Net Payoff ($)
165 19 -2 17
175 9 -2 7
180 4 -2 2
181 3 -2 1
182 2 -2 0
183 1 -2 -1
184 0 -2 -2
185 -1 -2 -3
186 -2 -1 -3
187 -3 0 -3
188 -4 1 -3
189 -5 2 -3
190 -11 8 -3
The payoff schedule
The payoff chart (Synthetic Long Put)
NAGA
12. STRATEGY 5 : LONG PUT
Buying a Put is the opposite of buying a Call. When you buy a Call you are bullish about the stock / index. When an
investor is bearish, he can buy a Put option. A Put Option gives the buyer of the Put a right to sell the stock (to the Put
seller) at a pre-specified price and thereby limit his risk.
A long Put is a Bearish strategy. To
take advantage of a falling market an
investor can buy Put options.
When to use: Investor is bearish
about the stock / index.
Risk: Limited to the amount of
Premium paid. (Maximum loss if stock
/ index expires at or above the option
strike price).
Reward: Unlimited
Break-even Point: Stock Price –
Premium
Strategy : Buy Put Option
Current Apple Stock Price 182$
Put Option Strike Price ($) 180$
Mr. XYZ Pays Premium ($) 1$
Break Even Point ($) (Strike Price - Premium). 180$-1 179$
Example:
Mr. XYZ is bearish on Apple on 10th July, when the Apple is at $182. He buys a
Put option with a strike price $180 at a premium of $1, expiring on 31st July. If
the Apple goes below 179, Mr. XYZ will make a profit on exercising the option.
In case the Apple rises above 180, he can forego the option (it will expire
worthless) with a maximum loss of the premium.
NAGA
13. The payoff schedule
On expiry 31st July
Apple
closes at
Net Payoff from
Put Option ($.)
165$ 14$
175$ 4$
179$ 0$
180$ -1
182$ -1
185$ -1
190$ -1$
ANALYSIS: A bearish investor can profit from declining stock price by buying Puts. He limits his
risk to the amount of premium paid but his profit potential remains unlimited. This is one of
the widely used strategy when an investor is bearish.
The payoff chart (Long Put
NAGA
14. STRATEGY 6.SHORT PUT
Selling a Put is opposite of buying a Put. An investor buys Put when he is bearish on a stock. An investor Sells
Put when he is Bullish about the stock – expects the stock price to rise or stay sideways at the minimum. When
you sell a Put, you earn a Premium (from the buyer of the Put).If the stock price increases beyond the strike
price, the short put position will make a profit for the seller by the amount of the premium, since the buyer will
not exercise the Put option and the Put seller can retain the Premium (which is his maximum profit). But, if the
stock price decreases below the strike price, by more than the amount of the premium, the Put seller will lose
money. The potential loss being unlimited (until the stock price fall to zero).
When to Use: Investor is very Bullish on the stock /
index. The main idea is to make a short term
income.
Risk: Put Strike Price – Put Premium.
Reward: Limited to the Amount of premium
received
Break-even Point: Put Strike Price – Premium
Example:
Mr. XYZ is bullish on Apple on 10th July, when the Apple is at 182$. He
sells a Put option with a strike price $180 at a premium of $2, expiring
on 31st July. If the Apple goes above 180$ on expiry, he will gain the
amount of premium 2$ as the Put buyer won’t exercise his option Mr.
XYZ will make a profit Premium received. In case the Apple falls below
178$, which is break even point Mr. xyz will loose the premium more
depend on the extent of fall of the apple
NAGA
15. Strategy : SELL PUT OPTION
Current Apple Stock Price 182$
Put Option(sell) Strike Price ($) 180$
Mr. XYZ receives Premium ($) 2$
Break Even Point ($) (Strike Price - Premium)(180-2) 178$
On expiry 31st July
Apple
closes at
Net Payoff from
Put Option ($)
170$ -8
175$ -3
180$ 2
181$ 2
182$ 2
183$ 2
190$ 2
Selling Puts can lead to regular income in a rising or range bound markets. But it should be done carefully since
the potential losses can be significant in case the price of the stock / index falls. This strategy can be considered
as an income generating strategy.
The payoff schedule
NAGA
16. STRATEGY 7.LONG COMBO : SELL A PUT, BUY A CALL
A Long Combo is a Bullish strategy. If an investor is expecting the price of a stock to move up he can do a Long Combo
strategy. It involves selling an OTM (lower strike) Put and buying an OTM (higher strike) Call. This strategy simulates the
action of buying a stock (or a futures) but at a fraction of the stock price. It is an inexpensive trade, similar in pay-off to
Long Stock, except there is a gap between the strikes (please see the payoff diagram). As the stock price rises the
strategy starts making profits. Let us try and understand Long Combo with an example.
When to Use: Investor is Bullish on the
stock.
Risk: Unlimited (Lower Strike + net debit)
Reward: Unlimited
Breakeven :
Higher strike + net debit
Strategy : Sell a Put + Buy a Call
Apple Current Market Price ($.) 187
Sells Put Strike Price ($.) 180
Mr. XYZ receives Premium ($.) 1.00
Buys Call Strike Price ($) 187
Mr. XYZ pays Premium ($.) 2.00
Net Debit ($.) 1.00
Break Even Point ($.)
(Higher Strike + Net Debit)
188
A stock Apple. is trading at $.185. Mr. XYZ is bullish on the stock. But
does not want to invest He does a Long Combo. He sells a Put option
with a strike price $.180 at a premium of $. 1.00 and buys a Call Option
with a strike price of $ 187 at a premium of $2. The net cost of the
strategy1$
NAGA
17. For a small investment of $1 (net
debit), the returns can be very high in a
Long Combo, but only if the stock
moves up. Otherwise the potential
losses can also be high.
The payoff schedule
Apple closes
at ($)
Net Payoff from
the Put Sold
($)
Net Payoff from
the
Call purchased
($)
Net Payoff ($)
175 -4 -2 -6
178 -1 -2 -3
180 1 -2 -1
182 1 -2 -1
184 1 -2 -1
186 1 -2 -1
188 1 -1 0
190 1 2 3
195 1 7 8
200 1 13 14
205 1 18 19
NAGA
18. STRATEGY 8 LONG STRADDLE
A Straddle is a volatility strategy and is used when the stock price / index is expected to show large movements. This
strategy involves buying a call as well as put on the same stock / index for the same maturity and strike price, to take
advantage of a movement in either direction, a soaring or plummeting value of the stock / index. Either way if the stock
/ index shows volatility to cover the cost of the trade, profits are to be made. With Straddles, the investor is direction
neutral. All that he is looking out for is the stock / index to break out exponentially in either direction.
When to Use: The investor thinks that the
underlying stock / index will experience
significant volatility in the near term.
Risk: Limited to the initial premium paid.
Reward: Unlimited
Breakeven:
Upper Breakeven Point = Strike Price of
Long Call + Net Premium Paid
Lower Breakeven Point = Strike Price of
Long Put - Net Premium Paid
Example
Suppose Apple stock is currently trading at $184 on 10 July. An investor,
Mr. A enters a long straddle by buying a Aug $184 strike Put for $1.50
and same strike a Aug $184 Call for $1.50. The net debit taken to enter
the trade is $3, which is also his maximum possible loss.
Strategy : Buy Put + Buy Call
Apple stock price Current Market Price ($) 184
Buys Call&put Strike Price ($) 184
Mr. A pays Total Premium(Call+Put) ($) 3
Break Even Point ($)
Upper Break even: 187
Lower Break even: 181
NAGA
19. The payoff schedule
On expiry
Apple closes
at
Net Payoff
from Put
purchased ($)
Net Payoff
from Call
purchased($)
Net Payoff ($)
165 17.50 -1.50 16
175 7.50 -1.50 6
181 1.50 -1.50 0(LB)
182 0.50 -1.50 -1
183 -0.50 -1.50 -2
184 -1.50 -1.50 -3
185 -1.50 -0.50 -2
186 -1.50 0.50 -1
187 -1.50 1.50 0(UB)
195 -1.50 11 8
200 -1.50 16 13
NAGA
20. STRATEGY 9 :SHORT STRADDLE
A Short Straddle is the opposite of Long Straddle. It is a strategy to be adopted when the investor feels the market
will not show much movement. He sells a Call and a Put on the same stock / index for the same maturity and strike
price. It creates a net income for the investor. If the stock / index does not move much in either direction, the
investor retains the Premium as neither the Call nor the Put will be exercised. If the stock / index value stays close to
the strike price on expiry of the contracts, maximum gain, which is the Premium received is made.
When to Use: The investor thinks that the
underlying stock / index will experience very
little volatility in the near term.
Risk: Unlimited
Reward: Limited to the premium received
Breakeven:
Upper Breakeven Point = Strike Price of Short
Call + Net Premium Received
Lower Breakeven Point =Strike Price of Short
Put - Net Premium Received
Example
Suppose Apple stock is currently trading at $184 on 10 July. An
investor, Mr. A enters a Short straddle by Selling a Aug $184 Strike Put
for $1.50 and same strike a Aug $184 sell Call for $1.50. The net credit
received is $3, which is also his maximum possible profit.
Strategy : Sell Put + Sell Call
Apple stock price Current Market Price ($) 184
Sell Call&put Strike Price ($) 184
Mr. A Received Total Premium(Call+Put) ($) 3
Break Even Point ($)
Upper Break even: 187
Lower Break even: 181
NAGA
21. On expiry
Apple closes
at
Net Payoff
from Put Sell
($)
Net Payoff
from Call
Sell($)
Net Payoff
($)
165 -17.50 1.50 -16
175 -7.50 1.50 -6
181 -1.50 1.50 0(LB)
182 -0.50 1.50 1
183 0.50 1.50 2
184 1.50 1.50 3
185 1.50 0.50 2
186 1.50 -0.50 1
187 -1.50 1.50 0(UB)
195 -1.50 11 -8
200 -1.50 16 -13
The payoff schedule
However, incase the stock / index moves in either direction, up
or down significantly, the investor’s losses can be significant.
So this is a risky strategy and should be carefully adopt ed and
only when the expected volatility in the market is limited
NAGA
22. STRATEGY10 : COVERED CALL
Covered calls are an options strategy where an investor holds a long position in an asset and writes (sells) call options
on that same asset to generate an income stream. You own shares in a company which you feel may rise but not much
in the near term (or at best stay sideways). You would still like to earn an income from the shares. The coveredcall is a
strategy in which an investor Sells a Call option on a stock he owns (netting him a premium). The Call Option which is
sold in usually an OTM Call. This strategy is usually adopted by a stock owner who is Neutral to moderately Bullish
about the stock.
When to Use: This is often employed when an investor has a short-term neutral to moderately bullish view on the stock
he holds. He takes a short position on the Call option to generate income from the option premium.
Risk: If the Stock Price falls to zero, the investor loses the entire value of the Stock but retains the premium, since the Call
will not be exercised against him. So
Maximum risk = Stock Price Paid – Call Premium. Upside capped at the Strike price plus the Premium received. So if the
Stock rises beyond the Strike price the investor (Call seller) gives up all the gains on the stock.
Reward: Limited to (Call Strike Price – Stock Price paid) + Premium received.
Breakeven: Stock Price paid - Premium Received.
NAGA
23. Example
Mr. A bought XYZ Ltd. for $ 38.50 and simultaneously sells a Call option at an strike price of $40. Which
means Mr. A does not think that the price of XYZ Ltd will rise above $40. However, incase it rises above $40, Mr.
A does not mind getting exercised at that price and exiting the stock at$40 (TARGET SELL PRICE = 3.9% return on
the stock purchase price). Suppose XYZ Ltd Strike price of 40$ Call option Trading at 2$. Mr. A receives a
premium of $2 for selling the Call. Thus net outflow to Mr. A is ($38.50 – $2) = $36.50. He reduces the cost of
buying the stock by this strategy. If the stock price stays at or below $40, the Call option will not get exercised
and Mr. A can retain the $2 premium, which is an extra income. If the stock price goes above $40, the Call
option will get exercised by the Call buyer. The entire position will work like this
Strategy : Buy Stock + Sell Call Option
Mr. A buys the stock XYZ Ltd Current Market price 38.50$
Call Option Strike Price ($) 40$
Mr. A receives Premium ($) 2$
Break Even Point ($) (Stock Price paid - Premium Received)(38.50$-2$)= 36.50$
Aboove our Example:
1.The price of XYZ Ltd. stays at or below $ 40. The Call buyer will not exercise the Call Option. Mr. A will keep the
premium of $2. This is an income for him. So if the stock has moved from $38.50 (purchase price) to $39.50 on expiry,
Mr. A makes $3 [$ 39.50 – $ 3850 + $ 2 (Premium) ] = An additional $2, because of the Call sold.
NAGA
24. 2. Suppose the price of XYZ Ltd. moves to Rs. 41 on expiry, then the Call Buyer will exercise the Call Option and Mr. A will
have to pay him $1 (loss on exercise of the Call Option). What would Mr. A do and what will be his pay – off?
A) Sell the Stock in the market at :$41.
B) Pay Rs. 1 to the Call Options buyer :-$1
C) Pay Off (A – B) received :$40. (This was Mr. A’s target price)
D)Premium received on Selling Call Option :$2
E)Net payment (C + D) received by Mr. A : $42
F) Purchase price of XYZ Ltd. : $38.50
G) Net profit :$42 – $38.50 = = $3.50
H)Return (%) :($42 – $38.50) X 100 $38.50. =9.90%
(Which is Morethan the target return of 3.90%).
NAGA
25. XYZ Ltd.
price closes
at $(Expiry)
Stock payoff
(XYZ Ltd
bought@38.50)
Call pay
off(Premium
Received by
selling CE 2$)
Net Payoff ($)
35 -3.50 2 -1.50
36 -2.50 2 -0.50
36.50 -2 2 0
38 -0.50 2 1.50
39 0.50 2 2.50
40 1.50 2 3.50
41 2.50 1 3.50
42 3.50 0 3.50
43 4.50 -1 3.50
The payoff schedule
A covered call serves as a short-term hedge on a long stock
position and allows investors to earn income via the premium
received for writing the option. Most useful in Range bound
Markets.
NAGA
26. STRATEGY11 COVERED PUT
This strategy is opposite to a Covered Call. A Covered Call is a neutral to bullish strategy, whereas a Covered
Put is a neutral to Bearish strategy. You do this strategy when you feel the price of a stock / index is going to
remain range bound or move down. Covered Put writing involves a short in a stock / index along with a short
Put on the options on the stock / index. If the stock price does not change, the investor gets to keep the
Premium. He can use this strategy as an income in a neutral market. Let us understand this with an example
When to Use: If the investor is of the view that the
markets are moderately bearish.
Risk: Unlimited if the price of the stock rises
substantially
Reward: Maximum is (Sale Price of the Stock –
Strike Price) + Put Premium
Breakeven: Sale Price of Stock + Put Premium
Suppose Apple future. is trading at 185 in June. An investor,
Mr. A, shorts $180 Put by selling a July Put for $2 while
shorting an Apple future at 185$. The net credit received by
Mr. A is $185 + $2 = 187$
Strategy : Short Stock future or stock+ Short Put Option
Sells Stock future (Mr. A
receives)
Current Market
Price ($) 185
Sells Put Strike Price ($) 180
Mr. A receives Premium ($) 2
Break Even Point ($) (Sale price of Stock + Put
Premium) 187
NAGA
27. Apple
closes on
expiry($)
Pay off
from
future($)
Net pay off
from the put
sale option($)
Net pay
off($)
170 15 -8 7
175 10 -3 7
180 5 2 7
182 3 2 5
184 1 2 3
185 0 2 2
186 -1 2 1
187 -2 2 0
188 -3 2 -1
190 -5 2 -3
195 -10 2 -8
The payoff schedule
NAGA
28. STRATEGY12: LONG STRANGLE
A Strangle is a slight modification to the Straddle to make it cheaper to execute. This strategy involves the
simultaneous buying of a slightly out -of-the-money (OTM) put and a slightly out-of-the-money (OTM) call of the
same underlying stock / index and expiration date. Since the initial cost of a Strangle is cheaper than a Straddle,
the returns could potentially be higher. However, for a Strangle to make money, it would require greater movement
on the upside or downside for the stock.
When to Use: The investor thinks that the
underlying stock / index will experience. very high
levels of volatility in the near term.
Risk: Limited to the initial premium paid.
Reward: Unlimited
Breakeven:
Upper Breakeven Point = Strike Price of Long Call
+ Net Premium Paid
Lower Breakeven Point = Strike Price of Long Put -
Net Premium Paid
Example Suppose Apple is currently trading at 185$ 10th
july. An investor, Mr. A, executes a Long Strangle by buying
a $175 Apple Put for a premium of $0.50 and a $.195
Apple Call for $0.50. The net debit taken to enter the trade
is $1, which is also his maxi mum possible loss.
Strategy : Buy OTM Put + Buy OTM Call
Apple stock Current Value 185
Buy Call Option Strike Price ($) 195
Mr. A pays Premium ($) 0.50
Break Even Point ($) 196
Buy Put Option Strike Price ($) 175
Mr. A pays Premium ($) 0.50
Break Even Point ($) 174
NAGA
29. On expiry Apple
closes at
Net Payoff from
Put purchased ($)
Net Payoff from
Call purchased ($) Net Payoff ($)
155 19.50 -0.50 19
165 9.50 -0.50 9
174 0.50 -0.50 0
175 -0.50 -0.50 -1
180 -0.50 -0.50 -1
182 -0.50 -0.50 -1
184 -0.50 -0.50 -1
186 -0.50 -0.50 -1
188 -0.50 -0.50 -1
190 -0.50 -0.50 -1
195 -0.50 -0.50 -1
196 -0.50 0.50 0
200 -0.50 4.50 4
205 -0.50 9.50 9
215 -0.50 19.50 19
The payoff schedule
NAGA
30. STRATEGY13: SHORT STRANGLE
A Short Strangle is a slight modification to the Short Straddle.. This strategy involves the simultaneous selling of
a slightly out-of-the-money (OTM) put and a slightly out-of-the-money (OTM) call of the same underlying stock
and expiration date. This typically means that since OTM call and put are sold The underlying stock has to
move significantly for the Call and the Put to be worth exercising. If the underlying stock does not show much
of a movement, the seller of the Strangle gets to keep the Premium.
When to Use: This options trading strategy is taken
when the options investor thinks that the underlying
stock will experience little volatility in the near term
Risk: Unlimited
Reward: Limited to the premium received.
Breakeven:
Upper Breakeven Point = Strike Price of short call + Net
Premium Received
Lower Breakeven Point = Strike Price of short Put - Net
Premium received
Example Suppose Apple is currently trading at 185$ 10th july. An
investor, Mr. A, executes a short Strangle by selling a $175 Apple
Put for a premium of $0.50 and a $.195 Apple Call for $0.50. The
net credit is $1, which is also his maximum possible gain
Strategy : Sell OTM Put + Sell OTM Call
Apple stock Current Value 185
Sell Call Option Strike Price ($) 195
Mr. A receives Premium ($) 0.50
Break Even Point ($) 196
Sell Put Option Strike Price ($) 175
Mr. A receives Premium ($) 0.50
Break Even Point ($) 174
NAGA
31. On expiry Apple
closes at
Net Payoff from
Put sell ($)
Net Payoff from
Call sell ($) Net Payoff ($)
155 -19.50 0.50 -19
165 -9.50 0.50 -9
174 -0.50 0.50 0
175 0.50 0.50 1
180 0.50 0.50 1
182 0.50 0.50 1
184 0.50 0.50 1
186 0.50 0.50 1
188 0.50 0.50 1
190 0.50 0.50 1
195 0.50 0.50 1
196 0.50 -0.50 0
200 0.50 -4.50 -4
205 0.50 -9.50 -9
215 0.50 -19.50 -19
The payoff schedule
NAGA
32. Thank you for visiting
NAGA
Strategies To be explained in Next
presentation:
1.COLLAR
2.BULL CALL SPREAD STRATEGY
3. BULL PUT SPREAD STRATEGY
4. BEAR CALL SPREAD STRATEGY
5. BEAR PUT SPREAD STRATEGY
6. LONG CALL BUTTERFLY STRATEGY
7. SHORT CALL BUTTERFLY STRATEGY
8. LONG CALL CONDOR STRATEGY
9. SHORT CALL CONDOR STRATEGY
10.BOX SPREAD STRATEGY
▪ Before implementing the strategies I will suggest you to find the
index/stock Trend direction (Positive/Negitive/neutral). Use
appropriate strategy.
▪ What ever I presented in presentation Most of the strategies we
already implemented.
▪ What ever I given examples not plagiarized all of my
understanding and knowledge.
If you need more clarification about strategies do not hesitate to
contact me. My
Mail id: rao9948281822@gmail.com,
naga@marketinvesment.com
Naga srinivasarao