Option Strategies

  • 1. Orientation

    1.1 – Setting the context Before we start this module on Option Strategy, I would like to share with you a Behavioral Finance article I read couple of years ago. The article was titled “Why winnin ..

  • 2. Bull Call Spread

    2.1 – Background The spread strategies are some of the simplest option strategies that a trader can implement. Spreads are multi leg strategies involving 2 or more options. When I say multi leg stra ..

  • 3. Bull Put Spread

    3.1 – Why Bull Put Spread? Similar to the Bull Call Spread, the Bull Put Spread is a two leg option strategy invoked when the view on the market is ‘moderately bullish’. The Bull Put Spread is s ..

  • 4. Call Ratio Back Spread

    4.1 – Background The Call Ratio Back Spread is an interesting options strategy. I call this interesting keeping in mind the simplicity of implementation and the kind of pay off it offers the trader. ..

  • 5. Bear Call Ladder

    5.1 – Background The ‘Bear’ in the “Bear Call Ladder” should not deceive you to believe that this is a bearish strategy. The Bear Call Ladder is an improvisation over the Call ratio back spr ..

  • 6. Synthetic Long & Arbitrage

    6.1 – Background Imagine a situation where you would be required to simultaneously establish a long and short position on Nifty Futures, expiring in the same series. How would you do this and more i ..

  • 7. Bear Put Spread

    7.1 – Spreads versus naked positions Over the last five chapters we’ve discussed various multi leg bullish strategies. These strategies ranged to suit an assortment of market outlook – from ..

  • 8. Bear Call Spread

    8.1 – Choosing Calls over Puts Similar to the Bear Put Spread, the Bear Call Spread is a two leg option strategy invoked when the view on the market is ‘moderately bearish’. The Bear Call Spread ..

  • 9. Put Ratio Back spread

    9.1 – Background We discussed the “Call Ratio Back spread” strategy extensively in chapter 4 of this module. The Put ratio back spread is similar except that the trader invokes this when he is b ..

  • 10. The Long Straddle

    10.1 – The directional dilemma How many times have you been in a situation wherein you take a trade after much conviction, either long or short and right after you initiate the trade the market move ..

  • 11. The Short Straddle

    11.1 – Context In the previous chapter we understood that for the long straddle to be profitable, we need a set of things to work in our favor, reposting the same for your quick reference – The vo ..

  • 12. The Long & Short Strangle

    12.1 – Background If you have understood the straddle, then understanding the ‘Strangle’ is quite straightforward. For all practical purposes, the thought process behind the straddle and strangl ..

  • 13. Max Pain & PCR Ratio

    13.1 – My experience with Option Pain theory In the never ending list of controversial market theories, the theory of ‘Option Pain’ certainly finds a spot. Option Pain, or sometimes referred to ..

  • 14. Iron Condor

    14.1 – New margin framework These are fascinating times we are living in, especially if you are an options trader in India 🙂 Starting 1st June 2020, NSE’s new margin framework is live, which es ..