Long Straddle Option Strategy
When to use: Long Straddle Option Strategy is useful for investors who believe that the stock will be very volatile (i.e. move a lot in price) but are uncertain about the direction of the move. For example, suppose you believe an important court case that will make or break a company is about to be settled, and […]
Short Strangle Option Strategy
When to use: Short Strangle Option Strategy is used when the investor believes that the stock is not very volatile and that the stock price will not change much before the expiry date. The intention is to earn an option premium on two options at the same time. How it works: In the short strangle option strategy you sell an out-of-the-money call option […]
Long Strangle Option Strategy
When to use: Long Strangle Option Strategy is used when the investors believe that the stock will experience very high volatility but uncertain about the direction of its movement. How it works: In the long strangle option strategy you buy an out-of-the-money call option and an out-of-the-money put option of the same stock with the same expiration date, T. For example: On 16th August […]
Long Call Option Strategy
The most basic and commonly implemented option strategy is the Long Call Option Strategy. When to use: When you are Bullish and anticipate the stock / index to rise. How it works: Suppose, you are bullish on Tata Motors stock on 16th August 2013, when the share trades at Rs. 319. You buy a call option at a premium […]
Short Call Option Strategy
When to use: When you are Bearish and anticipate the stock / index to fall. How it works: Suppose, you are bearish on ITC Limited stock on 16th August 2013, when the share trades at Rs. 324. You sell a call option (also called writing a call option) for a premium of Rs. 20, expiring 26th September 2013 with a […]
Long Put Option Strategy
A basic and commonly implemented option strategy is the Long Put Option Strategy When to use: When you are Bearish and anticipate the stock / index to rise. How it works: Suppose, you are bearish on ICICI Bank stock on 16th August 2013, when the stock trades at Rs. 830. You buy a put option at a premium of Rs. […]
Short Put Option Strategy
When to use: When you are Bullish and anticipate the stock / index to fall. How it works: Suppose, you are Bullish on ONGC stock on 16th August 2013, when the stock trades at Rs. 265. You sell a put option (also called writing a put option) for a premium of Rs. 5, expiring 29th August 2013 with a Strike […]