Put Backspread Option Strategy
When to use: Put Backspread Option Strategy is used when the investor is bearish on the stock (i.e. when the investor expects the stock price to fall in the near future). How it works: In the put backspread strategy the investor sells 1 in-the-money put option; and buys 2 out-of-the-money put options of the same underlying stock with the same expiry […]
Call Backspread Option Strategy
When to use: Call Backspread Option Strategy is used when the investor is bullish on the stock (i.e. the investor expects the price of the stock to rise in the near future). How it works: Call backspread option strategy uses three option contracts of the same underlying stock, with the same expiry date but two different strike prices. In […]
Short Synthetic Option Strategy
When to use: Short Synthetic Option Strategy is used when the investor is bearish on the stock in the near future (i.e. the investor expects the stock to fall in the near future). How it works: In a short synthetic option strategy you sell 1 call option and buy 1 put option of the same underlying stock with the same expiry […]
How is a Stock Market Index Constituted
Note: The explanation below is based the basis of inclusion of stocks in the BSE Sensex and the Nifty 50. Composition of a stock market index such as the S&P BSE Sensex (“Sensex”), S&P Nifty 50 (“Nifty”), the Bank Nifty etc is not constant. You must have come across a news item like – “NMDC and IndusInd […]
Strap Option Strategy
When to use: Strap option strategy is used when the investor is bullish on the stock and expects volatility in the near future. How it works: Strap option strategy uses three option contracts of the same underlying stock, with the same expiry date and same strike prices. In this strategy, you buy 2 at-the-money call options and 1 at-the-money put option, each […]
Short Put Ladder Option Strategy
When to use: Short Put Ladder Option Strategy is used when the investor is neutral to bullish on the stock and expects significant volatility. How it works: In the short put ladder strategy you sell 1 in-the-money put option; buy 1 at-the-money put option and buy 1 out-of-the-money put option of the same underlying stock with the same expiry date. You believe that the market will […]
Short Call Ladder Option Strategy
When to use: Short Call Ladder Strategy is used when the investor is moderately bullish on the stock and expects significant volatility. How it works: In the short call ladder strategy you sell 1 in-the-money call option; buy 1 at-the-money call option and buy 1 out-of-the-money call option of the same underlying stock with the same expiry date. You believe that the market will be […]
Strip Option Strategy
When to use: Strip Option Strategy is used when the investor is bearish on the stock and expects volatility in the near future. How it works: Strip option strategy use three option contracts of the same underlying stock, with the same expiry date and same strike prices. In this strategy, you buy 2 at-the-money put options and 1 at-the-money call option. For […]
5 Things to Look For In Identifying Multibagger Stocks
I am not quite sure of what the term means or where it originated but there is a long and illustrious list of investors who made a fortune by investing in multibagger Stocks. On my part, I have read the investment philosophy of many of those investors to understand how they go about picking stocks. Below […]
Long Put Ladder Option Strategy
When to use: Long Put Ladder option strategy is used when the investor is moderately bearish on the stock and expects less volatility. This strategy is an extension of Bear Put Spread Strategy as in that the investor sells another lower strike put. By shorting another put at a lower strike price, the position assumes uncapped risk potential […]