Scribd Logo
Upload

Welcome to Scribd!

  • 92 views

    Strategies of Trading in Future and Options: By: Vikash Chander Monika Yadav Sumit Debnath Rohit Soni

    Uploaded by

    Vikash Chander Khatkar
    This document discusses strategies for trading futures and options. It describes covered calls, where an investor is neutral to bullish on a stock and willing to sell the stock if it reaches a specific price. The investor buys the stock and sells a call option. The maximum potential profit is limited to the strike price minus the stock price plus the premium received. The maximum potential loss comes from declines in the stock price. It also describes iron condors, where an investor looks for limited profit from an underlying security with low volatility. This is done by buying and selling out of the money put and call options around the same strike price to generate premium income. Profits are maximized if the underlying stock stays between the short put and call strikes.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd

    Strategies of Trading in Future and Options: By: Vikash Chander Monika Yadav Sumit Debnath Rohit Soni

    Uploaded by

    Vikash Chander Khatkar
    92 views8 pages
    This document discusses strategies for trading futures and options. It describes covered calls, where an investor is neutral to bullish on a stock and willing to sell the stock if it reaches a specific price. The investor buys the stock and sells a call option. The maximum potential profit is limited to the strike price minus the stock price plus the premium received. The maximum potential loss comes from declines in the stock price. It also describes iron condors, where an investor looks for limited profit from an underlying security with low volatility. This is done by buying and selling out of the money put and call options around the same strike price to generate premium income. Profits are maximized if the underlying stock stays between the short put and call strikes.

    Original Description:

    Option strategies for volatile , steady , bull and bearish market. Openc ondor, Covered call

    Original Title

    Option Strategies

    Copyright

    © © All Rights Reserved

    Available Formats

    PPT, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document discusses strategies for trading futures and options. It describes covered calls, where an investor is neutral to bullish on a stock and willing to sell the stock if it reaches a specific price. The investor buys the stock and sells a call option. The maximum potential profit is limited to the strike price minus the stock price plus the premium received. The maximum potential loss comes from declines in the stock price. It also describes iron condors, where an investor looks for limited profit from an underlying security with low volatility. This is done by buying and selling out of the money put and call options around the same strike price to generate premium income. Profits are maximized if the underlying stock stays between the short put and call strikes.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    92 views8 pages

    Strategies of Trading in Future and Options: By: Vikash Chander Monika Yadav Sumit Debnath Rohit Soni

    Uploaded by

    Vikash Chander Khatkar
    This document discusses strategies for trading futures and options. It describes covered calls, where an investor is neutral to bullish on a stock and willing to sell the stock if it reaches a specific price. The investor buys the stock and sells a call option. The maximum potential profit is limited to the strike price minus the stock price plus the premium received. The maximum potential loss comes from declines in the stock price. It also describes iron condors, where an investor looks for limited profit from an underlying security with low volatility. This is done by buying and selling out of the money put and call options around the same strike price to generate premium income. Profits are maximized if the underlying stock stays between the short put and call strikes.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    You are on page 1of 8

    STRATEGIES OF TRADING IN

    FUTURE AND OPTIONS

    By:
    Vikash Chander
    Monika Yadav
    Sumit Debnath
    Rohit Soni

    COVERED CALL
    Youre neutral to bullish,
    and youre willing to sell stock
    if it reaches a specific price.

    Trading Margin
    Requirement
    You own the stock
    Sell a call, strike price A
    Generally, the stock price will

    be below strike A

    Break even :
    Current stock price minus
    the premium received
    for selling the call.

    Maximum Potential Profit


    When the call is first sold, potential profit is limited to the strike price
    minus the current stock price plus the premium received for selling the
    call

    Maximum Potential loss


    You receive a premium for selling the option, but most downside risk
    comes from owning the stock, which may potentially lose its value.
    However, selling the option does create an opportunity risk. That is, if
    the stock price skyrockets, the calls might be assigned and youll miss
    out on those gains.

    COVERED CALL
    Neutral to Bullish
    Buy The Stock & Write A Call
    Perception Bullish on the Stock in the long term but expecting little
    variation during the lifetime of Call Contract
    Income received from the premium on Call
    Reliance
    Spot Price
    = Rs.270

    Premium on Rs. 270 CA = Rs. 12

    Buy Reliance @ Rs.270 and sell Rs. 270 CA @ Rs.12.

    Stock Price at Expiration

    Net Profit/ Loss

    230

    - 28 (- 40 + 12)

    250

    - 8 ( -20+12)

    270

    + 12 ( + 12)

    300

    + 12 (-30+30+12)

    350

    + 12 (-80 +80+12)

    Profits are limited . Losses can be unlimited

    COVERED CALL

    Profit

    +
    BEP

    0
    Strike Price

    Loss

    Stock Price
    Lower

    Higher

    IRON CONDOR
    Increase

    Probability to earning a small limited profit from underlying security having


    low volatility
    Construction
    Buy 1 OTM Put at strike price A
    Sell 1 OTM Put at strike price B
    Sell 1 OTM Call at strike price C
    Buy 1 OTM Call at strike price D
    Generally, B-A=D-A
    Scenarios:If Spot price <A, Both Put contracts are exercised
    If A<spot price<B, Short Put is exercised
    If B< Spot price<C, All contracts expire worthless
    If C<Spot price<D, Short Call is exercised
    If D<Spot price, Both Call contracts are exercised

    IRON CONDOR
    Max Profit = Net Premium Received - Commissions Paid
    Max Profit Achieved When spot price is between B and C
    Max Loss = (D-C)- Net Premium Received + Commissions Paid
    Max Loss Occurs When spot price>= D or spot price<= A
    Two Breakeven Points: Upper Breakeven Point = C+ Net Premium Received
    Lower Breakeven Point = B- Net Premium Received
    Example: Nifty 7789.30

    Position No

    Position

    Strike Price

    Premium

    Buy Put

    7300

    -38.5

    Sell Put

    7500

    69

    Sell Call

    8100

    36

    Buy Call

    8300

    -11.3

    Net Premium

    55.2

    Thank you

    You might also like