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    Formula Options Trading Strategies

    Uploaded by

    Sameer
    The document outlines 22 option trading strategies, including their expected market conditions, positions taken, break even points, risks, and rewards. Strategy 1 is long call, where a trader buys a call option to profit from an expected bullish market. Strategy 2 is short call, where a trader sells a call option to profit if the market declines. Strategy 3 is a synthetic long call, where a trader buys stock and a put option to be conservatively bullish.

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

    Formula Options Trading Strategies

    Uploaded by

    Sameer
    5K views2 pages
    The document outlines 22 option trading strategies, including their expected market conditions, positions taken, break even points, risks, and rewards. Strategy 1 is long call, where a trader buys a call option to profit from an expected bullish market. Strategy 2 is short call, where a trader sells a call option to profit if the market declines. Strategy 3 is a synthetic long call, where a trader buys stock and a put option to be conservatively bullish.

    Original Description:

    Options Trading

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    The document outlines 22 option trading strategies, including their expected market conditions, positions taken, break even points, risks, and rewards. Strategy 1 is long call, where a trader buys a call option to profit from an expected bullish market. Strategy 2 is short call, where a trader sells a call option to profit if the market declines. Strategy 3 is a synthetic long call, where a trader buys stock and a put option to be conservatively bullish.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    5K views2 pages

    Formula Options Trading Strategies

    Uploaded by

    Sameer
    The document outlines 22 option trading strategies, including their expected market conditions, positions taken, break even points, risks, and rewards. Strategy 1 is long call, where a trader buys a call option to profit from an expected bullish market. Strategy 2 is short call, where a trader sells a call option to profit if the market declines. Strategy 3 is a synthetic long call, where a trader buys stock and a put option to be conservatively bullish.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    OPTION STRATEGIES IN TRADING

    S.NO.

    PARTICULARS

    Expectations

    SHAILESH SHINDE (M) 9870381515 Email : taxcalling@gmail.com


    Position

    Break Even

    Option Buyer
    Risk

    Reward

    Strategy - 1 :- Long Call

    Bullish - market goes up

    Buy call Option

    Premium

    Unlimited

    Strike Price + Premium

    Strategy - 2 :- Short Call

    Bearish - market goes down

    Sell Call Option

    Unlimited

    Premium

    Strike Price + Premium

    Strategy - 3 :- Synthetic
    Long Call /
    Protective Call

    Conservatively Bullish

    Buy Stock + Buy Put


    Option

    Stock Price + Put


    Premium - Strike
    Price

    Unlimited

    Put Strike Price + Put Premium + Stock


    Price - Put Strike Price

    Strategy - 4 :- Long Put

    Buy Put Option

    Premium

    Unlimited

    Strike Price - Premium

    Strategy - 5 :- Short Put

    Bullish - market goes up

    Sell Put Option

    Unlimited

    Premium

    Strike Price - premium

    Strategy - 6 :- Covered Call

    Short term neutral to


    moderately bullish

    Buy Stock + Sell Call


    Option

    Stock Price - Call


    Premium

    (Call Strike Price Stock Price) +


    Premium Paid

    Stock Price - Premium

    Strategy - 7 :- Long Combo

    Bullish on stock

    Sell Put Option + Buy


    Call Option

    Unlimited

    Unlimited

    Strategy - 8 :- Synthetic
    Long Put / Protective Put

    Conservatively Bearish

    Short Stock + Buy Call


    Option

    Call Strike Price Stock Price +


    Premium

    Stock Price Premium

    Strategy - 9 :- Covered Put

    Neutral to Bearish

    Short Stock + Short Put


    Option

    Unlimited

    10

    Strategy - 10 :- Long
    Straddle

    short term significantly


    volatile

    Buy Put Option +


    Buy Call Option

    Premium

    Unlimited

    Upper Break Even = Strike Price + Premium Lower


    Break Even = strike Price - Premium

    11

    Strategy - 11 :- Short
    Straddle

    Very Little Volatility

    Sell Put Option +


    Sell Call Option

    Unlimited

    Premium

    Upper Break Even = Strike Price + Premium Lower


    Break Even = strike Price - Premium

    12

    Strategy - 12:- Long


    Strangle

    Very High Level of Volatility

    Buy OTM Put + Buy


    OTM Call

    Premium

    Unlimited

    Upper Break Even = Strike Price + Premium Lower


    Break Even = strike Price - Premium

    13

    Strategy - 13 :- Short
    Strangle

    Very Little Volatility

    Unlimited

    Premium

    Upper Break Even = Strike Price + Premium Lower


    Break Even = strike Price - Premium

    Bearish - market goes down

    Sell OTM Put +


    OTM Call

    Sell

    Higher Strike Price + Net Debit

    Stock Price - Call Premium

    (Stock Price - Strike


    Stock Price + Put Premium
    Price) + Put Premium

    S.NO.

    PARTICULARS

    Expectations

    Position

    Break Even

    Option Buyer
    Risk

    Reward
    Limited

    Conseratively Bullish

    Buy Stock + Buy Put +


    Sell Call

    Limited

    Moderately bullish

    Buy ITM Call + Sell


    OTM Call

    Unlimited if stock
    price falls below
    lower strike price

    Strike Price of OTM Strke Price of call Purchased + Net Debit


    Strike Price of ITM Paid
    net Debit

    16

    Strategy - 16 :- Bull Put Spread


    Strategy

    Moderately bearish

    Sell ITM Put + Buy


    OTM Put

    Unlimited if stock
    price falls below
    lower strike price

    Strike Price of ITM Strike Price of OTM - Strke Price of short Put - Net Premium
    net Debit

    17

    Strategy - 17 :- Bear Call Spread


    Strategy

    mildly bearish

    Sell ITM Call + Buy


    OTM Call

    Strike Price of OTM Strike Price of ITM net Debit

    18

    Strategy - 18 :- Bear Put Spread


    Strategy

    mildly bearish

    Buy ITM Put + Sell


    OTM Put

    Net Premium paid

    Strike Price of OTM Strike Price of ITM - Strke Price of Long Put - Net Premium
    net Debit

    19

    Strategy - 19 :- Long Call


    Butterfly

    Sell 2 ATM call + Buy 1


    Neutral on Mkt direction and
    ITM Call + buy 1 OTM
    bearish on volatility
    call

    Net Premium paid

    Diff between 2
    Upper Break Even = Strike Price(H) - Net Premium
    strikes - Net Premium Lower Break Even = strike Price(L) + Net Premium

    20

    Strategy - 20 :- Short Call


    Butterfly

    Buy 2 ATM call + Sell 1


    Neutral on Mkt direction and
    Diff between 2
    ITM Call + Sell 1 OTM
    bullish on volatility
    strikes - Net Premium
    call

    21

    Strategy - 21 :- Long Call


    Condor

    14

    Strategy - 14 :- Collar

    15

    Strategy - 15 :- Bull Call Spread


    Strategy

    22

    Strategy - 22 :- Short Call


    Condor

    Net Premium
    received

    Stock Price - Call Premium + Put


    Premium

    Lower Strike +Net credit

    Net Premium paid

    Upper Break Even = Strike Price(H) - Net Premium


    Lower Break Even = strike Price(L) + Net Premium

    Low volatility

    Buy 1 ITM Call(LS) +


    Sell 1 ITM Call(LM) +
    Sell 1 OTM Call(HM) +
    Buy 1 OTM Call(HS)

    Limited

    Limited

    Upper Break Even = Strike Price(H) - Net Premium


    Lower Break Even = strike Price(L) + Net Premium

    Breakout expected but


    direction not sure

    Sell 1 ITM Call(LS) +


    Buy 1 ITM Call(LM) +
    Buy 1 OTM Call(HM) +
    Sell 1 OTM Call(HS)

    Limited

    Limited

    Upper Break Even = Strike Price(H) - Net Premium


    Lower Break Even = strike Price(L) + Net Premium

    Note :- LS = Lower Strike Price; HS = Higher Strike Price; LM = Lower Medium Strike Price & HM = Higher Medium Strike Price
    Buyer of call and seller of put benefits when market goes up.
    Profits of Buyer are unlimited whereas profits of seller are limited upto premium received.
    In adverse situation, buyer suffers losses upto max premium paid whereas seller suffers unlimited losses.
    SHAILESH SHINDE (M) 9870381515 Email : taxcalling@gmail.com

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