short put

Option Strategy: Protective Call/Synthetic Long Put

If investors are of the view that market will go down or bearish but want to protect against an unexpected rise in the price of the stock. Suppose XYZ Ltd is trading at Rs 4457 in January. An investor Mr. A buys a Rs 4500 Call Option for Rs 100 while shorting the stock at Rs 4457. The Net credit of investor is Rs 4357 (Rs 4457- Rs 100). Strategy: Short Stock + Buy Call Option Risk is Limited  Maximum Risk(Rs 143) = Call strike Price (Rs 4500)- Stock Price (4457) +100. Rewards= Maximum is stock price-call Premium. Other Option Strategies Long Combo: Sell a Put, Buy a Call Covered C...
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Option Strategy: Short Put

Short Put means selling Put Option. This strategy is used when investors are very bullish on stock/index. when you sell put you earn premium from buyers you have sold someone the right to sell you the stock at the strike price. For example, a trader is bullish on Nifty when it is 8011, he sells a put option with a strike price of 8000 at a premium of 155.75 Expiring on 26 November 2015. if Nifty index stays above 8000, he will gain the amount of premium as put buyer would not exercise his option. in case Nifty falls below 8000, put buyer will exercise the option and the trader will start los...
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