strategy

Bear Put Spreads Option Strategy

Bear put option strategy is employed when the trader think the price of the underlying asset will go down moderately in the near term. In this strategy, the trader buys an in-the-money-put-option of higher strike price and sell an out-of-money-put option of lower strike price of the same underlying security with the same expiration date. By using this strategy the options trader reduces the cost of establishing the bearish position. By shorting the out-of-the-money put, the options trader reduces the cost of establishing the bearish position but forgoes the chance of making a large profi...
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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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Option Strategy: Buy stock, Buy Put, Synthetic Call

After discussing Long Call and short Call strategy, the next strategy for option trading strategy is Buy stock and Buy Put. This is a low-risk strategy, traders can limit the loss in case of fall in the market, but potential profit  is unlimited. In this strategy, we purchase a stock since we feel bullish about it but what if the price of stock went down..... you wish you had some insurance against price fall,  so buy a put on the stock this give you right sell on stocks at a certain price which is the strike price. The strike price can be the price at which you bought the stock (ATM strike...
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