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Formula Options Trading Strategies

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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Sameer
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12K views2 pages

Formula Options Trading Strategies

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.

Uploaded by

Sameer
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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OPTION STRATEGIES IN TRADING

S.NO.

PARTICULARS

Expectations

SHAILESH SHINDE (M) 9870381515 Email : [email protected]


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 : [email protected]

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