State Are you a day trader?
Options are fast becoming the favorite investment instrument for retail traders. High leverage and returns potential are attracting retail traders towards the Options market.
Market View - Bullish When you're expecting a rise in the price of the underlying and increase in volatility. Actions Buy Call Option A long call strategy involves buying a call option only. So if you expect Reliance to do well in near future then you can buy Call Options of Reliance.
However, most traders end up losing money. One of the reasons for losing trades is lack of a strategy or using the same strategy in all market scenarios.
Long Call Options Strategy
Most traders, especially beginners, adopt two strategies. One, when the market is bullish, they buy a Call Option.
Two, when the market is bearish, they buy a Put Option. These strategies are useful in only some market scenarios.
It is because most of the times market move in a narrow range or sideways. Buying a Call or a Put works only when there is a sharp movement in the market which doesn't forts options trading strategies most often.
7 Life-changing Options Trading Strategies!
In most of the times, markets move up by 2 points, come down by 1 point, move up by 1 point and so on. One of the beauties of Options trading is that you can make money in every market scenario- bullish, bearish or neutral.
But to do that you need to adopt the right strategy. There are forts options trading strategies 20 Option strategies that are popular and described in various websites. But not all strategies are meant for retail traders who trade with limited money and have a low-risk appetite.
Plus you'll still be able to look over the shoulders of successful RadioActive Traders as they respond to the market in real-time. Fusion subscribers can follow the currently open and historical trades of the RadioActiveTrading. Fusion also has a Report Tool for researching new Married Put positions, a Stock Insurance Tool to view Married Put possibilities on stocks you may own and a library of lessons that help you master the techniques discussed in The Blueprint. Note: A subscription to Fusion does not give you access to The Blueprint.
But there are some strategies which can help you make money in different market scenarios- When the market is moderately bullish or bearish: This a common day's market. You are holding a stock and you expect a moderate change in its price.
The Advisor may also engage in swap transactions and other derivative transactions and trade other instruments on behalf of the Partnership with the prior written approval of CMF and subject to its obtaining all required registrations or licenses. The Advisor makes no representation or warranty that the trading to be directed by it for the Partnership will be profitable or will not result in losses. For the avoidance of doubt and notwithstanding anything to the contrary in this Agreement, all indirect forts options trading strategies by the Advisor for and on behalf of the Partnership through the Master fund shall be governed exclusively by the Master Fund Agreement, except as otherwise provided herein. Moreover, the Advisor, with the prior written permission by original, fax copy or email copy of CMF, may enter into swaps and other derivative transactions permitted under Section 1 a of this Agreement with such swap dealers or other counterparties as it may choose for execution with instructions to give-up the trades to the broker designated by CMF provided that the swap dealer or counterparty and any give-up or other fees are approved in advance by CMF. All give-up or similar fees relating to the foregoing shall be paid by the Partnership after all parties have executed the relevant give-up agreements via EGUS or by original, fax copy or email copy.
What to do in such a market scenario? You can adopt 'Covered Call' or a ' Covered Put' strategy depending on whether the market is expected to be mildly bullish or bearish.
In case you are not holding any stocks, this strategy can also be implemented by buying the stocks of a company and selling the Options simultaneously. So, if you are owning shares of th options company then you buy Options of shares in equivalent lot sizes.
Profit/Loss for various closing prices
Selling the Call Option will earn you premium which will be your maximum profit. Since you would not be selling the shares, this loss would only be in the paper. So until and unless there is a sharp decline in the price of the stocks you are holding, you are good and will make good money. When the market is lackluster: There are times when the market or a stock is pretty stagnant. There is barely any movement.
In such a scenario, you can implement short straddle strategy. This strategy involves simultaneously selling a Call and a Put Option of the same underlying, strike price and expiry.
Suppose Nifty is currently moving in a range of and you expect it to hover around the same range in the near future. The lot size is 75 shares. The net premium received by selling Put and Call Options will be your maximum profit while the losses can be unlimited if the price moves sharply in either direction.