Thursday, 30 July 2015

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Wednesday, 22 July 2015

Advantages of Options


Options can provide these advantages to your portfolio
Cost Efficiency Options have great leveraging power. As such, an investor can obtain an option position that will minimize a stock position almost identically, but at a huge cost savings.
Higher Potential Returns you don't need a calculator to figure out that if you spend much less money and make almost the same profit, you'll have a higher percentage return. When they pay off, that's what options typically offer to investors.
Flexibility Options can be used in a wide variety of strategies, from conservative to high-risk, and can be tailored to more expectations than simply "the stock will go up" or "the stock will go down."
Hedging Options allow investors to protect their positions against price fluctuations when it is not desirable to alter the underlying position.
Volatility The use of options also allows the investor to trade the market's "third dimension" Options allow the investor to trade not only stock movements, but also the passage of time and movements in volatility. Most stocks don't have large moves most of the time. Only a few stocks actually move significantly, and then they do it rarely.

 
 

Tuesday, 21 July 2015

BULLISH TRADING STRATEGIES

Bullish Trading Strategies
Bullish strategies in options trading are employed when the options trader expects the underlying stock price to move upwards. It is necessary to assess how high the stock price can go and the timeframe in which the rally will occur in order to select the optimum trading strategy. 
Very Bullish
The most bullish of options trading strategies is the simple call buying strategy used by most novice options traders.
Moderately Bullish
In most cases, stocks seldom go up by leaps and bounds. Moderately bullish options trader usually set a target price for the Bull Run and utilizes bull spreads to reduce risk. While maximum profit is capped for these strategies, they usually cost less to employ.
Mildly Bullish
Mildly bullish trading strategies are options strategies that make money as long as the   underlying stock price does not go down on options expiration date. These strategies usually provide a small downside protection as well. Writing out-of-the-money covered calls is one example of such a strategy.
 
 
 

Saturday, 18 July 2015

OPTION STEATGEY : BULL CALL SPREAD

Bull Call Spread
  • In a bull call spread strategy; an investor will simultaneously buy call options at a specific strike price and sell the same number of calls at a higher strike price. Both call options will have the same expiration month and underlying asset. This type of strategy is often used when an investor is bullish and expects a moderate rise in the price of the underlying asset.

  • Bull call spreads can be implemented by buying an at-the-money call option while simultaneously writing a higher striking out-of-the-money call option of the same underlying security and the same expiration month.

Friday, 17 July 2015

OPTION CALLS TYPE

Short-Term Call Options
When an option trader buys a call option, trader has the right to buy the underlying at strike price before expiration. Keep in mind that just because the option trader has the right to buy the stock, doesn’t mean that trader has to necessarily do so. The call option just like a put option can be sold anytime up until expiration for a profit or loss
Bull Call Spreads
When implementing a bull call spread, an option trader purchases a call option at one strike and sells the same number of calls on the same stock at a higher strike with the same expiration date.
By implementing a bull call spread, traders can hedge their bets limiting the potential loss. This is the advantage when comparing to purchasing a call outright. Remember that there are no sure-fire ways to make money by using options. However, knowing and understanding the strategy is a good way to limit losses.
Long-Term Call Options
The long call option strategy is the most basic option trading strategy whereby the options trader buys call options with the belief that the price of the underlying security will rise significantly beyond the strike price before the option expiration date.

Tuesday, 14 July 2015

HOW TO TRADE IN OPTION CALL & PUT

Definition of option
The right, but not the obligation, to buy or sell specific amount of a given stock,  index, at a specified price  during a specified period of time.
The price of the option depends on the price of the underlying, plus a risk premium.
Medium of exchange for options contracts allowing the holder the right to sell or buy an underlying commodity on an open market. The option contracts define the trading limitations of the market, including the option type and the expiration date.
Options are derivatives, which mean their value is derived from the value of an underlying investment. Most frequently the underlying investment on which an option is based is the equity shares in a publicly listed company. Options are traded on securities marketplaces among institutional investors, individual investors, and professional traders and trades can be for one contract or for many. Fractional contracts are not traded.

Saturday, 20 June 2015

Butterfly Spread

All the strategies up to this point have required a combination of two different positions or contracts. In a butterfly spread options strategy, an investor will combine both a bull spread strategy and a bear spread strategy, and use three different strike prices. For example, one type of butterfly spread involves purchasing one call (put) option at the lowest (highest) strike price, while selling two call (put) options at a higher (lower) strike price, and then one last call (put) option at an even higher (lower) strike price.

Thursday, 28 May 2015

COVERED LONG HEDGE WITH OPTION STRATEGY

Today we offer you Sbin Long Future strategy covered with long Put.In light of expected RBI policy we believe this strategy will give you high upside potential with limited down side risk.
You buy stock because you’re bullish and expect the stock's price to go up. Since you’re bullish, chances are you aren’t too preoccupied with the downside. But as we all know, markets can shift quickly. Puts are a handy tool to help lock in profits on your existing positions in the event of a sudden reversal. This is the strategy which is ideal in this case.  
1ST LEG 
"Buy SBIN Future Jun @ 280"
2ND LEG
"Buy SBIN Jun 280 Put @ 10"