OPTION CALL PUT TIPS GIVEN TODAY MORNING ROCKS

TO CHECK VISIT http://optioncallputtradingtips.blogspot.com/2020/07/option-call-put-tips-for-28-july-2020.html

NIFTY 11250 CALL  30 JULY ACHIEVED  1ST TARGET 56 BUY GIVEN @ 45 PROFIT OF  825 FOR FINAL TGT COST SL HAS TRIGGERED 

BANKNIFTY 22200 CALL 30 JULY ACHIEVED 1ST TARGET 270 BUY GIVEN @ 230 PROFIT OF 1000 FOR FINAL TGT COST SL HAS TRIGGERED 

ZEEL 145 PUT ACHIEVED TARGET 6 BUY GIVEN @ 4.5 PROFIT OF 4200

JINDALSTEL 185 CALL ACHIEVED TARGET 3.5 BUY GIVEN @ 2.7 PROFIT 4000

OPTION CALL PUT TIPS FOR 28 JULY 2020

BUY 2 LOTS NIFTY 11250 CALL  30 JULY@ 45  TARGET 55/65

BUY 2 LOTS BANKNIFTY 22200 CALL 30 JULY@ 230 TARGET 270/320

BUY 1 LOT ZEEL 145 PUT @4.5 TARGET 6

BUY 1 LOT JINDALSTEL 185 CALL @ 2.7 TARGET 3.5

How To make money with PUT Options

The Basic Put Option 

A put option provides an investor with the right, but not the obligation to sell a stock at a specific price.This price is known as the strike, or exercise price.

If you believe a specific stock or market will go downwards in near future you buy plain put option for that particular stock or index.The price of this option moves opposite to underlying security price.

Writing Put Options for Income

Buying a put option is similar to going short on a stock, or profiting from a fall in the stock price.  However, an investor can also short, or write a put option.  This lets him or her receive income in the form of receiving the option price and the hope is the stock remains above the strike price.  If the stock falls below the strike price, the put writer has the obligation to buy the stock (because it is effectively “put” to him or her) from the put option holder.  Again, this occurs if the stock price falls below the exercise price.

When writing put options, the investor who is short is betting that the stock price will remain above the exercise price during the term of the option.  When this happens, the investor is able to keep the premium and earn income from the strategy.

Combining One Put with Another Option 

To create  a more advanced strategy and demonstrate the use of put options in practice, consider combining a put option with a call option.   This strategy is known as a straddle and consists of buying a put option as well as going long a call option.  In this case, the investor is speculating that the stock is going to have a relatively significant move either up or down. 

For example, assume a stock trades at Rs 1000.  The straddle strategy can be relatively straightforward and consist of purchasing both the put and call at a strike price of 1000.  Two long options are purchased with the same expiration date and a profit is reached if either the stock moves up or down by more than the cost to purchase both options. 

Looking at an actual stock,  shares of Reliance recently traded around 1000 per share.  A call option trades at Rs 14 and a put option trades at Rs 15 for a total cost of Rs 28 for a single contract.  In this case, the stock would have to move up past Rs 1028 for the call option to start to pay off and below Rs 972 for the put strategy to start to pay off.

STRANGLE IN SBIN WITH BEARISH BIAS

SBIN is in news today for reducing credit policy.Moreover tomorrow is bi monthly RBI credit policy which bring SBIN more in focus.On technical grounds there is increase in open interest and significant surge in vix in this counter. One can take Strangle option strategy in options with slight bearish bias.

Leg 1: Buy 1 Lot SBIN 340 call @ 2.4-2.5

Leg 2: Buy 1 Lot SBIN 295 put @ 4.6-4.8

PAYOFF CHART

CLICK READ MORE TO CHECK PAYOFF TABLE

TIMING IS ESSENCE WHEN BUYING CALL OPTION

Timing is of great essence in the stock market. Same applies to the derivatives market too, especially since you have multiple options. So when do you buy a call option?
To maximize profits, you buy at lows and sell at highs. A call option helps you fix the buying price. This indicates you are expecting a possible rise in the price of the underlying assets. So, you would rather protect yourself by paying a small premium than make losses by shelling a greater amount in the future.

You thus anticipate a rise in the stock markets, i.e., when market conditions are bullish.

Timing is of great essence in the stock market. Same applies to the derivatives market too, especially since you have multiple options. So when do you buy a call option?

To maximize profits, you buy at lows and sell at highs. A call option helps you fix the buying price. This indicates you are expecting a possible rise in the price of the underlying assets. So, you would rather protect yourself by paying a small premium than make losses by shelling a greater amount in the future.

You thus anticipate a rise in the stock markets, i.e., when market conditions are bullish.

How to Trade Options in Bear Market

A bear market is defined as a drop of 20% or more in a market average over a one-year period, measured from the closing low to the closing high. Generally, these market types occur during economic recessions or depressions, when pessimism prevails .Bear markets reflect slowing economic growth and corporate financial problems. Fearful traders panic and dump their holdings at a loss, which pushes stock prices down further and ignites a fresh round of selling. Investors can use several bear-option strategies to profit from a market-wide selling frenzy

Step 1

Buying put options is a straightforward bear strategy with low risk/high reward potential. The goal is for the stock price to drop below the put option strike price so the option is in the money prior to expiration. The amount of risk is limited to the option price plus the commission.

Step 2

Buying Options for the Purpose of Hedging

Other than speculation, options can also be bought as a means to insure potential losses for an existing position in the underlying. To hedge a long underlying position, a protective put can be purchased. Similarly, to protect a short underlying position, a protective call strategy can be used.

In-the-money Covered Call Strategy

In-the-money covered call options are sold when the investor has a neutral to slightly bearish outlook towards the underlying security as their higher premiums provide greater downside protection.

Out-of-the-money Covered Call Strategy

This is a covered call strategy where the moderately bullish investor sells out-of-the-money calls against a holding of the underlying shares. The OTM covered call is a popular strategy as the investor gets to collect premium while being able to enjoy capital gains (albeit limited) if the underlying stock rallies.

Out-of-the-money options are cheaper to buy than in-the-money options but they are also more likely to expire worthless.

For call options, this means that the higher the strike price, the cheaper the option. Similarly, put options with lower strike prices are therefore less expensive to purchase.

However, the size of the premium alone does not tell us the whole story. In fact, at-the-money options can be considered the most expensive even though their premiums are lower than in-the-money options. This is because their time value is highest and time value is the part of the premium that will waste away as the expiration date approaches.

Call & Put Buying Combinations

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LONG BUTTERFLY STRATEGY

Short two calls at the middle strike, and long one call each at the lower and upper strike.  The upper and lower strikes (wings) must both be equidistant from the middle strike (body), and all the options must be the same expiration.

Max Loss

The maximum loss would occur should the underlying stock be outside the wings at expiration.

Max Gain

The maximum profit would occur should the underlying stock be at the middle strike at expiration.