Wish to start trading stock options? Here are choices !!!

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With the entire buzz this year about GameStop and gamma squeezes, you might have heard the term ‘call options’ going around. But what exactly are options? Should you start trading 

with them? And when it comes to options, what are your, well, options?

What is a call option?

A call option is a contract that gives investors an option to buy shares at a specific price at a later date. Call options are bought when investors are banking on a share price to rise, so they can profit from the difference in price.

For example, if you were to buy a call option for Netflix (NASDAQ:NFLX) stock at 500 per share (called the strike price) and think it will be going up to, say,502, you’re buying a call option to profit from the speculative rise in price.

It’s all kind of like being at the casino. You don’t know for sure what’s going to happen to the stock, but you think it will perform well, so you place your bets—or in this case, your call option.

If this is all starting to sound a lot like the GameStop scenario, you’re on the money. In this situation, investors bought call options (and stocks) by the bucket load in an attempt to hedge the stock. But as it soared higher, the market makers (the ones that sold the options) had to buy more stock, resulting in a gamma squeeze.

What are my options with options?

The reason that investors are drawn to buying call options is that they can obviously make money from the stock going up in price. But before you go and start placing your bets, there are a few important caveats to know about.

Firstly, in order to buy a call option, investors have to pay a premium. If the investor loses money on their call option, they will also have to factor in the loss of the premium.

The next thing to know is that call options differ in price depending on whether they’re ‘in the money’ or ‘out of the money’. When a call option is ‘in the money’, it means the stock price is already in profit, and the call option will be more expensive. For example, if you bought a stock at a strike price of 35, but it’s currently trading at 37. A call option that is ‘out of the money’ will be trading at below the strike price and will be cheaper (but also riskier) to buy.

The other thing to keep in mind is that call options have expiration dates. Whether it’s weekly, monthly, or quarterly, in order to buy the shares and then sell them immediately to make a profit, investors will need to exercise their option before this expiry date. Call options are more expensive if they have a longer expiry window because investors will have a longer period to wait for the stock to be ‘in the money’, and vice versa with shorter expiry periods.

Just when you thought we were done explaining options, here we are with another option. Alongside a call option, there is also something called a put option. Unlike call options that allow buyers to buy options at a set price, put options lets buyers sell an option at a set price. If the share price drops, then the buyer profits because it gets to sell it at the higher price.

Are call options a good call?

Now that you know everything there is to know about options—and hopefully, you haven’t read the word options so many times it’s lost all meaning—there are a few different strategies out there to start trading.

Ranging from a ‘covered call’, to a ‘long call’, and a ‘short call’, there are many strategies you can use to win at the options game. If you’re ready to give it a go, look out for a brokerage firm to get started. Just know that there are usually about four or five different levels of trading that you will need to be approved before you can start trading.

There are many who have profited from trading call options, but, like all investing, there are also a lot of stories of people getting burned. But no matter which strategy you choose, even if some may seem less risky than others, trading using options, like all investing, comes with inherent risks.

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How To Use Index Options Strategies to Manage Portfolio

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Standardized call contracts, which are some of the tools we will review, were introduced to the markets in 1973, along with the Options Clearing Corporation and, of course, the Black Sholes Option Pricing Model. As we’ve already discussed, buying a call gives the purchaser the right to buy the underlying security for a specific price either at (for a European style contract) or up to (for an American style contract) a specified future expiration date. Sellers of calls become obligated to deliver the underlying securities at these same terms.

Standardized put contracts were introduced into the market four years after the introduction of calls. Buying a put gives the purchaser the right to sell the underlying security for a specific price either at (for a European style contract) or up to (for an American style contract) a specified future expiration date. Sellers of puts become obligated to receive the underlying securities at these same terms.

Puts were quickly adopted as a way to protect or insure portfolios against losses. This differs greatly from the practice of “portfolio insurance,” which was a strategy of selling index futures in declining markets and using those proceeds to help offset portfolio losses. “Portfolio Insurance” has often been labeled as a significant catalyst in the 1987 stock market crash while buying puts to protect against losses has never been implicated in anything except teaching novice investors the potentially expensive lesson to pay attention to volatility.

While there are many entities, such as trading desks and hedge funds, that trade options exclusively and are focused on complex, multi-legged trades, there are still traditional investment managers that take a more basic approach to options. Generally speaking, when it comes to options, equity portfolio managers use them to accomplish two things: i) enhance returns and ii) protect returns. Various option strategies can provide both.

Return Enhancement

A popular strategy employed by managers is to sell “covered” calls. 

Say you have an account that is technology focused and you are looking to augment the overall portfolio yield. You can do this by selling index calls against that position. Any potential delivery obligation would be in cash. 

For this example, assume the Nasdaq-100^® Index is currently trading around 12,700. You want to sell calls but you don’t want to be forced to fulfill your obligation to deliver. In order to protect your position, you want to set the strike price high enough so that the odds of your having to liquidate the position are very low but not so high that you end up earning only a modest premium.

This is where knowing the volatility (23% for this example), of the price level of NDX comes in handy. Say you want to sell one contract that expires in 25 days. An expected, one standard deviation move in the index level of NDX over the next 25 days can be found using the current index level of NDX (12,7000), the annualized volatility NDX (23% meaning that on an annualized basis, you would expect the NDX to fluctuate up to 23% of its current level 68% of the time), and the square root of 25/365, (which is converting annualized volatility of 365 days to a term of 25 days).

Given an annualized volatility of 23%, a one standard deviation move in NDX over the next 25 days would be 764 index points meaning 68% of the time, the NDX would be expected to end up between 12700 plus or minus 764, from 11935 to 13464.

Looking at the options montage for NDX, you see that there is a 13500 strike call that last sold for 68 and a 13450-strike call that last sold for 80, which would net you 6850 or 8070 respectively. If you think that all relevant news has already been priced into the markets and you can’t foresee any other surprises on the horizon that would cause markets to trade outside a one standard deviation range, you go ahead and sell that 13500 strike call and collect the 6850 premium. So what happens if the markets decide to completely ignore your thoughtful analysis and decide to run up beyond your projection, threatening to blow up your trade? At a high level, one of two things could happen:

SHOULD WE INVEST IN IT STOCKS DURING COVID-19?

The COVID-19 pandemic has been a massive challenge for a lot of industries. But for one sector it has proven to be a shot in the arm – the technology space.

In India, the technology landscape is evolving and the larger players are re-inventing themselves. Midcap companies too are growing faster. Digital and internet consumer companies are also seeing a lot of traction.

But how will the sector perform going forward? Nilesh Shah of Envision Capital shared his views.

Higher valuations ahead?

According to Shah, technology stocks have been huge outperformers and several of the technology companies in India have been able to kind of win some large deals across the globe and bring about increased scalability in their business models.

Margins have expanded and therefore that has translated into even strong valuations, he said, adding yhat several companies have managed to win some very large deals.

Will the IT rally sustain?

Going forward, Shah believes the opportunity for technology companies is likely to sustain and even get bigger. It doesn’t seem to be just a short term phenomenon, but it is something which looks very enduring, he noted.

Preferred largecaps in the sector?

Tata Consultancy Services (TCS), Infosys, Wipro, and HCL Technologies – all these four companies have a very sound business strategy, said Shah.

"Each one of them has an edge somewhere in consulting, hi-tech, or in products. But the company that we like the most today, especially keeping in mind both growth prospects as well as the valuations, is HCL Technologies.

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Last week on 13 April 2021 only we have predicted downtrend in the ICICIBANK stock & given the put option ,& today on 19 April 2021 it has become the top looser -5.52%.

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Why Options Trading Is Must In Stock Market To Tackle COVID-19 Uncertainties !!!

Bouts of volatility and uncertainty come with opportunities. Especially lucrative enough to get the long-term investors glued to the screen for attractive prices.

Confused !!!!😕  how to invest  in such unpredictable market !! 😕

feel hassle free to contact us on whatsapp number 90395422248 to know how to invest in such kind of market 🙋🙋

It has been more than a year now since we have been overwhelmed by this global pandemic. The highs and lows are part of the equity market and so are the bouts of volatility. However, today's headline-driven market has lost significance of data analytics and has thrown the predictive models under the bus.

But there is one thing for sure about bouts of volatility. Such bouts of volatility and uncertainty come with opportunities. Especially lucrative enough to get the long-term investors glued to the screen for attractive prices.

However, such bouts could trap some of the crucial portions of investable capital for a long time if one wrong call is made. Hence, it is quintessential in such an unpredictable market to introduce Options in our investment portfolios.

We have talked about how traders optimize the equity Options to modify their risk profiles and amplify their returns but let us revisit Options' utility for investors, who could be interested in modifying the price profile of their invested stocks at least for a while (till the dust settles).

Here we will focus on how a set of intentions of an investor can be monetized using equity options. But before we go any further let us revisit the four option transactions, what would they essentially mean:

A. Buying a Put would entail a Choice to Sell a Stock 

B. Buying a Call would entail a Choice to Buy a Stock 

C. Selling a Put would entail Obligation to Buy a Stock

D. Selling a Call would entail Obligation to Sell a Stock

Two additional notables.

Firstly, all aforementioned transactions would happen at a predefined price point for the stock a.k.a Strike Price.

Secondly the cost, while buying options would be onetime cost of Premium, selling options would require margin (portion of entire transaction value) to be deposited upfront but with a small receipt of premium.

Let us see how these Option trades can be embedded into investment activity to improve our efforts of dealing with uncertainty.

1. With the existing uncertainty-led volatility there would definitely come a fear of losing wealth in stock if it is at an attractive price led by deep cuts gets even deeper, let us understand how Options can help investors take care of this fear.

Use the transaction A (as outlined above) and Buy a Put of a Strike Price below which one would not be comfortable holding the stock. In case the stock falls below the strike upon expiry we have a choice to sell the stock at strike price.

Alternatively, one may also Buy a Call (Transaction B) instead, now one gets the choice to buy the stock on the day of expiry. Exercise the choice if the stock ends up above the Strike Price upon expiry. But in case if the stock were to fall further, just don't buy it.

Cost would be Premium (3-5 percent of the stock price). Put Option will protect the investor against any fall below the strike price at the end of expiry. Call Option Premium is paid to buy a comfort of getting in only if turns out to be a money maker.

Lastly transactions C&D involve selling of Options where comes a commitment but still if in case one wishes to sell a stock at a predefined price and wouldn't want anything more than what the stock has to offer -  resort to transaction D and Sell a Call of the Strike Price at which one wishes to sell the stock.

Transaction D would require margin but that could partially be covered with the stock holding or earmarked capital for a further Buy.

Transactions A&B are protection mechanism and in today's situation a must have addition to every investment activity undertaken.

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New Cases Of Corona Rising, Increased Investor Concern !!!

The sentiment of the stock market is deteriorating due to the ever increasing cases of Corona. Due to this, the market has seen a lot of ups and downs in the past week. However, the RBI kept interest rates at a constant rate for the fifth time in the last week, leading to a recovery in the market. But the lockdown put pressure on banking stocks and the overall market declined. Today Sensex lost 1707 points to end at 47883 and the Nifty was down 524 points at 14310. The Bank Nifty index dropped 1656 points to 30792. However, midcap and smallcap sectors have given tremendous returns to investors. The IT and pharma sectors witnessed strong buying due to the constantly weakening rupee against the US dollar. Both indices gained 4-6% in the past week.

In terms of overall market, there is a possibility of huge market volatility in the medium term. There are two main reasons for this, the March quarter results and new cases of corona epidemic. In such a situation, shopping in select sectors may fall in some. In this, IT and banking shares can be in focus.

Five big events will be very important for investors this week...

Fourth quarter results of 2020-21: Today, IT sector giant TCS came out with quarterly results. With this, the fourth quarter results will start coming. About 21 companies, including Infosys, Wipro, HDFC Bank, Mindtree, Hathaway Bhavani, HDIL, Lloyd Metal, will present quarterly results this week.

New corona cases and lockdown status: Corona was confirmed in one lakh 52 thousand 565 people in the country on Saturday. For the first time since the onset of the epidemic, so many infected have been identified in a single day. In the last 24 hours, 90,328 people recovered and 838 people died. The recovery rate has also come down to close to 90%, which was 93.3% on Friday. At the same time, 100 million people have been vaccinated in the country so far.

Lockdown is being imposed in major states of the country to prevent the infection of Corona. Kerala states including Maharashtra, UP, Delhi, Madhya Pradesh, Gujarat have night curfew and total lockdown.

The impact of the lockdown on the banking sector: The banking sector is being severely affected by lock-in-place and increasing strictures in major states. Because this is affecting the quality asset of the bank. Meaning other banking businesses including debt collection will be completely affected. The result of this was that the bank index lost more than 4% last week. It may fall even further with increasing hardening. This will affect the sentiment of the overall market.

Domestic economy data will come: On Monday of this week, economy data will also come. It will release data on industrial production for the month of February and retail inflation for March, while on Wednesday the government will release the data of wholesale inflation. In January, industrial production fell 1.6% due to a decline in the manufacturing and mining sector. At the same time, retail inflation rose to 5.03% in February from 4.06% in January, due to the rise in food prices. Similarly, trade data will be made public on Thursday and Foreign Reserve Exchange data on Friday.

The rupee will keep an eye on the move: The rupee has weakened by 161 paise against the dollar due to rising new cases of corona, spending on vaccine and RBI's plan to buy bonds. Now the price of one US dollar has been increased to 74.43 rupees. The rupee came to this level on November 4, 2019. According to market analysts, in the next few days, the rupee may again see a strength. Because the US Fed Reserve's Monetary Policy meeting is going to happen soon.

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What Are Some Of The Mistakes People Make That Are Destroying Their Financial Lives?

Buying insurance policies for investment purpose: Have you invested your money in insurance plan to get a return in future? Big mistake! Out of 100 people I have spoken, 95 have made this mistake.. Very few people understand the difference between term plan, endowment plan, etc.

Not able to crack the credit card mystery: Are you paying the minimum amout due on your credit card payment? If yes, you are trapped in credit card mystery. On the other side, very few people really enjoy the benefits like free lounge access, buy one get one movie ticket, etc.

No idea about the power of compounding: Everyone has come across the formula of compounding but very few people really understand its power. This is the reason people do not start saving early and hence lose out on the power of compounding. Albert Einstein said that power of compounding is the eighth wonder of the world.

Buying stocks based on tips without any knowledge: You will find every Tom, Dick and Harry giving stock tips over Facebook, Whatsapp and TV. Unfortunately, a lot of people fall in a trap of these people and invest money without any knowledge. What is the end result? They lose everything!

Becoming a victim of lifestyle inflation: Moving from 2bhk to 3bhk just because you have got a good hike, upgrading your car because you have got some bonus are some of the examples of lifestyle inflation destroying financial lives.

Buying things just because they are on discount: From Amazon’s “Great Indian Sale” to Flipkart’s “The Big Billion Days”, everyone is encashing on the weakness of Indians buying things just because it is on discount. Funny thing is now you will find such sales every other month.

Getting tempted to go for an exotic vacation : just because someone put a post on Facebook and Instagram: Instagram and Facebook are introduced as Social Media Platform but they are actually destroying the entire social fabric. Friends are jealous of each other. Most of them are just social media friends. Facebook and Instagram are more of a marketing platform where people post stuff just to get some likes and companies promote their product and services.

Spending a bomb on weekend parties: 5 days work and 2 days party: This is the new culture in India. Pubs are jam-packed on weekends where people would spend a bomb on drinks. By the end of the month, they are left with no money.

No track of cash flow: Very few people keep a track of their expenses. Most of them just don’t know where the money is gone.

No emergency budget: Not having any extra money in the case of an emergency results in embarrassing situations of borrowing money from friends and relative. Some people even break their investments and make a big mistake.

No medical insurance: I have seen people losing out the lifetime savings just because they did not take medical insurance. One accident can shatter all financial dreams. Better be insured. Healthcare cost is rising and it is impossible to manage it without insurance.

No financial plan: People do not know why they need to save money because they don’t know their financial goals.

No diversification: Some people would invest all their money in real estate, some would invest all the money in gold, some would just keep it in the locker, some would invest all the money in the stock market. Very few people understand the right way of diversifying the investments.

Spending all the hard earned money on children marriage: Thanks to our hypocritic society! People save their entire life just to spend all the money on random relatives who only bother about the food and arrangements. What is the topic of discussion at weddings? “Sharma ji ne to unki beti ko car gift kari. (Mr Sharma has gifted a car to his daughter)”. “Mehta ji ne unki beti ko 50 tola sona diya” (Mr Mehta has gifted 500-gram gold to his daughter.)

Buying excessive gold only to keep it in the locker: Gold worth lakhs is kept in lockers only to be used once or twice a year. This is resulting in the money getting blocked and hence not getting any returns on it.

An extremely conservative approach with investment: Traditionally, people have been risk-averse. They would just have an FD and live on 6–7% annual interest. Some would just keep the cash at home.

Lack of clarity between asset and liability: Having a car is not an asset because it consumes fuel and has a maintenance cost. Its price will only depreciate in the future. Car is a necessity but people spend a lot of money and even take the loan to buy a luxury car over and above their budget.

Considering frugal as cheap: A lot of people confuse economic spending with being cheap. An economic spender does not compromise with quality but does his research well enough to buy the product or service at the lowest rate.

Procrastinating investment decisions: “I will invest from tomorrow”. But the problem is that tomorrow never comes.

Spending a lot of money on fancy stuff: A fancy car, a fancy house, a fancy watch, a fancy vacation. People want fancy stuff and willing to pay a premium irrespective of the value it generates.

Lack of patience: “I can’t wait for my wealth to grow. I want to double my investments in 6 months. I need to invest in the stock market.” A lot of people lose their lifetime of savings because they don’t have the patience to understand the investment option and would blindly trust anyone with their investment.

Depending upon others for investment decisions: “I don’t know anything about investment. Please manage my money.” Unfortunately, a lot of people are dependent upon others with their hard earned money. This is the reason we have a lot of self-proclaimed experts giving stock market tips.

Getting too greedy with investment: People blindly invest their money in penny stocks, day trading, futures and options. They eventually lose all their hard earned money. What is the root cause? GREED 

Lack of disciplined investment: Instead of spending what is left after investing, people invest what is left after spending. This results in indisciplined investment.

Root Cause: Lack of knowledge about personal financial management!

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Buying A Put V/S Selling A Call: How To Decide

Many F&O traders normally are confused between buying a put option versus selling a call option. Broadly both are bearish strategies and the difference between a call and put option is that while the former is a right to buy the later is a right to sell. Obviously when you buy an option your risk is limited to the premium you pay. That is because your loss is limited to the premium paid while your profits can be unlimited. On the other hand, when sell an option, your income is limited to the option premium received but the losses can be technically unlimited. Let us understand the difference between a call and a put with example. Let us also understand how to trade in call and put options, both on the buy side and the sell side.

Call and put option with a live example
 Let us assume that the current market price of Tata Steel in the spot market is Rs.695/-
ContractCall PremiumPut PremiumITM or OTMNovember 680 Call24.00-ITMNovember 680 Put-7.00OTMNovember 720 Call7.50-OTMNovember 720 Put-28.20ITM  
An In-the-Money (ITM) option is one that has intrinsic value and time value. Take the case of the 680 Call Option on Tata Steel. The Call is currently quoting at Rs.24, of which Rs.15 is explained by the intrinsic value of call option (695-680). The balance Rs.9 is the time value. In case of the 680 put, the intrinsic value is zero and so the entire Rs.7 is explained by time value of money.
Let us come to the 720 strike. The 720 Put is currently quoting at Rs.28.20. Of this Rs.25 is explained by intrinsic value (720-695) and the balance Rs.3.20 is explained by time value of money. In case of the 720 call the entire Rs.7.50 is the time value of money.
What determines the economics of buying a put versus selling call?
As we have already seen, you buy put option when you expect sharp downsides in the stock. Therefore, you bet by limiting your risk to the option premium and play for the downside in the stock. You sell call option when you expect that the upsides for the stock are limited. You are indifferent to whether the stock is stable or goes down as long as the stock does not go above the strike price. Before getting into how to trade in call and put options, let us first understand the difference between call and put positions with the example above.
Let us now consider 2 investors viz. Alpha and Beta. Alpha is an aggressive investor who believes that with the metals cycle already overpriced, Tata Steel price should correct. He expects the price to correct to Rs.640 in the next 1 week. He can sell the Tata Steel 680 call and get a maximum profit of Rs.24, which is a good profit on his margin. However, Alpha is taking on a very huge risk here. Since Alpha has sold the 680 Call at Rs.24, he is only covered up to Rs.704. Any price above that will result in unlimited losses for Alpha. The better option will be buying the 680 November Put option. If the price touches Rs.640, then he makes a profit of Rs.33/- (40-7). In a worst case scenario if the Tata Steel stock goes up to any level, his loss is limited only to Rs.7/- share.
Now, let us consider the case of Beta who is more conservative. Beta is of the view that the stock may be hovering in a range. While downsides are open, its upside is limited to Rs.720. The best option for Beta is to sell the 720 call. Buying the 720 put may be too expensive and buying the 680 put may be too out of the money. Selling the 720 call will give him a premium of Rs.7.50 and serve his view.
Buying a put option versus selling a call option: How to decide?
Your decision whether you should buy a put option or sell a call option will be broadly guided by the following 4 considerations:

Are you having an affirmative view on the stock or index going down? In that case it makes more sense for you to buy the put option. Your downside risk will be limited to the option premium paid and your profits in case the stock falls will be unlimited.

Are you having a cautiously non-affirmative view on the stock? In this case you are only confident that the stock price is unlikely to rise beyond a point. You are indifferent to whether the stock price goes down or stays stagnant at current levels. In such cases, it makes eminent sense to sell the call at the strike where you believe the stock to top out. You can also sell a lower call for higher premium but that is taking on unnecessary risk.

Can you pay the margins for the trade? When you buy a put option, your total liability is limited to the option premium paid. That is your maximum loss. However, when you sell a call option, the potential loss can be unlimited. Hence your margining will be exactly like how the margins are imposed on futures. Be prepared for higher capital outlay in this case.

Lastly, are you playing for a rise in volatility or fall in volatility in the market? If you are playing for a rise in volatility, then buying a put option is the better choice. However, if you are betting on volatility coming down then selling the call option is a better choice.

How to trade put and call options is all about knowing the difference between call and put options in terms of risk and return potential. Your choice can actually be a simple one.

BEARISH MARKET TRADING STRATEGIES

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When your outlook on an underlying security is bearish, meaning you expect it to fall in price, you will want to be using suitable trading strategies. A lot of beginner options traders believe that the best way to generate profits from an underlying security falling in price is simply to buy puts, but this isn't necessarily the case.

Buying puts isn't a great idea if you are only expecting a small price reduction in a financial instrument, and you have no protection if the price of that financial instrument doesn't move or goes up instead. There are strategies that you can use to overcome such problems, and many of them also offer other advantages.

On this page we discuss the benefits of using bearish options trading strategies, and some of the disadvantages too. We also provide a list of the ones that are most commonly used.

·         Why Use Bearish Options Trading Strategies?

·         Disadvantages of Bearish Options Trading Strategies

·         List of Bearish Options Trading Strategies

Why Use Bearish Options Trading Strategies?

First, we should point out that purchasing puts is indeed a bearish options trading strategy itself, and there are times when the right thing to do is to simply buy puts based on an underlying security that you expect to fall in price. However, this approach is limited in a number of ways.

A single holding of puts could possibly expire worthless if the underlying security doesn't move in price, meaning that the money you spent on them would be lost and you would make no return. The negative effect of time decay on holding options contracts means that you'll need the underlying security to move a certain amount just to break even, and even further if you are to generate a profit.

Therefore, buying puts options is unlikely to be the best strategy if you are anticipating only a small drop in price of the underlying security, and there are other downsides too. This isn't to say that you should never simply buy puts, but you should be aware of how some of the downsides can be avoided through the use of alternative strategies.

There is a range of trading strategies suitable for a bearish outlook, and each one is constructed in a different way to offer certain advantages. An important aspect of successful trading is to match a suitable strategy to whatever it is you are trying to achieve on any given trade.

As an example, if you wanted to take a position on an underlying security going down in price but didn’t want to risk too much capital, you could buy puts and also write puts (at a lower strike) to reduce some of the upfront cost. Doing this would also help you offset some of the risk of time decay.

Another way to reduce the negative effect of time decay would be to include the writing of calls. You can even use strategies that return you an initial upfront payment (credit spreads) instead of the debit spreads that have an upfront cost.

Basically, bearish options trading strategies are very versatile. By using the appropriate one you cann't only profit from the price of the underlying security falling, but you also have an element of control over certain aspects of a trade like the exposure to risk or the level of investment required.

Disadvantages of Bearish Strategies

Although there are clear advantages to using bearish options trading strategies other than simply buying puts, you should be aware that there are some disadvantages too. Most of them usually involve a trade off in some way, in that there's essentially a price to pay for any benefit you gain.

 For example, most of them have limited profit potential; which is in contrast to buying puts where you are limited only by how much the underlying security can fall in price. While this isn't necessarily a huge problem, because it's reasonably rare for a financial instrument to drop dramatically in price in a relatively short period of time, it does highlight that to get an extra benefit (such as limited risk) you have to make a sacrifice (such as limited profit).

In some respects, the fact that there are a number of different strategies to choose from is a disadvantage in itself. Although it's ultimately a good thing that you have a selection to choose from, it's also something of an extra complication, because it takes extra time and effort to decide which is the best one for any particular situation.

Also, because most of them involve creating spreads, that require multiple transactions, you will have to pay more in commissions. In truth, though, these disadvantages are fairly minor and far outweighed by the positives. The fact is if you can become familiar with all the various strategies and adept at choosing which ones to use and when, then you stand a very good chance of being a successful trader.

List of Bearish Strategies

Below is a list of the more frequently used strategies that are suitable for when you have a bearish outlook. There's also some brief information about each one: including the number of transactions required, whether a debit spread or a credit spread is involved, and whether it's appropriate for beginners.

You can get more detailed information on each one of these by clicking on the relevant link. If you would like additional help in choosing a strategy, then you can use our selection tool which you can find here.

Long Put

This is a single position strategy that involves only one transaction. It's suitable for beginners and comes with an upfront cost.

Short Call

Only one transaction is required for this single position strategy, and it produces an upfront credit. It isn't suitable for beginners.

Bear Put Spread

This simple strategy is perfectly suitable for beginners. It involves two transactions, which are combined to create a debit spread.

Bear Call Spread

This is relatively straightforward strategy, but it requires a high trading level so it isn't really suitable for beginners. A credit spread is created using two transactions.

Bear Ratio Spread

This is complex and not suitable for beginners. It requires two transactions and can create either a debit spread or credit spread, depending on the ratio of options bought to options written.

Short Bear Ratio Spread

This is fairly complicated and not ideal for beginners. A credit spread is created and two transactions are involved.

Bear Butterfly Spread

The bear butterfly spread has two variations: the call bear butterfly spread and the put bear butterfly spread. It's not suitable for beginners; it requires three transactions and creates a debit spread.

Bear Put Ladder Spread

This requires three transactions to create a debit spread. It's not suitable for beginners due to its complexities.

BANKBARODA OPTION STRATEGY ROCKS

STRATEGY GIVEN @ 9.31 AM TO CHECK VISIT http://optioncallputtradingtips.blogspot.com/2021/03/bankbaroda-option-strategy-for-expiry.html 

"BANKBARODA 75 CALL BOOK PROFIT NEAR 2.1 & BUY GIVEN @ 0.8 PROFIT OF 15210 

BANKBARODA 72 PUT  BOOKED PROFIT@ 1 BUY GIVEN @ 0.7 PROFIT OF 3510"

PROFIT 18720 

INVESTMENT 17550 

RISK :: RETURN

17550 :: 36270

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OPTION CALL PUT TIPS ROCKS

OPTION TIPS GIVEN IN TODAY'S POST @ 9.21 AM TO CHECK VISIT http://optioncallputtradingtips.blogspot.com/2021/03/blog-post_23.html

INDUSINDBK 1000 CALL  ACHIEVED TARGET 14 BUY GIVEN @ 12 PROFIT OF 1800

BANKBARODA 75 CALL ACHIEVED TARGET 1 BUY GIVEN @ 0.7 PROFIT OF 3510

NIFTY 14500 PUT  ACHIEVED TARGET 45/55  BUY GIVEN @ 35 PROFIT OF 2250

7560 PROFIT IN 24240 INVESTMENT WITHIN JUST 45 MINUTES

NET RETURN TODAY 31800 

BANKBARODA OPTION STRATEGY FOR EXPIRY MARCH 2021

BUY 1 LOT BANKBARODA 75 CALL @ 0.8 AND 72 PUT @ 0.7

PAY OFF TABLE :-

OPTION CALL PUT TIPS FOR 23 MARCH 2021

" BUY 1 LOT INDUSINDBK 1000 CALL @ 12 TARGET 14"

"BUY 1 LOT BANKBARODA 75 CALL @ .7 TARGET 1"

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