Call put strategy nifty

Call put strategy nifty

Nifty is most likely to go higher from the current levels. After the corporate tax cut. We are seeing huge buying in markets. We are expecting nifty has 6-7% upside room still left. But buying a future can be risky. So we are looking for options strategy with defined risk. In nifty one can deploy bull call spread, by buying ATM call option and selling higher strike call. This will bring the. [Continue Reading]

Any Nifty option trading strategies which are easy to

Similarly, PCR close to OR below denotes that there are much more calls in the system than puts and its time for a downside reversal. However, in extreme cases PCR can be much higher than and much lower than also.

-Free Nifty Futures & Nifty Options Trading

Break out strategy is best applied when some important news is to be announced, that can bring large movements in markets in either direction. This strategy uses Nifty options, both call option and put option, traders generally buy out of money call option and put option just before the news is to be announced.


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NSE Option Chain | Bank Nifty Call and Put Option Chain

An even more interesting strategy is the  iron condor. In this strategy, the investor simultaneously holds a bull put spread and a bear call spread. The iron condor is constructed by selling one out-of-the-money put and buying one out-of-the-money put of a lower strike (bull put spread), and selling one out-of-the-money call and buying one out-of-the-money call of a higher strike (bear call spread). All options have the same expiration date and are on the same underlying asset. Typically, the put and call sides have the same spread width. This trading strategy earns a net premium on the structure and is designed to take advantage of a stock experiencing low volatility. Many traders like this trade for its perceived high probability of earning a small amount of premium.

This could, for example, be a wager on an earnings release for a company or an FDA event for a health care stock. Losses are limited to the costs (or premium spent) for both options. Strangles will almost always be less expensive than  straddles  because the options purchased are out of the money.

In the P& L graph above, notice how there are two breakeven points. This strategy becomes profitable when the stock makes a large move in one direction or the other. The investor doesn’t care which direction the stock moves, only that it is a greater move than the total premium the investor paid for the structure.

A  long straddle  options strategy is when an investor simultaneously purchases a call and put option on the same underlying asset , with the same strike price and expiration date. An investor will often use this strategy when he or she believes the price of the underlying asset will move significantly out of a range, but is unsure of which direction the move will take. This strategy allows the investor to have the opportunity for theoretically unlimited gains, while the maximum loss is limited only to the cost of both options contracts combined.

A simple example would be if an investor is long 655 shares of IBM at $55 and IBM has risen to $655 as of January 6 st. The investor could construct a protective collar by selling one IBM March 65 th 655 call and simultaneously buying one IBM March 95 put. The trader is protected below $95 until March 65 th , with the trade-off of potentially having the obligation to sell his/her shares at $655.

This strategy essentially combines selling an at-the-money straddle and buying protective “wings.” You can also think of the construction as two spreads. It is common to have the same width for both spreads. The long out-of-the-money call protects against unlimited downside. The long out-of-the-money put protects against downside from the short put strike to zero. Profit and loss are both limited within a specific range, depending on the strike prices of the options used. Investors like this strategy for the income it generates and the higher probability of a small gain with a non-volatile stock.

In this article, I will show you almost a holy grail to trade NSE Option Chain data. You can trade this strategy with above 85%-95% success rate positionally. Today I will discuss how to generate positional option calls using a simple trick called Put Call Ratio and I will show you the usage of Nifty Put Call Ratio.

The formula is very simple to calculate – take the put options Open Interest (from the Option Chain table) and divide by the Open Interest of calls. This data is easily available in option chain Nifty. In the above chart we have automated the calculations for you so you can get live view of what market is thinking.

If PCR is declining while the Nifty spot is near resistance level – bearish indication. This implies that bulls are fearful of bears.

The  bear put spread  strategy is another form of vertical spread. In this strategy, the investor will simultaneously purchase put options at a specific strike price and sell the same number of puts at a lower strike price. Both options would be for the same underlying asset and have the same expiration date. This strategy is used when the trader is bearish and expects the underlying asset s price to decline. It offers both limited losses and limited gains.

PCR close to or above denotes that there much more puts in the system than calls. When there is huge put standing in market it means almost all traders are with puts. No one to buy new puts so its almost a market bottom. Start buying calls now.

In the P& L graph above, notice how the maximum gain is made when the stock remains at the at-the-money strikes of the call and put sold. The maximum gain is the total net premium received. Maximum loss occurs when the stock moves above the long call strike or below the long put strike. (For related reading, see 89 Best Online Stock Brokers for Options Trading 7569 89 )

In the P& L graph above, you can see that this is a bearish strategy, so you need the stock to fall in order to profit. The trade-off when employing a bear put spread is that your upside is limited, but your premium spent is reduced. If outright puts are expensive, one way to offset the high premium is by selling lower strike puts against them. This is how a bear put spread is constructed.

For example, a long butterfly spread can be constructed by purchasing one in-the-money call option at a lower strike price, while selling two at-the-money call options, and buying one out-of-the-money call option. A balanced butterfly spread will have the same wing widths. This example is called a “call fly” and results in a net debit. An investor would enter into a long butterfly call spread when they think the stock will not move much by expiration.

In the P& L graph above, you can see that this is a bullish strategy, so the trader needs the stock to increase in price in order to make a profit on the trade. The trade-off when putting on a bull call spread is that your upside is limited, while your premium spent is reduced. If outright calls are expensive, one way to offset the higher premium is by selling higher strike calls against them. This is how a bull call spread is constructed.

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