STRATEGIES OF TRADING IN

FUTURE AND OPTIONS

By:
Vikash Chander
Monika Yadav
Sumit Debnath
Rohit Soni

COVERED CALL
Youre neutral to bullish,
and youre willing to sell stock
if it reaches a specific price.

Trading Margin
Requirement
You own the stock
Sell a call, strike price A
Generally, the stock price will

be below strike A

Break even :
Current stock price minus
the premium received
for selling the call.

Maximum Potential Profit

When the call is first sold, potential profit is limited to the strike price
minus the current stock price plus the premium received for selling the
call

Maximum Potential loss

You receive a premium for selling the option, but most downside risk
comes from owning the stock, which may potentially lose its value.
However, selling the option does create an opportunity risk. That is, if
the stock price skyrockets, the calls might be assigned and youll miss
out on those gains.

COVERED CALL
Neutral to Bullish
Buy The Stock & Write A Call
Perception Bullish on the Stock in the long term but expecting little
variation during the lifetime of Call Contract
Income received from the premium on Call
Reliance
Spot Price
= Rs.270

Premium on Rs. 270 CA = Rs. 12

Buy Reliance @ Rs.270 and sell Rs. 270 CA @ Rs.12.

Stock Price at Expiration

Net Profit/ Loss

230

- 28 (- 40 + 12)

250

- 8 ( -20+12)

270

+ 12 ( + 12)

300

+ 12 (-30+30+12)

350

+ 12 (-80 +80+12)

Profits are limited . Losses can be unlimited

COVERED CALL

Profit

+
BEP

0
Strike Price

Loss

Stock Price
Lower

Higher

IRON CONDOR
Increase

Probability to earning a small limited profit from underlying security having

low volatility
Construction
Buy 1 OTM Put at strike price A
Sell 1 OTM Put at strike price B
Sell 1 OTM Call at strike price C
Buy 1 OTM Call at strike price D
Generally, B-A=D-A
Scenarios:If Spot price <A, Both Put contracts are exercised
If A<spot price<B, Short Put is exercised
If B< Spot price<C, All contracts expire worthless
If C<Spot price<D, Short Call is exercised
If D<Spot price, Both Call contracts are exercised

IRON CONDOR
Max Profit = Net Premium Received - Commissions Paid
Max Profit Achieved When spot price is between B and C
Max Loss = (D-C)- Net Premium Received + Commissions Paid
Max Loss Occurs When spot price>= D or spot price<= A
Two Breakeven Points: Upper Breakeven Point = C+ Net Premium Received
Lower Breakeven Point = B- Net Premium Received
Example: Nifty 7789.30

Position No

Position

Strike Price

Premium

Buy Put

7300

-38.5

Sell Put

7500

69

Sell Call

8100

36

Buy Call

8300

-11.3

Net Premium

55.2

Thank you