Basics of Stock Market for beginners

Mr. Ganesan Dharanidharan

Research Analyst & Branch Manager,
Alice Blue Financial Services,
Pondicherry.
 Market Players

• Initiative Buyer (Banks, Insurance Companies, Mutual Funds, hedge funds, etc.)

• Initiative Seller (Banks, Insurance Companies, Mutual Funds, hedge funds, etc.)

• Responsive Buyer (Retailer - We)

• Responsive Seller (Retailer - We)

 One Strategy
Any Exchange – Any Time Frame

Price Action Trading Intraday – Swing – Investing

Stock – Commodity – Forex – Future & Options

---Supply and Demand---

Types of Candle Terminology

High High High

Close
Close Close
Difference between Difference between
50% 50%
Open to Close High to Low
Open Open
Low Low Open Low
Body Range Candle Range
Equilibrium Candle Im-Balance Candle
(E-Candle) (IB-Candle)
 One Strategy
Any Exchange – Any Time Frame

Price Action Trading Intraday – Swing – Investing

Stock – Commodity – Forex – Future & Options

---Supply and Demand---

Types of Candle Terminology

High High High

Close
Close Close
Difference between Difference between
50% 50%
Open to Close High to Low
Open Open
Low Low Open Low
Body Range Candle Range
Equilibrium Candle Im-Balance Candle
(E-Candle) (IB-Candle)
 They imply that transactions are happening in a range thus Buyer
They imply imbalance between Buyer and Seller thus price starts
and Seller are in balance
moving either up or down
E-Candle => Body Range <= 50% of Candle Range
IB Candle => Body Range > 50% of Candle Range

High High
Close
Close
50% 50%

Open
Low Low Open

High 120 High 120

115 Close

100 Close Candle Range Body Range Candle Range

Body Range
95 Open 95 Open
90 90
Low Low
Body Range: Open – Close Candle Range: High – Low Body Range: Open – Close Candle Range: High – Low
95-100 120-90 = 30 points 95-115 120-90 = 30 points
5 points 50% of Candle Range 20 points 50% of Candle Range
30*(50/100) 30*(50/100)
15 Points 15 Points
E-Candle => Body Range <= 50% of Candle Range E-Candle => Body Range <= 50% of Candle Range
IB Candle => Body Range > 50% of Candle Range IB Candle => Body Range > 50% of Candle Range
 High High High Close High Close High High
Close
Close Close
50% 50% 50% 50% 50% 50% Close
Open Open
Open Open Open
Low Low Low Low Low Low Open

E-Candle => Body Range <= 50% of Candle Range E-Candle => Body Range <= 50% of Candle Range
IB Candle => Body Range > 50% of Candle Range IB Candle => Body Range > 50% of Candle Range

High High High High High High Open

Open Open Open
Open
50% 50% Open 50% 50% 50% 50%
Close Close
Close
Close Close Close
Low Low Low Low Low Low

E-Candle => Body Range <= 50% of Candle Range E-Candle => Body Range <= 50% of Candle Range
IB Candle => Body Range > 50% of Candle Range IB Candle => Body Range > 50% of Candle Range
Condition 1: Condition 1:

IB Candle -> E Candle -> IB Candle IB Candle -> 2 E Candle -> IB Candle

Condition 1:

IB Candle -> 3 E Candle -> IB Candle

1 E Candle 2 E Candle 3 E Candle

 1 E Candle 2 E Candle 3 E Candle

1 E Candle 2 E Candle 3 E Candle

Condition 2:
Buy Zone :
The two candles immediately following the IB Candle must each
make a new High. They do not have to make a Higher close, just Higher
high. It can be an E Candle or IB Candle 2nd High

1st High

1 E Candle 2 E Candle 3 E Candle

 3 3
Condition 2:
2
Sell Zone : 2
1
The two candles immediately following the IB Candle must each 1 IB Candle
make a new Low. They do not have to make a lower close, just lower lows.
It can be an E Candle or IB Candle.
E Candle
E Candle Sell zone IB Candle IB Candle Buy zone

IB Candle
Buy zone
IB Candle
1st Low E Candle
2nd Low Reversal Continuation

Reversal Continuation

E Candle Sell zone

IB Candle

IB Candle
Sell zone
E Candle

1 IB Candle

2 IB Candle
Buy Zone
3 1
2
3
IB Candle

Buy zone E- Candle

E- Candle
Sell Zone

IB Candle

Sell E- Candle

IB Candle
 Line Placement – Method 1
Entry Line – Closest line to the Current Market Price Entry Line – Closest line to the Current Market Price
Stop-loss Line – Farthest line from the Current Market Price Stop-loss Line – Farthest line from the Current Market Price

Stop-loss Line Target Line

Sell Zone
Entry Line
Entry Line
Entry Line E- Candle
Stop-loss Line
Buy Zone
Stop-loss Line Method 1 - Body To Wick

Line Placement – Method 2 Power Zone Formation

Entry Line – Closest line to the Current Market Price
2
Stop-loss Line – Farthest line from the Current Market Price IB Candle Sell Zone
Target Line 1

Entry Line 1
Buy Zone
E- Candle IB Candle 2
Stop-loss Line
Reversal Buy Power Zone Reversal Sell Power Zone
Method 2 - Wick To Wick
 Reversal Buy Power Zone Reversal Buy Power Zone
Condition 1:
2
IB Candle - > IB Candle
1
Condition 2:
Buy Zone :
The two candles immediately
following the IB Candle must each make
Buy Zone
IB Candle
a new High. They do not have to make a
Higher close, just Higher high. It can be
an E Candle or IB Candle

Reversal Sell Power Zone Reversal Sell Power Zone

Condition 1:
IB Candle Sell Zone
IB Candle - > IB Candle

Condition 2:
Sell Zone :
The two candles immediately
1
following the IB Candle must each make
2 a new Low. They do not have to make a
lower close, just lower lows. It can be an
E Candle or IB Candle.
 Time Frame 4 types of Reversal Zones
2
Purpose Time Frame
Investment (Monthly & Yearly Income Trade) Monthly, Weekly, Daily 1 E Candle Sell zone
Swing Trading (Weekly Income Trade) 15 M & 60M
Intraday Trading (Daily Income Trade) 5M or 15M IB Candle
Scalping (Hourly Income Trade) 1M or 3M or 5M

IB Candle
IB Candle IB Candle
1
Buy zone
2
E Candle

4 types of Reversal Zones 2 types of Zones

2
2 1
IB Candle Sell Zone IB Candle
1
IB Candle
Sell zone
E Candle

E Candle
Buy zone
1
IB Candle
IB Candle
Buy Zone IB Candle
2
1
2
 Zone Marking –
2
Condition 1:
1
IB Candle - > E Candle - >IB Candle

Condition 2:
IB Candle
Buy Zone :
The two candles immediately
IB Candle
following the IB Candle must each make a new
High. They do not have to make a Higher Buy zone

close, just Higher high. It can be an E Candle

E Candle
or IB Candle

Zone Marking – Zone Marking -

Method 1 Method 2
 Zone Marking –

Condition 1:
E Candle Sell zone
IB Candle - > E Candle - >IB Candle

Condition 2: IB Candle
Sell Zone :
The two candles immediately following the IB IB Candle
Candle must each make a new Low. They do not have
1
to make a lower close, just lower lows. It can be an E
2
Candle or IB Candle.

Zone Marking – Zone Marking -

Method 1 Method 2
 Zone Marking –
2
Condition 1:
1
IB Candle - > E Candle - >IB Candle
IB Candle
Condition 2:
Buy Zone :
The two candles immediately E Candle
Buy zone
following the IB Candle must each make a new
IB Candle
High. They do not have to make a Higher
close, just Higher high. It can be an E Candle
or IB Candle

Zone Marking – Zone Marking -

Method 1 Method 2
Zone Marking – Reversal Sell Power Zone Zone Marking – Reversal Sell Power Zone

Stock Screener – UP TREND Stock Screener – DOWN TREND

Stock selection parameters – UP TREND: Stock selection parameters – Down Trend:
Ø FNO Stocks Ø FNO Stocks
Ø 15M Close >= 15M 12EMA Ø 15M Close <= 15M 12EMA
15M 12EMA > 15M 26EMA 15M 12EMA < 15M 26EMA
Ø 1H Close >= 1H 12EMA Ø 1H Close <= 1H 12EMA
1H 12EMA > 1H 26EMA 1H 12EMA < 1H 26EMA
Ø 2H Close >= 2H 12EMA Ø 2H Close <= 2H 12EMA
2H 12EMA > 2H 26EMA 2H 12EMA < 2H 26EMA
Ø 1D Close >= 1D 12EMA Ø 1D Close <= 1D 12EMA
1D 12EMA > 1D 26EMA 1D 12EMA < 1D 26EMA
Ø Daily Volume > 1000000 Ø Daily Volume > 1000000
Ø Daily Close > 100 Ø Daily Close > 100
 Reversal Buy Power Zone Zone Marking – Reversal Buy Power Zone

Condition 1:
2
IB Candle - > IB Candle
1
Condition 2:
Buy Zone :
The two candles immediately
following the IB Candle must each make
Buy Zone
IB Candle
a new High. They do not have to make a
Higher close, just Higher high. It can be
an E Candle or IB Candle

Zone Marking – Reversal Buy Power Zone Reversal Sell Power Zone
Condition 1:
IB Candle Sell Zone
IB Candle - > IB Candle

Condition 2:
Sell Zone :
The two candles immediately
1
following the IB Candle must each make
2 a new Low. They do not have to make a
lower close, just lower lows. It can be an
E Candle or IB Candle.
Zone Marking – Reversal Sell Power Zone Zone Marking – Reversal Sell Power Zone

Stock Screener – UP TREND Stock Screener – DOWN TREND

Stock selection parameters – UP TREND: Stock selection parameters – Down Trend:
Ø FNO Stocks Ø FNO Stocks
Ø 15M Close >= 15M 12EMA Ø 15M Close <= 15M 12EMA
15M 12EMA > 15M 26EMA 15M 12EMA < 15M 26EMA
Ø 1H Close >= 1H 12EMA Ø 1H Close <= 1H 12EMA
1H 12EMA > 1H 26EMA 1H 12EMA < 1H 26EMA
Ø 2H Close >= 2H 12EMA Ø 2H Close <= 2H 12EMA
2H 12EMA > 2H 26EMA 2H 12EMA < 2H 26EMA
Ø 1D Close >= 1D 12EMA Ø 1D Close <= 1D 12EMA
1D 12EMA > 1D 26EMA 1D 12EMA < 1D 26EMA
Ø Daily Volume > 1000000 Ø Daily Volume > 1000000
Ø Daily Close > 100 Ø Daily Close > 100
 Refining Time Frame Refining Time Frame
The zone plotted dose not support R:R. Then we can check for zone in
Lower Time frame.

Eg: Zone plotted in 5 Min candle can be refined by 1 or 3 Min

Zone plotted in 3 Min candle can be refined by 1Min

5 Min Zone 3 Min Zone 1 Min Zone

(12 Tick) (8 Tick) (5 Tick) 5 Min Zone

Refining Time Frame Refining Time Frame

3 Min Zone 1 Min Zone

Responsive Gap CPR Indicator

TC = (Pivot –BC) + Pivot

Pivot = (High + Low + Close)/3
BC = (High + Low)/2

Note :
• CPR indicator is an analysis tool and not designed for Trade entries.
• Kindly use it for odd enhancement.

What is a
Standard Floor Pivot ?
 Standard Floor Pivots

R3 = R1+ (High – Low)

R2 = Pivot + (High – Low)

Standard Floor Pivots
R1 = 2*Pivot - Low
VS
Pivot = (High + Low + Close)/3 Expanded Floor Pivots
S1 = 2*Pivot – High

S2 = Pivot - (High – Low)

S3 = S1 - (High - Low)

Expanded Floor Pivots Expanded Floor Pivots

R4 = R3+ (R2 – R1)
Standard Floor Pivots
+ R3 = R1+ (High – Low)
R4 = R3+ (R2 – R1) R2 = Pivot + (High – Low)
R1 = 2*Pivot - Low
TC = (Pivot –BC) + Pivot TC = (Pivot –BC) + Pivot
Pivot = (High + Low + Close)/3
BC = (High + Low)/2
BC = (High + Low)/2
S1 = 2*Pivot – High
S2 = Pivot - (High – Low)
S4 = S3 - (S1 – S2) S3 = S1 - (High - Low)
S4 = S3 - (S1 – S2)
Responsive Gap CPR Indicator

TC = (Pivot –BC) + Pivot

Pivot = (High + Low + Close)/3
BC = (High + Low)/2

Note :
• CPR indicator is an analysis tool and not designed for Trade entries.
• Kindly use it for odd enhancement.

What is a
Standard Floor Pivot ?
 Standard Floor Pivots

R3 = R1+ (High – Low)

R2 = Pivot + (High – Low)

Standard Floor Pivots
R1 = 2*Pivot - Low
VS
Pivot = (High + Low + Close)/3 Expanded Floor Pivots
S1 = 2*Pivot – High

S2 = Pivot - (High – Low)

S3 = S1 - (High - Low)

Expanded Floor Pivots Expanded Floor Pivots

R4 = R3+ (R2 – R1)
Standard Floor Pivots
+ R3 = R1+ (High – Low)
R4 = R3+ (R2 – R1) R2 = Pivot + (High – Low)
R1 = 2*Pivot - Low
TC = (Pivot –BC) + Pivot TC = (Pivot –BC) + Pivot
Pivot = (High + Low + Close)/3
BC = (High + Low)/2
BC = (High + Low)/2
S1 = 2*Pivot – High
S2 = Pivot - (High – Low)
S4 = S3 - (S1 – S2) S3 = S1 - (High - Low)
S4 = S3 - (S1 – S2)
 Central Pivot Range (CPR) Trend Analysis

Trend Analysis
TC = (Pivot –BC) + Pivot
Pivot = (High + Low + Close)/3 Higher Value Bullish (Up Trend)

BC = (High + Low)/2 Lower Value Bearish (Down Trend)

Secret characteristics of CPR:

Ø Trend Analysis
Ø CPR Width Forecasting
Ø Two days pivot range relationships

UP Trend Analysis Up Trend Analysis

Step Up Ascending Pivot

Higher Value
 Down Trend Analysis Down Trend Analysis

Step Down Descending Pivot

Lower Value

CPR Width Forecasting

CPR Width Forecasting

Narrow CPR Breakout
Wide CPR Sideways
Narrow CPR
APOLLOTYRE – Narrow CPR HDFCBANK– Narrow CPR

Amarajabat – Wide CPR

Wide CPR
 Maruti – Wide CPR

What if “U” know this before

HINDALCO- Breakouts NAUKRI- Breakouts

 INFY– Breakouts

Just 1 click to scan the script using

Chart ink

Two-day Pivot Range Relationship

Two-Day Pivot Relationships

Unchanged Value Sideways
Inside Value Breakout
Unchanged Value
Outside Value Sideways
Overlapping Higher Value Moderately Bullish
Overlapping Lower Value Moderately Bearish
Unchanged Value (Sideways) Unchanged Value (Sideways)

Inside Value (Trending or Breakout)

Inside Value
Yesterday’s CPR Today’s CPR
Inside Value (Trending or Breakout)

Outside Value

Yesterday’s CPR Today’s CPR

Outside Value (Sideways) Outside Value (Sideways)

Yesterday’s CPR Today’s CPR

Yesterday’s CPR Today’s CPR

 Overlapping Higher Value

Overlapping Higher Value

Today’s CPR
Yesterday’s CPR

Overlapping Higher Value

Overlapping Lower Value

Yesterday’s CPR Today’s CPR

 Overlapping Lower Value Overlapping Lower Value

Yesterday’s CPR

Today’s CPR

Yesterday’s CPR
Today’s CPR

CPR Indicator Scanner Narrow CPR

 APOLLOTYRE – Narrow CPR HDFCBANK– Narrow CPR

Narrow Range CPR H4 Breakout Trade Setup

H5 – Target

Reward
H4 – Buy Entry
TC
Difference between TC to BC < 0.1 of previous Close Risk
BC
H3 – Stop Loss
Yesterday’s CPR

Risk Reward Ratio - 1 : 1.66

H4 Breakout Trade Setup L4 Breakout Trade Setup

L3 – Stop Loss
Risk
L4 – Sell Entry

Reward

L5 – Target

Risk Reward Ratio - 1 : 1.66

L4 Breakout Trade Setup

Wide CPR
 Amarajabat – Wide CPR Maruti – Wide CPR

Wide Range CPR H3 Reversal Trade Setup

H4 – Stop Loss
Risk
H3 – Sell Entry
TC
Difference between TC to BC > 1% of previous Close Reward
BC
L3 – Target
Yesterday’s CPR

Risk Reward Ratio - 1 : 2

H3 Reversal Trade Setup L3 Reversal Trade Setup

H3 – Target

Reward

L3 – Buy Entry
Risk
L4 – Stop Loss

Risk Reward Ratio - 1 : 2

L3 Reversal Trade Setup

Inside Value
 Inside Value (Trending or Breakout) Inside Value (Trending or Breakout)

Yesterday’s CPR Today’s CPR

Yesterday’s CPR Today’s CPR

Inside Value CPR Inside Value CPR

TC TC
TC BC
BC TC
BC BC
Yesterday’s CPR Today’s CPR Yesterday’s CPR Today’s CPR
 Inside Value CPR Inside Value CPR

BC BC
TC BC
BC TC
TC TC
Yesterday’s CPR Today’s CPR Yesterday’s CPR Today’s CPR

Inside Value CPR H4 Breakout Trade Setup

H5 – Target
Y TC > Y BC
Reward
H4 – Buy Entry
Y TC > T TC
Risk
H3 – Stop Loss
Y TC > T BC

Y BC < T TC Risk Reward Ratio - 1 : 1.66

Y BC < T BC
H4 Breakout Trade Setup L4 Breakout Trade Setup

L3 – Stop Loss
Risk
L4 – Sell Entry

Reward

L5 – Target

Risk Reward Ratio - 1 : 1.66

L4 Breakout Trade Setup

Outside Value
 Outside Value (Sideways) Outside Value (Sideways)

Yesterday’s CPR Today’s CPR

Yesterday’s CPR Today’s CPR

Outside Value (Sideways) Outside Value (Sideways)

TC BC
TC TC
BC BC BC TC
Yesterday’s CPR Today’s CPR Yesterday’s CPR Today’s CPR
 Outside Value (Sideways) Outside Value (Sideways)

TC BC
BC BC
TC BC TC TC
Yesterday’s CPR Today’s CPR Yesterday’s CPR Today’s CPR

H3 Reversal Trade Setup H3 Reversal Trade Setup

H4 – Stop Loss
Risk
H3 – Sell Entry

Reward

L3 – Target

Risk Reward Ratio - 1 : 2

L3 Reversal Trade Setup H4 Breakout Trade Setup

H5 – Target

Reward
H4 – Buy Entry
Risk
H3 – Stop Loss

Risk Reward Ratio - 1 : 1.66

H4 Breakout Trade Setup L4 Breakout Trade Setup

L3 – Stop Loss
Risk
L4 – Sell Entry

Reward

L5 – Target

Risk Reward Ratio - 1 : 1.66

 L4 Breakout Trade Setup

Narrow CPR

APOLLOTYRE – Narrow CPR HDFCBANK– Narrow CPR

 Expanded Camarilla Levels H3 Reversal Trade Setup
H5 – Breakout Target
H4 – Stop Loss
H4 – Bullish Breakout Risk
H3 - Reversal H3 – Sell Entry

Reward

L3 – Target
L3 – Reversal
L4 – Bearish Breakout
Risk Reward Ratio - 1 : 2

L5 – Breakout Target

H3 Reversal Trade Setup L3 Reversal Trade Setup

H3 – Target

Reward

L3 – Buy Entry
Risk
L4 – Stop Loss

Risk Reward Ratio - 1 : 2

L3 Reversal Trade Setup H4 Breakout Trade Setup

H5 – Target

Reward
H4 – Buy Entry
Risk
H3 – Stop Loss

Risk Reward Ratio - 1 : 1.66

H4 Breakout Trade Setup L4 Breakout Trade Setup

L3 – Stop Loss
Risk
L4 – Sell Entry

Reward

L5 – Target

Risk Reward Ratio - 1 : 1.66

 L4 Breakout Trade Setup

Narrow CPR

APOLLOTYRE – Narrow CPR HDFCBANK– Narrow CPR

 Amarajabat – Wide CPR

Wide CPR

Maruti – Wide CPR CPR + Camarilla Trade Setup

CPR/CAMARILLA H4 Breakout L4 Breakout H3 Reversal L3 Reversal

Inside value CPR High POP High POP Low POP Low POP
Outside value CPR Low POP Low POP High POP High POP

CPR/CAMARILLA H4 Breakout L4 Breakout H3 Reversal L3 Reversal

Narrow CPR High POP High POP Low POP Low POP
Wide CPR Low POP Low POP High POP High POP
CPR + Camarilla Trade Setup CPR + Camarilla Trade Setup

H4 Breakout + Narrow CPR – High POP L3 Breakout + Narrow CPR – High POP

CPR + Camarilla Trade Setup CPR + Camarilla Trade Setup

H3 Reversal + Wide CPR – High POP L3 Reversal + Wide CPR – High POP
OPTIONS BASICS

BANK NIFTY Chart CALL Options

Right to buy 25 shares of Bank Nifty at agreed Premium and agreed Strike
Price

CMP 33905 34500 CE

259.75

CMP @ Stocks vs. CALL Options

33905
• Stocks – Unlimited Profitability + Unlimited Time

• Call Options – Unlimited Profitability + Limited Time (Expiry Date)

 CALL Options Premium Reaction CALL Options Premium Reaction

Stock Price Movement CALL Options Price Movement Stock Price Movement CALL Options Price Movement

Profitability Put Options

Right to Sell 25 shares of Bank Nifty at agreed Premium and agreed Strike
CALL Options Price
BUY SELL
Up Trend Profit Loss
Sideways Loss Profit
Down Trend Loss Profit
33500 PE CMP 33905
254
Stocks vs. PUT Options

• Stock – Unlimited Profitability + Unlimited Time

• Put Option – Unlimited Profitability + Limited Time (Expiry Date)

 PUT Options Premium Reaction PUT Options Premium Reaction

Stock Price Movement PUT Options Price Movement Stock Price Movement PUT Options Price Movement

Strike Price Strike Price - Contract

CMP 33905

CMP 33905

33600 33700 33800 33900 34000 34100 34200 33600 CE 33700 CE 33800 CE 33900 CE 34000 CE 34100 CE 34200 CE

Key words:
33600 PE 33700 PE 33800 PE 33900 PE 34000 PE 34100 PE 34200 PE
• Contract (CE & PE)
• Strike difference
• Different expiry (Weekly & Monthly)
 Strike Price – Strike Difference Strike Price - Expiry

CMP 33905

CMP 33905 100 Points 100 Points 100 Points

33600 CE 33700 CE 33800 CE 33900 CE 34000 CE 34100 CE 34200 CE

33600 CE 33700 CE 33800 CE 33900 CE 34000 CE 34100 CE 34200 CE

33600 PE 33700 PE 33800 PE 33900 PE 34000 PE 34100 PE 34200 PE

33600 PE 33700 PE 33800 PE 33900 PE 34000 PE 34100 PE 34200 PE

• Weekly Expiry – Every week Thursday

100 Points 100 Points 100 Points • Monthly Expiry – Every Month Last Thursday

* Bank Nifty – 100 Points * Nifty – 50 Points

ATM – At The Money OTM – Out of The Money

• The strike price which are at or very near the CMP • The strike price which are yet to be attained

• CMP = 33905 • CMP = 33905

33600 CE 33700 CE 33800 CE 33900 CE 34000 CE 34100 CE 34200 CE 33600 CE 33700 CE 33800 CE 33900 CE 34000 CE 34100 CE 34200 CE

33600 PE 33700 PE 33800 PE 33900 PE 34000 PE 34100 PE 34200 PE 33600 PE 33700 PE 33800 PE 33900 PE 34000 PE 34100 PE 34200 PE
 ITM – In The Money Options Chain

• The strike price which are attained

• CMP = 33905

33600 CE 33700 CE 33800 CE 33900 CE 34000 CE 34100 CE 34200 CE

33600 PE 33700 PE 33800 PE 33900 PE 34000 PE 34100 PE 34200 PE

Options Premium Options Premium

Premium – Intrinsic Value + Extrinsic Value (Time Value + IV) Last Close - CMP - 33905

• ATM – At The Money • ATM – 33900 CE

• OTM – Out of The Money • ITM – 33800 CE

• ITM – In The Money • ITM – 33700 CE

• ITM – 33600 CE
Call Option:
Intrinsic Value – ITM Strike Price + Stock Price • ITM – 33500 CE
Extrinsic Value – Time + IV - Premium – Intrinsic Value
 Options Premium Options Premium
Next Thursday Close - CMP - 33900 Premium – Intrinsic Value + Extrinsic Value (Time Value + IV)
Call Options:
• ATM – 33900 CE -0 Intrinsic Value : CMP - ITM Strike Price
Extrinsic Value : Premium – Intrinsic Value
• ITM – 33800 CE - 100
CMP : 33905
• ITM – 33700 CE - 200 Strike Price : 33700 CE
Premium : 655
• ITM – 33600 CE - 300 Intrinsic Value : CMP - ITM Strike Price
33905 -33700
• ITM – 33500 CE - 400 205
Extrinsic Value : Premium – Intrinsic Value
655 – 205 = 450

Options Premium
Premium – Intrinsic Value + Extrinsic Value (Time Value + IV)
Put Options:
Intrinsic Value : ITM Strike Price - CMP
Extrinsic Value : Premium – Intrinsic Value

CMP : 33905 Breakeven Calculation

Strike Price : 34300 PE
Premium : 595
Intrinsic Value : ITM Strike Price - CMP
34300 -33905
395
Extrinsic Value : Premium – Intrinsic Value
595 – 395 = 200
 Bank Nifty Chart

Bank Nifty Chart

Bank Nifty Chart Bank Nifty Chart

 Put Options Buy Put Options
Right to Sell 25 shares of Bank Nifty at agreed Premium and agreed Strike
Price

33500 PE 08 April 2021 CMP 33905

255

Breakeven – Strike Price - Premium Paid – 33500-255 = 33245

Put Options – Payoff Charts T+0 value at Entry

Day P&L
T+0 Friday 410
T+1 Monday 340
T+2 Tuesday 310
T+3 Wednesday 400
T+4 (Expiry day) Thusday -6375

Note:
Dotted blue lines indicate t+0.
*Note : 11.03.2021 is a trading Holiday on account of Mahashivratri
Solid lines indicate the P&L at expiry.
 Bank Nifty Chart

Bank Nifty Chart

Bank Nifty Chart Bank Nifty Chart

 Options Greeks - Delta
Rate of Change of Option Premium based on 1 point move in the stock or Index

Delta ranges from (-1 to +1)

Options Greeks PUT Option (-1 to 0) CALL Option (0 to +1)

-1 0 +1

Call Options - Delta Call Options - Delta

CALL Option (0 to +1)
Rate of Change of CALL Option Premium based on 1 point move in the
stock or Index
CALL Options Delta ranges from (0 to +1)
CALL Option (0 to +1) +1 + 0.85 + 0.65 + 0.5 + 0.45 + 0.25 0

ITM ATM OTM

33000 CE 33800 CE 33800 CE 33900 CE 34000 CE 34100 CE 35000 CE

+1 + 0.85 + 0.65 + 0.5 + 0.45 + 0.25 0

ITM ATM OTM 1.0…………0.7 0.6 0.5 0.4 0.3 0.2…

 Put Options - Delta Put Options - Delta
Put Option (-1 to 0)
Rate of Change of PUT Option Premium based on 1 point move in the
stock or Index
Put Options Delta ranges from (-1 to 0)
Put Option (-1 to 0) 0 - 0.15 -0.25 -0.5 -0.60 -0.75 -1

OTM ATM ITM

33000 PE 33800 PE 33800 PE 33900 PE 34000 PE 34100 PE 35000 PE
0 - 0.15 -0.25 -0.5 -0.4 -0.75 -1

OTM ATM ITM -0.1…… -0.3 -0.4 -0.5 -0.6 -0.7 -1

Options Greeks – Delta Options Greeks – Delta

Rate of Change of Option Premium based on 1 point move in the stock or future Rate of Change of Option Premium based on 1 point move in the stock or future

50 points increase in Bank Nifty 50 points decrease in Bank Nifty 50 points decrease in Bank Nifty 50 points increase in Bank Nifty

Call Option Put Option Call Option Put Option

0.5 = 0.5 * 50 points - 0.25 = -0.25 * -50 points 1 = 1 * -50 points - 0.25 = -0.25 * +50 points
= 25 increase in option premium = 12.5 increase in option premium = -50 in option premium = -12.5 in option premium
 Bank Nifty Chart Bank Nifty Chart

Time OHLC Value

10:05 High 35830
10.45 Low 35090
13.50 Low 35090
14.25 High 35540

35000 PE – 10th March (Weekly) 35000 PE – 10th March (Weekly)

Time OHLC Value

10:05 Low 177.65
10.45 High 434
13.50 High 419
14.25 Low 215.15
 35000 PE – March (Monthly) 35000 PE – March (Monthly)

Time OHLC Value

10:05 Low 651.60
10.45 High 965
13.50 High 976.45
14.25 Low 752.90

35100 CE – 10th March (Weekly) 35100 CE – 10th March (Weekly)

Time OHLC Value

13.50 Low 459.1
14.25 High 705
 Put Options Delta Value Factors to be considered

Put Option (-1 to 0)

• Time Decay : Negative

• IV Increases – Good , Decreases – Bad

Price
0 - 0.15 -0.25 -0.5 -0.4 -0.75 -1 IV Increase Increases
IV Decrease Reduces

OTM ATM ITM

Trade Plan

At 13.35 there was a

demand zone formation
in NIFTY.

Short Put Option Strategy Zone range was 15

(Intraday) Points in Spot (15*75 =
1225)

Plan to go short on Put

options.
 Option Greeks – Gamma Gamma Impact
The Rate of Change of Delta Let we find the theta decay from 10.45 AM to 13.50 PM on 35000 PE 10th March
Bank Nifty
Time OHLC Value
10:05 High 35830
10.45 Low 35090
Down Move of 840 Points
Bank Nifty 35000 PE 10th March (Weekly Expiry)
Time OHLC Value
10:05 Low 177.65
10.45 High 434
Difference in Premium 256.35 Points (149 %)

Gamma Impact Implied Volatility – IV

Let we find the theta decay from 10.45 AM to 13.50 PM on 35000 PE March Let we understand how the premium increases in with respect to increase in IV.
Bank Nifty Bank Nifty
Time OHLC Value Time OHLC Value
10:05 High 35830
10.45 Low 35090
10.45 Low 35090 13.50 Low 35090
Down Move of 840 Points Bank Nifty 35000 PE March (Monthly Expiry)
Bank Nifty 35000 PE March (Monthly Expiry) Time OHLC Value
Time OHLC Value 10.45 High 965
10:05 Low 651.60 13.50 High 976.45
10.45 High 965 Difference in Premium (+) 11.45 Points
Difference in Premium 313.4 Points (48%)
 Option Strategies

CALL PUT

Naked Options Strategies r

 NIFTY Chart

NIFTY Chart

Trade Plan

At 13.35 there was a

demand zone formation
in NIFTY.

Long Call Option Strategy Zone range was 15

(Intraday) Points in Spot (15*75 =
1225)

Plan to go long on Call

options.
 S.E.T Strike Selection based on RR

SL Points Loss Delta Strike Price

Case 1 19 Points 1425 1 (Deep ITM) Futures
Case 2 10 Points 750 0.52 (ATM) 14950 CE
Case 3 5 Points 375 0.26 (OTM) 15150 CE

Delta = SL / Zone Range

Call Options Delta Value Factors to be considered

CALL Option (0 to +1) • Time Decay : Negative

• IV Increases – Good , Decreases – Bad

Price
IV Increase Increases
+1 + 0.85 + 0.65 + 0.5 + 0.45 + 0.25 0
IV Decrease Reduces

ITM ATM OTM

 Debit Call Ratio Spread Credit Call Ratio Spread
Profit Buy 1 High Premium Call Profit Sell 1 High Premium Call
PnL and Sell 1 Low Premium Call PnL and Buy 1 Low Premium Call
Loss Risk : Limited Loss Risk : Limited
Bullish Trade Plan Bearish Trade Plan
Reward : Limited Reward : Limited
Expiry Options Strike Expiry Options Strike
18MAR21 145.00 CE 15050 Nifty 15000 CE – SELL -> 171.45 18MAR21 145.00 CE 15050 Nifty 15000 CE – BUY -> 171.45

SELL 18MAR21 171.45 CE 15000 Nifty 14900 CE – BUY -> 228.75 BUY 18MAR21 171.45 CE 15000 Nifty 14900 CE – SELL -> 228.75

18MAR21 200.00 CE 14950 Difference -> (228.75 – 171.45) 18MAR21 200.00 CE 14950 Difference -> (-228.75 + 171.45)
= (+)57.30 Points (Net Debit) = (-)57.30 Points (Net Credit)
BUY 18MAR21 228.75 CE 14900 SELL 18MAR21 228.75 CE 14900
18MAR21 265.00 CE 14850 18MAR21 265.00 CE 14850

Debit Put Ratio Spread Credit Put Ratio Spread

Profit Buy 1 High Premium Put Profit Sell 1 High Premium Put
PnL and Sell 1 Low Premium Put PnL and Buy 1 Low Premium Put
Loss Risk : Limited Loss Risk : Limited
Bearish Trade Plan Bullish Trade Plan
Reward : Limited Reward : Limited
Strike Options Expiry Strike Options Expiry
15050 PE 172.50 18MAR21 Nifty 15000 PE – BUY -> 146.00 15050 PE 172.50 18MAR21 Nifty 15000 PE – SELL -> 146.00

15000 PE 146.00 18MAR21 BUY Nifty 14900 PE – SELL -> 107.95 15000 PE 146.00 18MAR21 SELL Nifty 14900 PE – BUY -> 107.95

14950 PE 125.50 18MAR21 Difference -> (146.00-107.95) 14950 PE 125.50 18MAR21 Difference -> (-146.00 + 107.95)
= (+)38.05 Points (Net Debit) = (-)38.05 Points (Net Credit)
14900 PE 107.95 18MAR21 SELL 14900 PE 107.95 18MAR21 BUY
14850 PE 91.60 18MAR21 14850 PE 91.60 18MAR21
 Put Options Delta Value Factors to be considered

Put Option (-1 to 0)

• Time Decay : Negative

• IV Increases – Good , Decreases – Bad

Price
0 - 0.15 -0.25 -0.5 -0.4 -0.75 -1 IV Increase Increases
IV Decrease Reduces

OTM ATM ITM

Trade Plan

At 13.35 there was a

demand zone formation
in NIFTY.

Short Put Option Strategy Zone range was 15

(Intraday) Points in Spot (15*75 =
1225)

Plan to go short on Put

options.
 S.E.T Strike Selection based on RR

SL Points Loss Delta Strike Price

Case 1 19 Points 1425 -1
Case 2 10 Points 750 -0.52 (ATM) 15200
Case 3 5 Points 375 -0.26 (OTM)

Delta = SL / Zone Range

Put Options Delta Value Factors to be considered

Put Option (-1 to 0)

• Time Decay : Positive

• IV Increases – Bad , Decreases – Good

Price
0 - 0.15 -0.25 -0.5 -0.4 -0.75 -1 IV Increase Increases
IV Decrease Reduces

OTM ATM ITM

Note:
Selling options : -(-0.5) => +0.5
 Trade Plan

At 11.45 there was a

Supply zone formation
in NIFTY.

Short Call Option Strategy Zone range was 27.95

(Intraday) Points in Spot (27.95*75
= 2096.25)

Plan to go Short on Call

options.

S.E.T Strike Selection based on RR

SL Points Loss Delta Strike Price

Case 1 25 Points 2096.25 +0.89
Case 2 20 Points 1500 +0.71
Case 3 5 Points 500 +0.25

Delta = SL / Zone Range

 Call Options Delta Value Factors to be considered

CALL Option (0 to +1) • Time Decay : Positive

• IV Increases – Bad , Decreases – Good

Price
IV Increase Increases
+1 + 0.85 + 0.65 + 0.5 + 0.45 + 0.25 0
IV Decrease Reduces

ITM ATM OTM

Note:
Selling options : -(+0.5) => -0.5

Ratio Spread

There are four type of Ratio Spreads:

1. Debit Call Ratio Spread

Ratio Spread
2. Credit Call Ratio Spread
(Positional)
3. Debit Put Ratio Spread

4. Credit Put Ratio Spread

 Spread
Debit Call Ratio Spread
1 Types of Spread:

1. Vertical Spread (Ratio Spread)

2
2. Horizontal Spread (Calendar Spread)
3
4

Vertical Spread Horizontal Spread

It involves with the options of same Expiry It involves with the options of different Expiry

Expiry Options Strike Options Expiry Expiry Options Strike Options Expiry
18MAR21 CE 15150 PE 18MAR21 18MAR21 CE 15150 PE 18MAR21
18MAR21 CE 15100 PE 18MAR21 18MAR21 CE 15100 PE 18MAR21
18MAR21 CE 15050 PE 18MAR21 18MAR21 CE 15050 PE 18MAR21
18MAR21 CE 15000 PE 18MAR21 18MAR21 CE 15000 PE 18MAR21
18MAR21 CE 14950 PE 18MAR21 MAR21 CE 15150 PE MAR21
18MAR21 CE 14900 PE 18MAR21 MAR21 CE 15100 PE MAR21
18MAR21 CE 14850 PE 18MAR21 MAR21 CE 15050 PE MAR21
18MAR21 CE 14800 PE 18MAR21 MAR21 CE 15000 PE MAR21
 Ratio Spread Call (CE) Ratio Spread
Expiry Options Strike Options Expiry • Ratio Spread involves with Expiry Options Strike Options Expiry • Ratio Spread involves with
18MAR21 CE 15150 PE 18MAR21 Vertical Spread (It deals with 18MAR21 CE 15150 PE 18MAR21 Vertical Spread (It deals with
18MAR21 CE 15100 PE 18MAR21 options of same expiry). 18MAR21 CE 15100 PE 18MAR21 options of same expiry).
18MAR21 CE 15050 PE 18MAR21 • Deals with either Call(CE) 18MAR21 CE 15050 PE 18MAR21 • Deals with only Call(CE)
18MAR21 CE 15000 PE 18MAR21 or Put(PE) options. 18MAR21 CE 15000 PE 18MAR21 options.
18MAR21 CE 14950 PE 18MAR21 • Buy 1 strike price & Sell 1 18MAR21 CE 14950 PE 18MAR21 • Buy 1 Call Option & Sell 1
18MAR21 CE 14900 PE 18MAR21 18MAR21 CE 14900 PE 18MAR21
strike price. Call Option.
18MAR21 CE 14850 PE 18MAR21 18MAR21 CE 14850 PE 18MAR21
18MAR21 CE 14800 PE 18MAR21 18MAR21 CE 14800 PE 18MAR21

Put (PE) Ratio Spread Question

Expiry Options Strike Options Expiry • Ratio Spread involves with When we buy an option the premium amount will be_______________
18MAR21 CE 15150 PE 18MAR21 Vertical Spread (It deals with a. Credited to our account
b. Debited from our account
18MAR21 CE 15100 PE 18MAR21 options of same expiry).
18MAR21 CE 15050 PE 18MAR21 • Deals with only Put(PE) When we sell an option the premium amount will be_______________
a. Credited to our account
18MAR21 CE 15000 PE 18MAR21 options. b. Debited from our account
18MAR21 CE 14950 PE 18MAR21 • Buy 1 Put Option & Sell 1
18MAR21 CE 14900 PE 18MAR21
Put Option.
18MAR21 CE 14850 PE 18MAR21
18MAR21 CE 14800 PE 18MAR21
 Options Premium Options Premium
Premium – Intrinsic Value + Extrinsic Value (Time Value + IV) Last Friday Close - CMP - 15023

• ATM – At The Money • ATM – 15000 CE

• OTM – Out of The Money • ITM – 14950 CE

• ITM – In The Money • ITM – 14900 CE

• ITM – 14850 CE
Call Option:
Intrinsic Value – ITM Strike Price + Stock Price • ITM – 14800 CE
Extrinsic Value – Time + IV - Premium – Intrinsic Value

Options Premium OTM - Debit Call Ratio Spread

Next Thursday Close - CMP - 15000

• ATM – 15000 CE

• ITM – 14950 CE

• ITM – 14900 CE

• ITM – 14850 CE

• ITM – 14800 CE
OTM - Debit Call Ratio Spread OTM – Payoff Chart

OTM – Greeks OTM – Payoff Calculations

Buy Leg – 15100 CE – 121.80 Premium

Sell Leg – 15200 CE – 81.90 Premium

(A) Difference between the legs -> 15200-15100 -> 100 Points (7500 Rs)

(B) Difference between the Premium -> 121.80-81.90 -> 39.9 Points (2992.5 Rs)

Max Loss – (B) - 39.9 Points (2992.5 Rs)

Max Profit – (A) – (B) -> 100-39.9 -> 60.1 Points (4507.5 Rs)

Risk : Reward -> 2992.5 : 4507.5 -> 1:1.51

 NIFTY Chart

NIFTY Chart

NIFTY Chart NIFTY Chart

 OTM – Payoff Calculations

Buy Leg – 15100 CE – 121.80 Premium

Sell Leg – 15150 CE – 102.05 Premium

(A) Difference between the legs -> 15150-15100 -> 50 Points (3750 Rs) Sell Strike Adjustments
Case 2 : Gap between the Buy and Sell Leg
(B) Difference between the Premium -> 121.80-102.05 -> 19.75 Points (1481.25 Rs) 150 Points

Max Loss – (B) - 19.75 Points (1481.25 Rs)

Max Profit – (A) – (B) -> 50-19.75 -> 30.25 Points (2268.75 Rs)

Risk : Reward -> 1481.25 : 2268.75 -> 1:1.53

OTM – Payoff Chart OTM – Greeks

 Options Premium Options Premium
Premium – Intrinsic Value + Extrinsic Value (Time Value + IV) Last Friday Close - CMP - 15023

• ATM – At The Money • ATM – 15000 CE

• OTM – Out of The Money • ITM – 14950 CE

• ITM – In The Money • ITM – 14900 CE

• ITM – 14850 CE
Call Option:
Intrinsic Value – ITM Strike Price + Stock Price • ITM – 14800 CE
Extrinsic Value – Time + IV - Premium – Intrinsic Value

Options Premium OTM - Debit Call Ratio Spread

Next Thursday Close - CMP - 15000

• ATM – 15000 CE

• ITM – 14950 CE

• ITM – 14900 CE

• ITM – 14850 CE

• ITM – 14800 CE
OTM - Debit Call Ratio Spread OTM – Payoff Chart

OTM – Greeks OTM – Payoff Calculations

Buy Leg – 15100 CE – 121.80 Premium

Sell Leg – 15200 CE – 81.90 Premium

(A) Difference between the legs -> 15200-15100 -> 100 Points (7500 Rs)

(B) Difference between the Premium -> 121.80-81.90 -> 39.9 Points (2992.5 Rs)

Max Loss – (B) - 39.9 Points (2992.5 Rs)

Max Profit – (A) – (B) -> 100-39.9 -> 60.1 Points (4507.5 Rs)

Risk : Reward -> 2992.5 : 4507.5 -> 1:1.51

Credit Put Ratio Spread Credit Put Ratio Spread

Sell Immediate OTM after the Stop Loss.

Stop Loss – 34559.85

Immediate OTM Put – 34500 PE

Sell Leg – 34500 PE

Buy Leg Selection –> OTM Strike – OTM Premium

-> 34500-202 -> 34298 -> Appx 34300

Buy Leg – 34300 PE

Strike Selection Method OTM – Payoff Chart

 OTM – Payoff Calculations

Buy Leg – 15100 CE – 121.80 Premium

Sell Leg – 15150 CE – 102.05 Premium

(A) Difference between the legs -> 15150-15100 -> 50 Points (3750 Rs) Sell Strike Adjustments
Case 2 : Gap between the Buy and Sell Leg
(B) Difference between the Premium -> 121.80-102.05 -> 19.75 Points (1481.25 Rs) 150 Points

Max Loss – (B) - 19.75 Points (1481.25 Rs)

Max Profit – (A) – (B) -> 50-19.75 -> 30.25 Points (2268.75 Rs)

Risk : Reward -> 1481.25 : 2268.75 -> 1:1.53

OTM – Payoff Chart OTM – Greeks

OTM – Payoff Chart

Buy Strike Adjustments

Case 3 : Gap between the Buy and Sell Leg
400 Points (Grater than the sell leg premium)

OTM – Payoff Chart

Expiry day Trade Setup

(3 Min Time Frame)
Trade only after 2.30 PM
 OTM – Payoff Calculations Debit Call Ratio Spread - Analysis

Buy Leg – 15100 CE – 121.80 Premium How payoff chart and our trade setup differ in live market

Sell Leg – 15300 CE – 53.35 Premium • Stop Loss

(A) Difference between the legs -> 15300-15100 -> 200 Points (15000 Rs) • Target

(B) Difference between the Premium -> 121.80-53.35 -> 68.45 Points (5133.75 Rs)

Max Loss – (B) - 68.45 Points (5133.75 Rs)

Max Profit – (A) – (B) -> 200-68.45 -> 131.55 Points (9866.25 Rs)

Risk : Reward -> 5133.75 : 9866.25 -> 1:1.92

Debit Call Ratio Spread - Analysis

Strike Price Action POP 9.19 Close 9.21 Close Difference P/L
15100 CE Buy 41.69 99.05 79.30 -19.75 -3.55
15150 CE Sell 80.25 64.05 16.2
15100 CE Buy 39.87 99.05 79.30 -19.75 -6.85
15200 CE Sell 62.7 49.8 12.9 BANK NIFTY Chart
15100 CE Buy 38.52 99.05 79.30 -19.75
15250 CE Sell
15100 CE Buy 37.27 99.05 79.30 -19.75 -11.2
15300 CE Sell 37.2 28.65 8.55
 NIFTY Chart Bearish Trade Setup
Profit
PnL

Loss
Payoff Chart
Debit Put Ratio Spread Credit Call Ratio Spread
Buy 1 High Premium Put Sell 1 High Premium Call
and Sell 1 Low Premium Put and Buy 1 Low Premium Call
Risk : Limited Risk : Limited
Reward : Limited Reward : Limited

Debit Put Ratio Spread NIFTY Chart

Profit Buy 1 High Premium Put
PnL and Sell 1 Low Premium Put
Loss Risk : Limited
Bearish Trade Plan Reward : Limited
Strike Options Expiry
15050 PE 172.50 18MAR21 Nifty 15000 PE – BUY -> 146.00

15000 PE 146.00 18MAR21 BUY Nifty 14900 PE – SELL -> 107.95

14950 PE 125.50 18MAR21 Difference -> (146.00-107.95)

= (+)38.05 Points (Net Debit)
14900 PE 107.95 18MAR21 SELL
14850 PE 91.60 18MAR21
Credit Put Ratio Spread Credit Put Ratio Spread

Sell Immediate OTM after the Stop Loss.

Stop Loss – 34559.85

Immediate OTM Put – 34500 PE

Sell Leg – 34500 PE

Buy Leg Selection –> OTM Strike – OTM Premium

-> 34500-202 -> 34298 -> Appx 34300

Buy Leg – 34300 PE

Strike Selection Method OTM – Payoff Chart

 OTM – Greeks OTM – Payoff Calculations

Sell Leg – 34500 PE – 202 Premium

Buy Leg – 34300 PE – 144 Premium

(A) Difference between the legs -> 34500-34300 -> 200 Points (5000 Rs)

(B) Difference between the Premium -> 202-144 -> 58 Points (1450 Rs)

Max Profit – (B) - 58 Points (1450 Rs)

Max Loss – (A) – (B) -> 200-58 -> 142 Points (3550 Rs)

Risk : Reward -> 1450 : 3550 -> 1:0.41

Credit Put Ratio Spread - Analysis

Strike Price Action POP 9.15 Low 13.50 Low Difference P/L
34500 PE Sell @ SL 284.55 235.15 +49.40 -9.7
34300 PE Buy 217.35 158.25 -59.10
34500 PE Sell @today’s 284.55 105.70 +178.85 +31.2 Buy Strike Adjustments
34300 PE Buy high 217.35 69.70 -147.65 Case 1 : Gap between the Buy and Sell Leg
300 Points (Grater than the sell leg premium)
34500 PE Sell @today’s 284.55 451.55 -167.00 -47.35
34300 PE Buy low 217.35 337.00 +119.65
OTM – Payoff Chart

Buy Strike Adjustments

Case 3 : Gap between the Buy and Sell Leg
400 Points (Grater than the sell leg premium)

OTM – Payoff Chart

Expiry day Trade Setup

(3 Min Time Frame)
Trade only after 2.30 PM
 Credit Call Ratio Spread NIFTY Chart
Profit Sell 1 High Premium Call
PnL and Buy 1 Low Premium Call
Loss Risk : Limited
Bearish Trade Plan Reward : Limited
Expiry Options Strike
18MAR21 145.00 CE 15050 Nifty 15000 CE – BUY -> 171.45

BUY 18MAR21 171.45 CE 15000 Nifty 14900 CE – SELL -> 228.75

18MAR21 200.00 CE 14950 Difference -> (-228.75 + 171.45)

= (-)57.30 Points (Net Credit)
SELL 18MAR21 228.75 CE 14900
18MAR21 265.00 CE 14850

Credit Call Ratio Spread – Strike Selection Payoff Chart

Sell Immediate OTM or ATM near the zone.

Immediate OTM Call – 14950 CE

Sell Leg – 14950 CE

Buy Leg Selection –> Next OTM Strike

-> 15000 CE

Buy Leg – 15000 CE

 NIFTY Chart Bearish Trade Setup
Profit
PnL

Loss
Payoff Chart
Debit Put Ratio Spread Credit Call Ratio Spread
Buy 1 High Premium Put Sell 1 High Premium Call
and Sell 1 Low Premium Put and Buy 1 Low Premium Call
Risk : Limited Risk : Limited
Reward : Limited Reward : Limited

Debit Put Ratio Spread NIFTY Chart

Profit Buy 1 High Premium Put
PnL and Sell 1 Low Premium Put
Loss Risk : Limited
Bearish Trade Plan Reward : Limited
Strike Options Expiry
15050 PE 172.50 18MAR21 Nifty 15000 PE – BUY -> 146.00

15000 PE 146.00 18MAR21 BUY Nifty 14900 PE – SELL -> 107.95

14950 PE 125.50 18MAR21 Difference -> (146.00-107.95)

= (+)38.05 Points (Net Debit)
14900 PE 107.95 18MAR21 SELL
14850 PE 91.60 18MAR21
Debit Put Ratio Spread – Strike Selection Payoff Chart

Buy the OTM which is above the Target Line (14745.55).

Buy Leg – 14750 PE

Sell Immediate OTM to the Buy Leg.

Sell Leg – 14700 PE

Greeks Payoff Calculations

Buy Leg – 14750 PE – 31.75 Premium

Sell Leg – 14700 PE – 23.45 Premium

(A) Difference between the legs -> 14700-14750 -> 50 Points (3750 Rs)

(B) Difference between the Premium -> 31.75-23.45 -> 8.3 Points (622.5 Rs)

Max Loss – (B) - 8.3 Points (622.5 Rs)

Max Profit – (A) – (B) -> 50-8.3 -> 41.7 Points (3127.5 Rs)

Risk : Reward -> 622.5 : 3127.5 -> 1 : 5.03

 Credit Call Ratio Spread NIFTY Chart
Profit Sell 1 High Premium Call
PnL and Buy 1 Low Premium Call
Loss Risk : Limited
Bearish Trade Plan Reward : Limited
Expiry Options Strike
18MAR21 145.00 CE 15050 Nifty 15000 CE – BUY -> 171.45

BUY 18MAR21 171.45 CE 15000 Nifty 14900 CE – SELL -> 228.75

18MAR21 200.00 CE 14950 Difference -> (-228.75 + 171.45)

= (-)57.30 Points (Net Credit)
SELL 18MAR21 228.75 CE 14900
18MAR21 265.00 CE 14850

Credit Call Ratio Spread – Strike Selection Payoff Chart

Sell Immediate OTM or ATM near the zone.

Immediate OTM Call – 14950 CE

Sell Leg – 14950 CE

Buy Leg Selection –> Next OTM Strike

-> 15000 CE

Buy Leg – 15000 CE

 Greeks Payoff Calculations

Sell Leg – 14950 CE – 76.70 Premium

Buy Leg – 14000 CE – 54.95 Premium

(A) Difference between the legs -> 15000-14950 -> 50 Points (3750 Rs)

(B) Difference between the Premium -> 76.70-54.95 -> 21.75 Points (1631.25 Rs)

Max Profit – (B) - 21.75 Points (1631.25 Rs)

Max Loss – (A) – (B) -> 50-21.75 -> 38.25 Points (2118.75 Rs)

Risk : Reward -> 1631.25 : 2118.75 -> 1:0.77

NIFTY Chart

NIFTY Chart
 Sideways Trade Setup

Sell Zone

Buy Zone To be profitable in sideways

We need to use credit spread
Profit
Buy Zone Sell Zone
PnL

Loss
Payoff Chart

Credit Call Ratio Spread NIFTY Chart

Profit Sell 1 High Premium Call
PnL and Buy 1 Low Premium Call
Loss Risk : Limited
Bearish Trade Plan Reward : Limited
Expiry Options Strike
18MAR21 145.00 CE 15050 Nifty 15000 CE – BUY -> 171.45

BUY 18MAR21 171.45 CE 15000 Nifty 14900 CE – SELL -> 228.75

18MAR21 200.00 CE 14950 Difference -> (-228.75 + 171.45)

= (-)57.30 Points (Net Credit)
SELL 18MAR21 228.75 CE 14900
18MAR21 265.00 CE 14850
 Credit Put Ratio Spread Credit Put Ratio Spread
Profit Sell 1 High Premium Put
PnL and Buy 1 Low Premium Put
Loss Risk : Limited
Bullish Trade Plan
Reward : Limited
Strike Options Expiry
15050 PE 172.50 18MAR21 Nifty 15000 PE – SELL -> 146.00

15000 PE 146.00 18MAR21 SELL Nifty 14900 PE – BUY -> 107.95

14950 PE 125.50 18MAR21 Difference -> (-146.00 + 107.95)

= (-)38.05 Points (Net Credit)
14900 PE 107.95 18MAR21 BUY
14850 PE 91.60 18MAR21

NIFTY Chart

NIFTY Chart
Credit Call Ratio Spread – Strike Selection Credit Call Ratio Spread – Strike Selection

Sell Immediate OTM in or near the zone.

OTM Call in the zone – 14850 CE

Sell Leg – 14950 CE

Buy Leg Selection –> Next OTM Strike

-> 14900 CE

Buy Leg – 14900 CE

Credit Call Ratio Spread

NIFTY Chart
 NIFTY Chart Credit Put Ratio Spread – Strike Selection

Sell Immediate OTM in or near the zone.

OTM Call in the zone – 14250 PE

Sell Leg – 14250 PE

Buy Leg Selection –> Next OTM Strike

-> 14200 PE

Buy Leg – 14200 PE

Credit Put Ratio Spread – Strike Selection Credit Put Ratio Spread
 Inverted Iron Condor Payoff Inverted Iron Condor

Profit
PnL

Loss

Debit Call Ratio Spread Debit Put Ratio Spread

Profit
Buy Zone Sell Zone
PnL

Loss
Payoff Chart

Non Directional Trading Strategy

• Straddle Options Trading Strategy

• Long Straddle

Most Common • Short Straddle

Non Directional Trading strategy • Strangle Options Trading Strategy

• Long Strangle

• Short Strangle
 Iron Condor

Inverted Iron Condor

Debit Call Ratio Spread

Debit Call Ratio Spread +
+ Debit Put Ratio Spread
Debit Put Ratio Spread =
Inverted Iron Condor
 Inverted Iron Condor Payoff Inverted Iron Condor

Profit
PnL

Loss

Debit Call Ratio Spread Debit Put Ratio Spread

Profit
Buy Zone Sell Zone
PnL

Loss
Payoff Chart

Non Directional Trading Strategy

• Straddle Options Trading Strategy

• Long Straddle

Most Common • Short Straddle

Non Directional Trading strategy • Strangle Options Trading Strategy

• Long Strangle

• Short Strangle
 Long Strangle Options Trading Strategy Long Strangle Options Trading Strategy

Profit Buy OTM Call

and Buy OTM Put
Risk : Limited
PnL Reward : Unlimited
Loss
Condition : Inside Value CPR
Strike Options Expiry (Trending Day)
15000 CE 32.80 MAR21 BUY Nifty 15000 CE – BUY -> 32.80
14500 PE 50.90 MAR21 BUY Nifty 14500 PE – BUY -> 50.90
Net Debit = 83.70 Points

Long Strangle Options Trading Strategy

Inside Value
 Inside Value (Trending or Breakout) Inside Value (Trending or Breakout)

Yesterday’s CPR Today’s CPR

Yesterday’s CPR Today’s CPR

Long Straddle Options Trading Strategy Short Straddle Options Trading Strategy

Strike Price Action 9.15 Open 15.30 Difference P/L Profit Sell ATM Call
Close
PnL And Sell ATM Put
14750 CE Buy 155 131.2 -23.80 -50.85
14750 PE Buy 151.3 124.25 -27.05 (3813 Rs) Risk : Unlimited
Reward : Limited
Loss
Condition : Outside Value CPR

Strike Options Expiry (Sideways Day)

14750 CE 130.90 MAR21 SELL Nifty 14750 CE – SELL -> 130.90
14750 PE 124.25 MAR21 SELL Nifty 14750 PE – SELL -> 124.25
Net Credit = 255.15 Points
Short Straddle Options Trading Strategy Short Straddle Options Trading Strategy

Outside Value (Sideways)

Outside Value
Yesterday’s CPR Today’s CPR
 Outside Value (Sideways)

Nifty Chart
Outside Value CPR

Yesterday’s CPR Today’s CPR

Short Straddle Options Trading Strategy Short Straddle Options Trading Strategy

Strike Price Action 9.15 Open 15.30 Difference P/L

Close
14750 CE Sell 155 131.2 +23.80 +50.85
14750 PE Sell 151.3 124.25 +27.05 (3813 Rs)
 Long Strangle Options Trading Strategy Long Strangle Options Trading Strategy

Profit Buy OTM Call

and Buy OTM Put
Risk : Limited
PnL Reward : Unlimited
Loss
Condition : Inside Value CPR
Strike Options Expiry (Trending Day)
15000 CE 32.80 MAR21 BUY Nifty 15000 CE – BUY -> 32.80
14500 PE 50.90 MAR21 BUY Nifty 14500 PE – BUY -> 50.90
Net Debit = 83.70 Points

Long Strangle Options Trading Strategy

Inside Value
Sell Zone Formation
Example
Short Strangle Options Trading Strategy Short Strangle Options Trading Strategy

Outside Value (Sideways)

Outside Value
Yesterday’s CPR Today’s CPR
 Outside Value (Sideways)

Nifty Chart
Outside Value CPR

Yesterday’s CPR Today’s CPR

Short Strangle Options Trading Strategy Short Strangle Options Trading Strategy

Strike Price Action 9.15 Open 15.30 Difference P/L

Close
15000 CE Sell 49.70 32.50 17.20 47.15
14500 PE Sell 79.95 50.00 29.95 (3536 Rs)
 Graduation
Price Action Trading
High POP Zone Weightage
Zone marking 20%
Target based on Zone 20%
Stock Zone vs Sectoral index 60%
Price Action Trading
Price Action Trading
Zone marking Target based on Zone
• Reversal Buy Zone Formation • Reversal Buy Zone Formation
• Reversal Sell Zone Formation • Reversal Sell Zone Formation
• Continuation Buy Zone Formation • Continuation Buy Zone Formation
• Continuation Sell Zone Formation • Continuation Sell Zone Formation
• Reversal Buy Power Zone • Reversal Buy Power Zone
• Reversal Sell Power Zone • Reversal Sell Power Zone
Stock Zone vs Sectoral index
1 E Candle 2 E Candle 3 E Candle

1 E Candle 2 E Candle 3 E Candle

Condition 2: Reversal Continuation

Sell Zone :
E Candle Sell zone
The two candles immediately following the IB Candle must each
IB Candle
make a new Low. They do not have to make a lower close, just lower lows.
IB Candle
It can be an E Candle or IB Candle. Sell zone
E Candle
E Candle Sell zone
1 IB Candle

IB Candle 2 IB Candle

1st Low 3 1
2
2nd Low 3
Sell Zone Formation
Example
1 E Candle 2 E Candle 3 E Candle

1 E Candle 2 E Candle 3 E Candle

Condition 2:
Buy Zone :
The two candles immediately following the IB Candle must each
make a new High. They do not have to make a Higher close, just Higher
high. It can be an E Candle or IB Candle 2nd High

1st High
 Power Zone Formation

2
IB Candle Sell Zone
1

1
Buy Zone
IB Candle 2

Reversal Buy Power Zone Reversal Sell Power Zone

 Reversal Buy Power Zone Reversal Buy Power Zone
Condition 1:
2
IB Candle - > IB Candle
1
Condition 2:
Buy Zone :
The two candles immediately
following the IB Candle must each make
Buy Zone
IB Candle
a new High. They do not have to make a
Higher close, just Higher high. It can be
an E Candle or IB Candle

Reversal Sell Power Zone Reversal Sell Power Zone

Condition 1:
IB Candle Sell Zone
IB Candle - > IB Candle

Condition 2:
Sell Zone :
The two candles immediately
1
following the IB Candle must each make
2 a new Low. They do not have to make a
lower close, just lower lows. It can be an
E Candle or IB Candle.
Reversal Buy Power Zone Reversal Buy Power Zone

Reversal Sell Power Zone Reversal Sell Power Zone

Reversal Sell Power Zone

NIFTY

Nifty Chart Nifty Chart

 Nifty Chart Nifty Chart

4 types of Reversal Zones 4 types of Reversal Zones

2
E Candle Sell zone 2
1 IB Candle Sell Zone
1
IB Candle

IB Candle
IB Candle IB Candle 1
1 Buy Zone
Buy zone IB Candle 2
2
E Candle
 2 types of Zones
2
1
IB Candle
IB Candle
Sell zone
E Candle When Not to trade Zones
E Candle
Buy zone
IB Candle
IB Candle

1
2

Trailing Stop Loss Options Mastery

 Basic components to build options strategy Basic components to build options strategy

Sl. No. Leg Action Sl. No. Spread Type Net Premium
1 Long Call Buy Call Option 1 Credit Spread Receive premium as credit
2 Short Call Sell Call Option 2 Debit Spread Pay premium as debit
3 Long Put Buy Put Option
4 Short Put Sell Put Option Sl. No. Spread Type Expiry
1 Vertical Spread Same expiry legs
Sl. No. Strategy Type Direction
2 Horizontal Spread Different expiry legs
1 Directional Strategy Known
2 Non Directional Strategy Un-known

Single Leg Options Strategy

Strategy Long Call Short Call Long Put Short Put
1 Long Call Options Strategy 1
2 Short Call Options Strategy 1
3 Long Put Options Strategy 1
Strategy Cheat Sheet 4 Short Put Options Strategy 1
Long Call Options Strategy Short Call Options Strategy

Profit
Profit
PnL Sell 1 Call Option

PnL Buy 1 Call Option

Loss
Bullish Trade Plan Loss
Bearish Trade Plan
Strategy Type Spread Type
Strategy Type Spread Type
Directional Debit
Directional Credit

Long Put Options Strategy Short Put Options Strategy

Profit Profit
PnL Sell 1 Put Option

PnL Buy 1 Put Options

Loss
Loss
Bullish Trade Plan
Bearish Trade Plan

Strategy Type Spread Type Strategy Type Spread Type

Directional Debit Directional Credit
 Double Leg Options Strategy Debit Call Ratio Spread Options Strategy

Strategy Long Call Short Call Long Put Short Put

Profit Buy 1 High Premium Call
1 Debit Call Ratio Spread Options Strategy 1 1
2 Credit Call Ratio Spread Options Strategy 1 1 PnL and Sell 1 Low Premium Call

3 Debit Put Ratio Spread Options Strategy 1 1 Loss

4 Credit Put Ratio Spread Options Strategy 1 1 Bullish Trade Plan
5 Long Straddle Options Strategy 1 1
6 Short Straddle Options Strategy 1 1
Strategy Type Spread Type
7 Long Strangle Options Strategy 1 1
Directional Debit
8 Short Strangle Options Strategy 1 1

Credit Call Ratio Spread Options Strategy Debit Put Ratio Spread Options Strategy

Profit Sell 1 High Premium Call Profit Buy 1 High Premium Put
PnL and Buy 1 Low Premium Call PnL and Sell 1 Low Premium Put

Loss Loss
Bearish Trade Plan Bearish Trade Plan

Strategy Type Spread Type Strategy Type Spread Type

Directional Credit Directional Debit
Credit Put Ratio Spread Options Strategy Long Straddle Options Trading Strategy

Profit Buy ATM Call

Profit Sell 1 High Premium Put
and Buy ATM Put
PnL and Buy 1 Low Premium Put

Loss
PnL
Bullish Trade Plan
Loss

Strategy Type Spread Type

Strategy Type Spread Type
Non Directional Debit
Directional Credit

Short Straddle Options Trading Strategy Long Strangle Options Trading Strategy

Profit Sell ATM Call Profit Buy OTM Call

PnL And Sell ATM Put and Buy OTM Put

PnL
Loss Loss

Strategy Type Spread Type

Strategy Type Spread Type
Non Directional Debit
Non Directional Credit
Short Strangle Options Trading Strategy Four Leg Options Strategy
Strategy Long Call Short Call Long Put Short Put
Profit Sell OTM Call
1 Iron Condor Options Strategy 1 1 1 1
PnL And Sell OTM Put 2 Inverted Iron Condor Options Strategy 1 1 1 1

Loss

Strategy Type Spread Type

Non Directional Credit

Iron Condor Options Strategy Inverted Iron Condor Options Strategy

Sell 1 High Premium Call Buy 1 High Premium Call

Profit Profit
Buy Zone Sell Zone Buy 1 Low Premium Call Buy Zone Sell Zone Sell 1 Low Premium Call
PnL PnL
Sell 1 High Premium Put Buy 1 High Premium Put
Loss Buy 1 Low Premium Put Loss
Sell 1 Low Premium Put

Strategy Type Spread Type Strategy Type Spread Type

Non Directional Credit Non Directional Debit
 What u explore?
Review the strategy
In
With different strike price
Options Mastery

Pros and Cons of each strategy in How to plan your own trade setup
Different market scenario For next trading day
How to build your own custom strategy Thank You