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  • Black Blue Dark Simple Digital 5G Technology Technology Presentation

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    Rahul Kumar
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    The document discusses three option strategies: 1. Protective put strategy involves buying puts to limit downside risk when bullish on a stock. It provides protection while allowing for unlimited upside. 2. Bull call spread uses calls to profit from an expected moderate rise in price. It has limited risk and reward. 3. Long straddle is a neutral strategy used in highly volatile markets. It provides limited risk but unlimited reward potential based on large moves in either direction.

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    Black Blue Dark Simple Digital 5G Technology Technology Presentation

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    The document discusses three option strategies: 1. Protective put strategy involves buying puts to limit downside risk when bullish on a stock. It provides protection while allowing for unlimited upside. 2. Bull call spread uses calls to profit from an expected moderate rise in price. It has limited risk and reward. 3. Long straddle is a neutral strategy used in highly volatile markets. It provides limited risk but unlimited reward potential based on large moves in either direction.

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    © All Rights Reserved
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    18 views12 pages

    Black Blue Dark Simple Digital 5G Technology Technology Presentation

    Uploaded by

    Rahul Kumar
    The document discusses three option strategies: 1. Protective put strategy involves buying puts to limit downside risk when bullish on a stock. It provides protection while allowing for unlimited upside. 2. Bull call spread uses calls to profit from an expected moderate rise in price. It has limited risk and reward. 3. Long straddle is a neutral strategy used in highly volatile markets. It provides limited risk but unlimited reward potential based on large moves in either direction.

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    of 12

    OPTION

    STRATEGIES
    Team Member's
    Bipasha Chiney BM20013
    Kumari Priyanka BM20028
    Assigned by: Prof. Amit Parakh Rahul Kumar BM20039
    Agenda

    Protective put strategy


    Bull Spread
    Long straddle
    Protective Put Strategy

    OBJECTIVES
    Overview and benefits
    Protective put option example and Risk
    Graph
    Overview
    Strategy: Buying Protective Puts is a conservative way to protect your portfolio from adverse market moves.
    Deploy Only When you are bullish
    Buy Future @CMP
    Reduces the risk in your long stock positins by limiting the maximum possible loss in your portfolio
    Reward:
    Maximum Gain: Unlimited
    Maximum Loss : Limited to premium paid for put.

    Benefits
    Minimise your losses
    Chances of unlimited profit
    You can roll over your position
    Profit can be locked
    Protective Put Option Example and review
    Coal India Stock - Rs. 140
    Put - Rs.3
    Strike Price of put option - 130
    Premium- Rs.3
    Maximum Loss- 13
    Break Even Point - 143

    Break Even : Purchase Price+Premium Paid


    What is Bull Call Spread Strategy
    Used when Market is Bullish and Volatile.
    Advanatage of Stop Loss.

    Risk Profile = Limited Reward Profile = Limited


    Market view - Bullish
    When you are expecting a moderate rise in the price of the
    underlying.
    The trade will result in loss if the price of the underlying
    decreases at expiration.
    Maximum profit happens when the price of underlying rises
    above strike price of two calls.
    Example

    Current Nifty 10500


    Option lot size 75
    Strike price of call option 10300
    Premium paid 175
    Strike price Short Call option 10700
    Premium received 70
    Net Premium paid 110
    Break-even Point 10410
    (Strike price of bought call+ Net Prem)
    Straddle Strategy
    Neutral Strategy
    Highly volatile market

    Risk Profile Reward Profile

    Limited Unlimited
    Effect of Time & Volatility

    Implied Volatility Option Price

    Time Option Price


    Long Straddle Graph

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