Sensex Devta

Option strategies :

(1)Bull and Bear spread : A bull spread is a combination of options created to profit from a rise In price of the underlying assets.

A bear spread spread is a combination of options created to profit from a fall In price of the underlying assets.

Long bull spread : buy lower, sell higher ………buy 4900 put sell 5300put ,buy call 4900,sell 5300 call

Risk exposure limited, Limited profit potential ,Trend are clear in future ,call and put both are use

(2)Box spread: A box spread is a combination of bull and bear spread with call and put respectively with same strike price

Long call at lower strike price , short call at higher strike price

Long put at higher strike price , short put at power strike price

If you are a risk adverse investor there you can adopt this strategy since this always gives a pay off the difference between the higher and lower strike price

Two call and two put are use , same strike price

Condor spread : A condor spread strategy involving four option of the same type but with a small difference

Two option are bought with lower and higher strike price sell two option with intermediate strike price

Limited loss and limited profit , call and put both are use , trend are not clear

Calender spread : it is created by selling a call option with a certain strike price and buying another call option with long maturity but the same strike price .

Butterfly spread : A butterfly spread can be executed by using four identical option with the same expiration date and on the same underlying stock but different strike price

Buy lower and higher strike price , sell two intermediate strike price

Direction are not clear , use both call and put and long and short both strategy

Straddle : straddle involves buying call and put with the same strike price

Limited risk ,limited loss , profit upside unlimited , downside limited, direction not clear.

Strangle : combination of call and put with same expiration date and different strike price

Buying call higher strike price , buying put lower strike price

increasing in stock price as likely as it decrease.

Strips : a strips consists of long position in one call and two put the same strike price and expiration date

Volatile stock , buyer belive that stock price will be big move but price is more likely fall than rise.

Straps : buying two call and sell one put same strike price and expiration date

Stock is more likely rise than fall , volatile stock