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Option Trading Strategies Explained

The document provides an overview of option trading, specifically focusing on call and put options, their contracts, and the associated concepts such as strike price, premium, and break-even points. It outlines the roles of buyers and sellers in both call and put options, detailing their potential profits and losses. Additionally, it discusses the implications of market movements on option trading strategies.

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chaitanyalale
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0% found this document useful (0 votes)
382 views10 pages

Option Trading Strategies Explained

The document provides an overview of option trading, specifically focusing on call and put options, their contracts, and the associated concepts such as strike price, premium, and break-even points. It outlines the roles of buyers and sellers in both call and put options, detailing their potential profits and losses. Additionally, it discusses the implications of market movements on option trading strategies.

Uploaded by

chaitanyalale
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

7th sENse

OPTIDN TRADING- PART-1


Topic-63
OPTION

CALL PUT
CE PE
Europen Call] LEuvopeam Put)
optlon option

Buy sel Buy Sel

Buysell Buy-Sel
* Long c a l l Long put

SellBu sellBu
. Short Pu
shoxt call

e
NIFTY JAN 18500 cE NIFTY JAN 18 so0 PE

ABBOTINDIA JAN 13s00 Ce ABBOTINDIA 18SDo PE


APOLLOHoSP JAN S4oo PE
APOLLOHOsP JAN Soo Ce

BUY = Bullish T

CALL (CE)EELL
SELL Beavish J C

13UY Bemsh
PuT CPE)S SELL Bullish.
(Pe) sel

Bullish Beaish
CE PE CE PE
Se Sell BU
7th sENSE
Topic-63 OPTION TRADING PART-2
CE Contract

oPTION
CALL PUT
CE

LEuYopezn Call optim]

Buy Sel
Conract

oSS

No P f i No loss

PE

Buyers Bullish T ce Bu
CALL Cce) Seies
Selers Reorih ce Sel

CE ce

Buyers Seller'S
Contrach
stike price
Premium
Undelqing /spot pice
Intinsie value v)
Brezk -Even pint
Break-dn pinf
hseNSE
Topic-o OPTION TRADING PART-3
CE CONTRACT

STRIKG PRICE
OPTION

CALL PUT
CE

Buyer Seler

covip-1
Histom161)
Virulent
Normal
CHINA HIT BY cORONA |
cE
seje
CE
B
CORONA
CORONA will NoT come
wiCome n.
Remdes
vir
Rs. 2K
2k joR 2k ---<sk

Bearish
Bulish

CE Byuer makes pofnt


stike pri

C6 s e e r makes pfrE
2K

31
Comract
pin stike Pice|

IK 2K 3k 4k sk) GK Fh 3h 3k jok)
CE Buyer
CESeíe
7 sENSE
oPTION TRADING- PART-4
Topic-4
Topic-71 cecONTRACT
PREMUM
OPTION

CALL PUT
CE ce
Buyer Seller

2K
5K cK tk 3k 3h loK
K 2kK 3k
4
CE CE
Saler Buyer
(earish) STREKE
CBwlish)
PRTCE

CONTRACT
CE uyer- M). Remdesvir RA. Sk<

CEselter-tnj.Remdesy
ir Rs. sK
Expiry of Contract (Time) imonth (suppose)
cE seller Remdesvîr
O He cant se M
Befove epim to anbod

He must se to ce Byyer om

erpi if nj Rem desvir pe


above K

Rs. premi um
CE Buyer= He has to p2 for
(1K) ko iPremium (uppose.1K)
t c seller
Remdevir CE
2k sel er Sg ce«yer

pvemjumn
aK) Notrepurned any had
7hSENSE
OPTION TRADING4- PART S

Zt-do
CE CONTRACT

CE Buer's Profit

OPTION

CALL PUT
CE-Buyer CE Seller
IN
REMDES
YT

CE Seller's CE-Buyer's

I 2 3 45 SK K 7K-10oK
strike
Price

CE-CONTRACT

Premiu-1K -1K

ON EXPERY OF
I c e seller CE-CONTRACT cE Bayer (-1K)
3k 4 Ss
Stike Underlying Pice
rice
CSpot pri e
Bu] Csen

underyi6/spot
Price
Stike_. Intrinsic value
Pice

o-5K]s
ca Buyer's Ptofit =

Tntrinsic value-Premiu)
CP)
SK-1k
Exponental mfit
7 hsENSE
OPTION TRADING-PART-6
Topic-73 CE CONTRACT
CE Seller's Loss
OPTION
CALL PUT
CE CE
Buuen Seller

Ren

Rs.26 Ce Buye
CE Sellé
1 2 3 4 |s 7h 3h 3K 1°K
stdke
Pice

+1H CE CONTRACT -1K


Premium-1K

ON Expin oF
cE-Contrk
tcesellev ce Buyer (-IK)
ik 2 3k 4k sk K 7k 3k 3k (10R
Shdte umdeyima
Pm ce
3Potpsce

undeyih/por Aike Inni


pmce mce vdue
goK)
ce (ca) selters Loss
pvemiu-Intrinic value (1v)
1k sk
46 (400
8xponenha|Loss
7th sENSE
OPTION TRADING PART-7
Topic-H cE CONTRACT
cEBuyex's CE sellers
Propit+ Loss

oPTION
CALL PUT
Ce CE
BUyer Seller

Ce Selee CE Buyer
k 2 3K 4 s%|h 7K 3K 3K 10K
StiKe
CE Cmhoct
-1%
IR) CeSeller on expin ce Buyer (-1K)

1 2K 3 4K SK GK k 2h 3K 1ok)
stike
Undertyislpt
pot stnte =
T.¥.
(lnhinsi
Value)
(1oK)-- s sk
CEBuyers CE seller's
PrOf Loss

V. - -V.

46
o0 . 400 .
Ex pmentia| Expomential
Poit LosS
7th sENSE

Topic-75
OPTION TRADING PART-
CE CONTRACT

CE Buyer's CE Setler s
Loss Profit
OPTEON

CALL POT
GE Buye GE Geller

ceseller CERuyer
2k 3 4 sKK tk 2k 3h 10K
Strike
CE Contratt
+1K -1
Prernium- 1K
on Expim

1CE seller ContracC CEBuy (-1


1K 2 3K 4K |Sk| sh tk 3K 3k 10 K
Strte
spot
underlyint
Spot stike =
Inrinsic value (sv.)
..sk s o CmustBe nm-ne4rtive
iF negatve take as"2ero*)
46 K '22m

46 .2e

CE Buyor's CE Seller's (
oSS ProF
TV.-
-I.
1K-2e
tIk
Premium Pmium

Limitec Loss Limited pvwfit


7th sENSSE
OPTION TRADIN PART-
Topic-
F6
CE CONTRACT

CE Buyer's- Break-Even Poiot (BE-Point)


CE Seller!s- Break-Dwn Polnt (BD pn)

OPTION
CALL PUT
CEBuyeY CE Selley

2 k 3k 4k SK K 1 % 3K 3K 10K
sttike
cE CONTRACT
+1 PREMIUm -1K

on expim
Cam tracE
CE SeleY cEu t
IsK S2K ssK 53 G
Stske

pot-Mb! 02K
(ce) w2ok
1 =Premiu.

CEBuyeIR) I . CESeller(+1k)
Iv. - - - - T v. = +

0-2I -03 0-2


I-02 -3
S - | -0 5
0-8 I-03 o 2
o - 1= -0:2

1-1o
Brea- Even poîmE Break-Down pont-
a
0-| k 1-11-0-| K
Point cF Buyer
Stike Diee
E
No hoit No Less remium+ CE seljer
IK +sK E D pont
1thseNSE

Topic-77 OPTION TRADING PART 10


cE CONTRACT
CE Buyers seller's - Prot loss - qraph

BeArish Bullih,
mae Marte CE Buyer
+3

Premium +2 (BE)
(t1RCESdler Eveo
Point
8reak

spotunderlyi
3 4 S K 3K 3k 1ok 11 12k 13k 14K

premlu e Buyer Break Dawn point


stoke
-3
(8)
C E seller

Eponena1
Epanenha

Bveak Even pånt ( E)


BYk Down pink
BD) No Put No less (stoke t premium
SK IK
sk -shike
Ne
wited loss
Pn
CE CE
Seller Buyer

(+ Ertchicken 4-ShitG

Shit Gephamt<-Eat(+)

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