The derivatives sector of the Indian financial markets is one of the most well-liked among investors for a number of reasons. Futures and options are the two types of standardised derivatives that are traded in India. Options are more challenging than standard equities and require in-depth study and expertise. There are a few strategies that, when used correctly, can aid in effective option trading. These strategies are acceptable and easy for beginners to utilise. Let's examine some of the most well-liked option trading strategies according to the best stock advisory company in India.
Long Call Options
This strategy requires buying calls and is most suitable for investors who have faith in the prices of the underlying stock or asset class. You can take advantage of the rising price of the underlying asset with the help of this strategy. This approach lowers overall risk while trading options. When adopting this strategy, all you are risking is your premium, but if the underlying asset surges, the potential payoff might be endless.
Long Put Options
This method requires you to buy Put Options, just like the Long Call strategy does. The primary distinction is that in this circumstance, the value of the underlying security or asset should decrease. Your risk is limited to the premium amount you paid if the asset's value rises above the strike price. The long-put technique is widely used by investors to profit from falling stock prices.
Short Put Options
Investors that sell options should employ this strategy. A short put strategy seeks to gain from the premiums paid by other investors. Investors are inclined to let the contract expire if an option seller sells them a contract and the price of the underlying asset rises or stays the same. When using the Short Put strategy, the option seller will be permitted to keep the premium value in this case, generating a profit from the trade.
Covered Call Options
Investors who want to make money from a firm they own but aren't witnessing a significant price shift are fond of this strategy. In this strategy, the investors sell a call option with their own shares as the underlying asset. As a result, your pay will increase. In this case, the option buyer will let the contract expire if prices don't move at any moment and stay the same. Once the transaction has expired, you can keep the premium payment and profit from it.
Married Put Options
This strategy requires the use of the derivatives market's futures and options segments. While simultaneously investing in stocks and options, the investor purchases a put option contract for every handful of shares purchased. Your stock investment will be safeguarded by the put option if the stock market loses value. This approach aims to safeguard your investment from drops in share price. While it can be a bit challenging to adjust, this strategy can assist offset portfolio losses while holding out for an increase in share prices.
Protective Put Options
As the name implies, this strategy is advised for investors who want to safeguard themselves from losses. You must buy a long-put option on an asset you already own in order to use this strategy. In the event that the asset's value decreases over time, this will protect you. The primary distinction between this technique and the married put is that the protective put is designed to limit losses on an asset you already own, whereas the married put protects an asset you simultaneously buy.
Trading options is especially advantageous because losses are limited to the premium's value while gains are unrestricted. However, it should be noted that they are more challenging than conventional stock trading and demand much research and knowledge.
Bullish India, one of the best stock advisory companies in India, gives regular free intraday calls with high accuracy so that people could earn free in the stock market.
We even provide more than free intraday tips which are precise and more accurate.
If you are looking for best intraday tips, then start following Bullish India.
