11.2 Option Strategies Medium Risk

1/28/2021 Option Strategies Medium Risk
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

News: HUL Q3 PAT up 19% to Rs 1921 c... About us India Support
COURSE Quotes TRADE NOW
Derivatives
Advanced MARKETS RESEARCH
Chapter 11.2
LEARN PORTFOLIO INVESTING
0/3 CHAPTERS 0/3 QUIZZES
OPTION STRATEGIES MEDIUM RISK

1
OPTIONS STR… 13
OPTION STRA…
5
2
3 OPTION STRA…
When the markets have a potential to move substantially but there is such a situation where
traders are not sure about the direction. In such a market condition where market may move up or
fall down; traders can enter into strategies which can help benefit them in both the situation.
Win a Badge!
FINISH ALL CHAPTERS AND
QUIZZES
Previous Course
https://simplehai.axisdirect.in/3551_courses 1/14
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

Derivatives
Advanced MARKETS RESEARCH LEARN PORTFOLIO INVESTING
1 OPTIONS STR… 13
OPTION STRA…
5
2
3 OPTION STRA…
Win a Badge!
QUIZZES
Previous Course
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

Derivatives
1 OPTIONS STR… 13
OPTION STRA…
5
2
3 OPTION STRA…
Win a Badge!
QUIZZES
Previous Course
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

Derivatives
1
OPTIONS STR… 13
OPTION STRA…
5
2
3 OPTION STRA…
Covered Call Strategy
a. Strategy
Long 100 Shares

Sell 1 Call Option
b. Explanation
The covered call is a strategy in options trading whereby call options are written against a holding
of the underlying security. Using the covered call option strategy, the investor gets to earn a
premium writing calls while at the same time appreciate all benefits of underlying stock ownership,
such as dividends and voting rights, unless he is assigned an exercise notice on the written call
and is obligated to sell his shares. However, the profit potential of covered call writing is limited as
the investor had, in return for the premium, given up the chance to fully profit from a substantial
rise in the price of the underlying asset.
c. Limited Profit
In addition to the premium received for writing the call, the OTM covered call strategy's profit also
includes a paper gain if the underlying stock price rises, up to the strike price of the call option
sold.
d. Unlimited Loss Potential
Potential losses for this strategy can be very large and occurs when the price of the underlying
security falls. However, this risk is no different from that which the typical stock owner is exposed
to. In fact, the covered call writer's loss is cushioned slightly by the premiums received for writing
the calls.
Win a Badge!
QUIZZES
Previous Course
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

Derivatives
1
OPTIONS STR… 13
OPTION STRA…
5
2
3 OPTION STRA…
Win a Badge!
QUIZZES
Previous Course
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

Derivatives
1
OPTIONS STR… 13
OPTION STRA…
5
2
3 OPTION STRA…
Win a Badge!
QUIZZES
Previous Course
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

Derivatives
1 OPTIONS STR… 13
Long Straddle Strategy
OPTION STRA…
5
2
a. Market View
Long straddle options are unlimited profit, limited risk options trading strategies that are used
3
OPTION STRA… when the options trader thinks that the underlying securities will experience significant volatility in
the near term.
b. Strategy
Buy 1 At the money call

Buy 1 At the money Put
c. Explanation
The long straddle, also known as buy straddle or simply "straddle". It is a neutral strategy in
options trading that involve the simultaneously buying of a put and a call of the same underlying
stock, strike price and expiration date.
d. Unlimited Profit Potential
By having long positions in both call and put options, straddles can achieve large profits no matter
which way the underlying stock price heads, provided the move is strong enough.
e. Limited Risk
Maximum loss for long straddles occurs when the underlying stock price on expiration date is
trading at the strike price of the options bought. At this price, both options expire worthless and the
options trader loses the entire initial debit taken to enter the trade.
Win a Badge!
QUIZZES
Previous Course
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

Derivatives
1 OPTIONS STR… 13
OPTION STRA…
5
2
3 OPTION STRA…
Win a Badge!
QUIZZES
Previous Course
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

Derivatives
1
OPTIONS STR… 13
OPTION STRA…
5
2
3
OPTION STRA…
Long Strangle Strategy
a. Market View
The long options strangle is an unlimited profit, limited risk strategy that is taken when the options
trader thinks that the underlying stock will experience significant volatility in the near term. Long
strangle is debit spreads or net premium is paid to enter the trade.
b. Strategy
Buy 1 Out of the money Call

Buy 1 Out of the money Put
c. Explanation
The long strangle, also known as buy strangle or simply "strangle", is a neutral strategy in options
trading that involve the simultaneous buying of a slightly out-of-the-money put and a slightly out-
Win a Badge! of-the-money call of the same underlying stock and expiration date.
FINISH ALL CHAPTERS AND d. Unlimited Profit
QUIZZES
Huge gains for the long strangle strategy are attainable when the underlying stock price makes a
very strong move either upwards or downwards at expiration.
Previous Course
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

News: HUL Q3 PAT up 19% to Rs 1921 c...
e. Limited Risk About us India Support
COURSE Maximum losses for the long strangle options strategy is hit when the underlying stock
Quotes price on
TRADE NOW
expiration date is trading between the strike prices of the options bought. At this price, both
Derivatives options expire without exercising and the options trader loses the entire premium amount paid to
enter the trade. The investor is looking for a sharp move in the underlying stock, either up or
Advanced MARKETS
down, during the life of the options. This strategy does best if the stock price moves sharply in
RESEARCH either
LEARN
direction PORTFOLIO INVESTING
during the life of the options.
1 OPTIONS STR… 13
When the markets have a potential to move substantially but there

is such a situation where traders are not sure about the direction.
OPTION STRA…
5
2
In such a market condition where market may move up and fall
down; traders can enter into strategies like Long Straddle and
3 OPTION STRA… Strangle which can help benefit them in both the situation.
Win a Badge!
QUIZZES
Previous Course
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

Derivatives
1
OPTIONS STR… 13
OPTION STRA…
5
2
3
OPTION STRA…
Win a Badge!
QUIZZES
Previous Course
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

Derivatives
1
OPTIONS STR… 13
OPTION STRA…
5
2
3 OPTION STRA…
Win a Badge!
QUIZZES
Previous Course
BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

Derivatives
1 OPTIONS STR… 13
OPTION STRA…
5
2
3 OPTION STRA…
Covered Put Strategy
a. Strategy
Short 100 Shares
Sell 1 ATM Put
b. Explanation
Writing covered puts is a bearish options trading strategy involving the writing of put options while
shorting the obligated shares of the underlying stock.
c. Limited Profits with no downside risk
Profit for the covered put option strategy is limited and maximum gain is equal to the premiums
received for the options sold.
d. Unlimited Loss Potential
As the writer is short on the stock, he is subjected to much risk if the price of the underlying stock
rises dramatically. In theory, maximum loss for the covered put options strategy is unlimited since
there is no limit to how high the stock price can be at expiration. If applicable, the covered put
writer will also have to payout any dividends.
KEY TAKEAWAYS:
The Option strategies with Medium risk generally have an unlimited potential to make profit and a
limited loss risk
But in order to have unlimited profit with limited risk there is comparatively higher premium amount
payoff for the option buyers
NEXT COURSE OF ACTION:

Enroll and attend live e-Classes straight from our research experts by visiting E-Classroom
Visit Trading Reports and know our expert take on short term outlook on stocks, derivatives and
indices based on technical analysis.
TAKE A QUIZ NEXT CHAPTER
Win a Badge!
QUIZZES
Previous Course
Investment
BSE 500: 18358.67 -1.66%
News: HUL Q3 PAT up 19% to Rs 1921 c...
Markets Insights Important Main Office Address
Pound to INR: 99.73 -0.23%
Unit No. 2, Phoenix Market City,15,
About LBS Road,Support
us India
COURSE
Options Overview Investment Ideas Links Near Kamani Junction, Kurla (West), Mumbai-
Quotes 400 070. TRADE NOW
Equity Trading Ideas
Derivatives
Equity
Derivatives
Derivatives
Mutual funds
Mutual funds Ideas
Reports
NSE
BSE Telephone Numbers
AdvancedMutual funds
Commodities
Commodity derivatives RESEARCH
MARKETS LEARN
SEBI
PORTFOLIO INVESTING
SCORES(Sebi Complaints
022-40508080
022-61480808
SIP
Indices and Sectors
NSE stock list
Tools Redress System) Customer care Timings
IPO Mon- Fri: 08.45 to 17.30 IST
BSE stock list Returns Calculator
NCD and Bonds
SIP calculator Axis Group 1st, 3rd and 5th Sat: 10.00 to 13.00 IST
1 O
ETFs
PTIONS STR…Learn
Currency Axis Bank Email Address
13
Tax Saving
Overview
Services Axis Bank Foundation In case of any queries please write to:
helpdesk@axisdirect.in
O smallcase STRA…
Demat Account Axis Finance 5
2 PTION Courses Research On SMS
Equity Axis Capital
Demos Subscription
Axis Trustee Connect With us on
Webinars
3 Platforms
O PTION STRA…Direct Speak
Axis Mutual Fund
A.TREDS Ltd
Good Reads
Web trading
Desktop trading Download App
Mobile application Policy
Wordings-
Insurance TATA AIG
(General
Insurance)
Group Mediprime
Group Credit Secure Plus
Investments in securities market are subject to market risks. Read all the related documents carefully before investing.
Axis Direct is a brand under which Axis Securities Limited offers its retail broking and investment services.Trading Member| Axis Securities Limited,CINNo.U74992MH2006PLC163204 |
SEBI Single Reg. No.- NSE, BSE,MSEI, MCX & NCDEX – INZ000161633 | ARN- 64610 SEBI-Research Analyst Reg. No. INH 000000297
IRDA Corporate Agent (Composite) Reg. No. CA0073 | Portfolio Manager Reg. No.- INP000000654 | SEBI Depository Participant Reg. No. IN-DP-403-2019 |Investment Advisor Reg
No. INA000000615
In case of any grievances please write to: customer.grievance@axisdirect.in
Attention Axis Direct Investors
+ Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
+ Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
+ Pay 20% upfront margin of the transaction value to trade in cash market segment.
+ Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide notice no. 20200731-7 dated July 31, 2020 and 20200831-45 dated August 31, 2020
and other guidelines issued from time to time in this regard.
+ Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.
+Contact details: To prevent unauthorized transactions in your account, kindly update your mobile numbers/email IDs with your stock broker, M/S Axis Securities.Receive information
of your transactions directly from Exchange on your mobile/email at the end of the day.
+KYC NotificationKYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need
not undergo the same process again when you approach another intermediary
+Advisory against Tips:Investors are advised not to blindly follow the unfounded rumours, Tips given in social networks, SMS, WhatsApp, Blogs etc. and invest only after conducting
appropriate analysts of respective companies. Beware of fraudster entities operating throughout India and sending bulk messages on the pretext of providing investment tips and luring
investors to invest with them in their bogus firms by promising hefty profits.
+IPO Investment:No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise
your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account.
+Client Registration Documents:Client Registration Documents are now available in Vernacular Language for NSE for BSE for MCX For NCDEX
+ADVISORY TO DEMAT ACCOUNT HOLDERS:Click here to know more
+Filing complaints on SCORES - Easy & quick:
a. Register on SCORES portal
b. Mandatory details for filing complaints on SCORES are
i. Name, PAN, Address, Mobile Number, E-mail ID.
c.Benefits:
i. Effective communication
ii. Speedy redressal of the grievances.
+Central Vigilance Commission (CVC): Please visit CVC website at https://pledge.cvc.nic.in and take "Integrity Pledge" to be an active part of the "Satark Bharat, Samriddh Bharat"
(Vigilant India, Prosperous India).
Terms & Conditions Disclaimer Rules and Regulations & forms Policies & Procedures Privacy Policy Sitemap 2019 Axis Direct All rights reserved.
vV5.0.0.6-60
Win a Badge!
QUIZZES
Previous Course

11.2 Option Strategies Medium Risk

Uploaded by

Copyright:

Available Formats

You might also like

11.2 Option Strategies Medium Risk

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

11.2 Option Strategies Medium Risk

Uploaded by

Copyright:

Available Formats

1/28/2021 Option Strategies Medium Risk

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

COURSE Quotes TRADE NOW

0/3 CHAPTERS 0/3 QUIZZES

OPTION STRATEGIES MEDIUM RISK

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

COURSE Quotes TRADE NOW

0/3 CHAPTERS 0/3 QUIZZES

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

COURSE Quotes TRADE NOW

0/3 CHAPTERS 0/3 QUIZZES

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

COURSE Quotes TRADE NOW

0/3 CHAPTERS 0/3 QUIZZES

Covered Call Strategy

Long 100 Shares

d. Unlimited Loss Potential

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

COURSE Quotes TRADE NOW

0/3 CHAPTERS 0/3 QUIZZES

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

COURSE Quotes TRADE NOW

0/3 CHAPTERS 0/3 QUIZZES

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

COURSE Quotes TRADE NOW

0/3 CHAPTERS 0/3 QUIZZES

Long Straddle Strategy

Buy 1 At the money call

d. Unlimited Profit Potential

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

COURSE Quotes TRADE NOW

0/3 CHAPTERS 0/3 QUIZZES

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

COURSE Quotes TRADE NOW

0/3 CHAPTERS 0/3 QUIZZES

Long Strangle Strategy

Buy 1 Out of the money Call

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

When the markets have a potential to move substantially but there

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

COURSE Quotes TRADE NOW

0/3 CHAPTERS 0/3 QUIZZES

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

COURSE Quotes TRADE NOW

0/3 CHAPTERS 0/3 QUIZZES

BSE 500: 18358.67 -1.66% Pound to INR: 99.73 -0.23%

COURSE Quotes TRADE NOW

0/3 CHAPTERS 0/3 QUIZZES

Covered Put Strategy

Short 100 Shares

Sell 1 ATM Put

c. Limited Profits with no downside risk

d. Unlimited Loss Potential

NEXT COURSE OF ACTION:

TAKE A QUIZ NEXT CHAPTER

You might also like