Part9 Trading Masterclass

Categories of Options Strategies
Directional Strategies – Profit from a clear bullish or bearish bias.

Neutral Strategies – Profit from time decay or volatility drops.

Volatility-Based Strategies – Profit from big moves or volatility increases.

Hedging Strategies – Reduce risk on existing positions.

Directional Strategies
Bullish Strategies
These make money when the underlying price rises.

Long Call
Setup: Buy 1 Call

When to Use: Expect sharp upside.

Risk: Limited to premium paid.

Reward: Unlimited.

Example: Nifty at 22,000, buy 22,200 Call for ₹150. If Nifty rises to 22,500, option might be worth ₹300+, doubling your investment.

Bull Call Spread
Setup: Buy 1 ITM/ATM Call + Sell 1 higher strike Call.

Purpose: Lower cost vs. long call.

Risk: Limited to net premium paid.

Reward: Limited to difference between strikes minus premium.

Example: Buy 22,000 Call for ₹200, Sell 22,500 Call for ₹80 → Net cost ₹120. Max profit ₹380 (if Nifty at or above 22,500).

Bull Put Spread (Credit Spread)
Setup: Sell 1 higher strike Put + Buy 1 lower strike Put.

Purpose: Earn premium in bullish to neutral markets.

Risk: Limited to spread width minus premium.

Example: Sell 22,000 Put ₹200, Buy 21,800 Put ₹100 → Credit ₹100.