PCR Trading Strategy

Hedging with Options

Hedging protects your portfolio.

Portfolio Hedge with Index Options

Buy index puts to protect against market crashes.

Example: NIFTY at 20,000, buy 19,800 PE to offset losses in stocks.

Covered Puts for Short Positions

For traders shorting stocks, selling puts can hedge upside risk.

Advanced Option Concepts in Trading

To master strategies, you must understand Option Greeks:

Delta – Measures price change sensitivity.

Gamma – Measures delta’s rate of change.

Theta – Time decay rate.

Vega – Sensitivity to volatility changes.

Rho – Interest rate sensitivity.

Example: If you’re buying options before a big earnings announcement, Vega is crucial — higher volatility increases option value.