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Harmonic Patterns

Part 2 Candle Stick PatternKey Terminologies in Option Trading To understand options, you must master the vocabulary: Strike Price → Pre-decided price where option can be exercised. Premium → Price paid by the option buyer to the seller. Expiry Date → Last day the option can be exercised. In-the-Money (ITM) → Option already has intrinsic value. At-the-Money (ATM) → Strike price is equal to current market price. Out-of-the-Money (OTM) → Option has no intrinsic value. Lot Size → Options are traded in lots, not single shares. For example, Nifty lot = 50 units. How Option Pricing Works Options are not priced arbitrarily. The premium has two parts: Intrinsic Value (IV) The real value if exercised now. Example: Nifty at 20,200, call strike 20,100 → IV = 100 points. Time Value (TV) Extra value due to remaining time before expiry. Longer expiry = higher premium because of greater uncertainty. Option pricing is influenced by: Spot price of underlying Strike price Time to expiry Volatility Interest rates Dividends The famous Black-Scholes Model and Binomial Model are widely used to calculate theoretical prices. Greeks and Risk Management Every option trader must understand Greeks, the risk measures that show sensitivity of option price to different factors: Delta → Measures how much the option price changes if underlying moves 1 unit. Gamma → Measures how delta itself changes with price movement. Theta → Time decay; how much premium falls as expiry nears. Vega → Sensitivity to volatility. Higher volatility increases premium. Rho → Sensitivity to interest rates. Greeks allow traders to hedge portfolios and adjust positions dynamically. Strategies in Option Trading Options shine because you can combine calls, puts, and different strikes to create unique strategies. Directional Strategies Buying Call → Bullish play. Buying Put → Bearish play. Covered Call → Own stock + sell call → generates income. Protective Put → Own stock + buy put → insurance. Neutral Market Strategies Straddle → Buy call + put at same strike → profit from big moves either way. Strangle → Buy OTM call + OTM put → cheaper version of straddle. Iron Condor → Sell OTM call and put spreads → profit if market stays in range. Advanced Plays Butterfly spread, calendar spread, ratio spreads – for experienced traders.
NSE:ICICIBANKEducation
by SkyTradingZone
7
Divergence SecretsGreeks and Risk Management Every option trader must understand Greeks, the risk measures that show sensitivity of option price to different factors: Delta → Measures how much the option price changes if underlying moves 1 unit. Gamma → Measures how delta itself changes with price movement. Theta → Time decay; how much premium falls as expiry nears. Vega → Sensitivity to volatility. Higher volatility increases premium. Rho → Sensitivity to interest rates. Greeks allow traders to hedge portfolios and adjust positions dynamically. Strategies in Option Trading Options shine because you can combine calls, puts, and different strikes to create unique strategies. Directional Strategies Buying Call → Bullish play. Buying Put → Bearish play. Covered Call → Own stock + sell call → generates income. Protective Put → Own stock + buy put → insurance. Neutral Market Strategies Straddle → Buy call + put at same strike → profit from big moves either way. Strangle → Buy OTM call + OTM put → cheaper version of straddle. Iron Condor → Sell OTM call and put spreads → profit if market stays in range. Advanced Plays Butterfly spread, calendar spread, ratio spreads – for experienced traders. Options vs. Futures and Stocks Stocks → Simple ownership. Risk = unlimited downside, reward = unlimited upside. Futures → Obligation to buy/sell at future price. High leverage, unlimited risk. Options → Rights, not obligations. Limited risk (for buyer), flexible payoffs.
NSE:NIFTYEducation
by SkyTradingZone
6
Option Trading Pros and Cons of Option Trading Advantages Limited risk (for buyers). Leverage: control large positions with small capital. Flexibility: profit in all market conditions. Hedging tool. Disadvantages Complexity: requires deep understanding. Option sellers face unlimited risk. Time decay works against option buyers. Requires good volatility forecasting. Practical Examples of Option Trading Example 1: Buying Call on Reliance Reliance at ₹2,500. Buy 2600 CE for ₹50. Expiry day: Reliance at ₹2,700. Profit = (2700–2600) – 50 = ₹50 per share × lot size. Example 2: Protective Put for Portfolio Hedge You hold Nifty ETF at 20,000. Buy 19,800 PE. If market crashes to 19,000, your put limits loss. Psychology and Risk Control Option trading is not just about math; it’s about discipline: Avoid over-leveraging. Always define stop-loss. Respect time decay (theta). Manage emotions – fear of missing out (FOMO) and greed are costly.
NSE:AXISBANKEducation
by SkyTradingZone
7
Part 7 Trading Master Class Why Traders Use Options Hedging – Protect portfolio against price swings. Speculation – Bet on future price movements with smaller capital. Income Generation – Sell options and earn premiums. Arbitrage – Exploit mispricing between spot and derivatives. Options Pricing Models Two main models: Black-Scholes Model: Uses volatility, strike, expiry, and interest rates to price options. Binomial Model: Breaks time into steps, considering probability of price moves. Factors affecting option prices: Spot price of underlying Strike price Time to expiry Volatility Interest rates Dividends Strategies in Option Trading Options allow creation of custom payoff structures. Strategies are classified as: A. Protective Strategies Protective Put – Holding stock + buying put (like insurance). Covered Call – Holding stock + selling call. B. Income Strategies Iron Condor – Selling OTM call & put, buying further OTM options. Strangle/Straddle Selling – Profit from time decay when market is range-bound. C. Speculative Strategies Long Straddle – Buy ATM call + put, profit from big moves. Bull Call Spread – Buy lower strike call, sell higher strike call. Bear Put Spread – Buy higher strike put, sell lower strike put. 📊 Each strategy has its risk/reward profile. Professional traders combine them depending on market conditions.
NSE:ICICIBANKEducation
by SkyTradingZone
5
Part 6 Learn Institutional Trading Call & Put Options Explained At the heart of option trading are two instruments: Calls and Puts. Call Option: Gives the buyer the right (not obligation) to buy the asset at the strike price. Buyers expect prices to rise. Sellers (writers) expect prices to stay flat or fall. Put Option: Gives the buyer the right (not obligation) to sell the asset at the strike price. Buyers expect prices to fall. Sellers expect prices to stay flat or rise. 📌 Example: If Reliance stock trades at ₹2500: A ₹2600 call may cost ₹50 premium. If the stock rises to ₹2700, profit = (2700-2600-50) = ₹50 per share. A ₹2400 put may cost ₹40. If stock falls to ₹2200, profit = (2400-2200-40) = ₹160 per share. Key Concepts Intrinsic Value: Real profit if exercised immediately. Time Value: Premium paid for potential future movement. In-the-Money (ITM): Option already profitable if exercised. Out-of-the-Money (OTM): Option has no intrinsic value, only time value. At-the-Money (ATM): Strike = current market price.
NSE:AXISBANKEducation
by SkyTradingZone
6
Part 1 Ride The Big MovesWhat is an Option? An option is a financial contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (called the strike price) on or before a specific date (called the expiry date). There are two main types of options: Call Option – Gives the buyer the right to buy the underlying asset. Put Option – Gives the buyer the right to sell the underlying asset. Example: If you buy a call option on stock XYZ with a strike price of ₹500, you can buy the stock at ₹500 even if the market price rises to ₹600. If you buy a put option on stock XYZ at ₹500, you can sell it at ₹500 even if the market price falls to ₹400. How Options Work Call Option Buyer: Expects the price to rise. Pays a premium upfront. Profit = Unlimited (price can rise indefinitely) – Premium paid. Loss = Premium paid (if price falls below strike). Put Option Buyer: Expects the price to fall. Pays a premium upfront. Profit = Strike – Price (max is strike – 0) – Premium paid. Loss = Premium paid. Option Seller (Writer): Receives the premium. Takes obligation to buy/sell if the buyer exercises. Risk = Can be unlimited for call sellers. Factors Affecting Option Prices (Option Greeks) Option price is influenced by: Delta (Δ) – How much the option price moves with a 1-point move in underlying. Gamma (Γ) – How fast delta changes with underlying price. Theta (Θ) – Time decay; how much value the option loses each day. Vega (V) – Sensitivity to volatility in the underlying asset. Rho (ρ) – Sensitivity to interest rates. Tip: Time decay is crucial – options lose value as expiry approaches if the underlying doesn’t move favorably.
OKX:BTCUSDEducation
by SkyTradingZone
5
Part 4 Institutional TradingAdvantages of Option Trading Leverage: Small premium controls large exposure. Flexibility: Can profit in any market—up, down, or sideways. Risk Management: Limited risk for buyers. Income Generation: Option writing provides steady cash flow. Risks of Option Trading Despite advantages, options carry risks: Time Decay: Options lose value as expiry approaches. Volatility Risk: Changes in implied volatility can hurt positions. Liquidity Risk: Some options may not have enough buyers/sellers. Unlimited Risk for Writers: Option sellers face theoretically unlimited losses. Options vs Futures Many confuse options with futures. Key differences: Futures: Obligation to buy/sell at expiry. Options: Right, not obligation. Futures: Unlimited risk both ways. Options: Buyers’ risk limited to premium.
NSE:AXISBANKEducation
by SkyTradingZone
7
Part 4 Trading Master ClassParticipants in Option Markets There are four key participants in option trading: Buyers of Calls – Bullish traders. Sellers of Calls (Writers) – Bearish or neutral traders, earning premium. Buyers of Puts – Bearish traders. Sellers of Puts (Writers) – Bullish or neutral traders, earning premium. Each of these participants plays a role in keeping the options market liquid. Option Pricing: The Greeks Option pricing is not random—it is influenced by multiple factors, commonly represented by the Greeks: Delta: Measures how much the option price changes when the underlying asset moves ₹1. Gamma: Measures how much Delta itself changes when the underlying moves. Theta: Measures time decay—how much the option loses value daily as expiration approaches. Vega: Measures sensitivity to volatility changes. Rho: Sensitivity to interest rate changes. For traders, Theta and Vega are the most crucial, since time decay and volatility play massive roles in profits and losses.
NSE:ICICIBANKEducation
by SkyTradingZone
8
Part 1 Trading Master ClassIntroduction In the world of financial markets, traders and investors have many instruments to express their views, manage risks, or speculate on price movements. One of the most fascinating and versatile instruments is the option contract. Options trading, when understood deeply, opens the door to countless strategies—ranging from conservative income generation to high-risk speculative plays with massive upside. Unlike traditional stock trading, which is relatively straightforward (buy low, sell high), option trading introduces multiple layers of complexity: time decay, volatility, strike prices, premiums, and Greeks. Because of this, beginners often feel intimidated, while experienced traders consider options an art form—something that requires both science and psychology. This guide will take you step by step into the world of option trading, covering what options are, how they work, key terminology, strategies, risks, advantages, and real-life use cases. By the end, you’ll have a full 360-degree view of this powerful trading instrument. What Are Options? An option is a type of financial derivative contract. Its value is derived from an underlying asset such as a stock, index, currency, or commodity. An option gives the buyer the right, but not the obligation, to buy or sell the underlying asset at a predetermined price (called the strike price) before or on a specified date (called the expiration date). There are two basic types of options: Call Option – Gives the buyer the right to buy the underlying asset at the strike price. Put Option – Gives the buyer the right to sell the underlying asset at the strike price. So, if you think the price of a stock will rise, you might buy a call option. If you think it will fall, you might buy a put option.
NSE:BANKNIFTYEducation
by SkyTradingZone
8
Part 3 Institutional Trading Option Styles and Formats Options come in various forms to suit different strategies: Vanilla Options: Standard call and put options traded on exchanges. Exotic Options: Options with complex structures, including barrier, digital, and Asian options. LEAPS: Long-term options with expiration dates up to three years. Participants in Option Trading Option markets attract a range of participants: Hedgers: Protect existing positions from adverse price movements. Speculators: Seek to profit from directional price changes or volatility. Arbitrageurs: Exploit price differences between markets or instruments. Market Makers: Provide liquidity by quoting buy and sell prices for options. Advantages of Option Trading Option trading offers several benefits over traditional trading: Leverage: Control large positions with smaller capital. Flexibility: Wide range of strategies for bullish, bearish, and neutral markets. Risk Management: Ability to hedge stock portfolios and limit losses. Income Generation: Selling options (writing) generates premium income. Speculation Opportunities: Capitalize on volatility without owning the underlying asset.
BITSTAMP:BTCUSDEducation
by SkyTradingZone
10
Part 1 Ride The Big Moves Introduction to Option Trading Option trading is a segment of the financial market that allows investors to buy and sell options—financial contracts that grant the right, but not the obligation, to buy or sell an underlying asset at a predetermined price before or on a specified date. Unlike stocks or commodities where ownership is transferred, options are derivatives, meaning their value derives from an underlying asset such as equities, indices, commodities, or currencies. Options are widely used for hedging, speculation, and income generation. Traders use options to manage risk, enhance returns, and capitalize on market volatility. Global financial markets, including India’s NSE and BSE, have witnessed exponential growth in options trading due to their flexibility and strategic possibilities. Types of Options Options are primarily classified into two types: Call Options and Put Options. Call Options A call option gives the buyer the right to purchase the underlying asset at a specified price, called the strike price, before or on the option's expiration date. Investors buy calls if they anticipate the price of the underlying asset will rise. Example: Suppose a stock is trading at ₹100, and an investor buys a call option with a strike price of ₹110. If the stock rises to ₹120, the investor can exercise the option, buy at ₹110, and sell at ₹120, gaining ₹10 minus the premium paid. Put Options A put option gives the buyer the right to sell the underlying asset at a specified strike price within a certain timeframe. Investors buy puts if they expect the price of the underlying asset to fall. Example: A stock trades at ₹150. An investor buys a put option with a strike price of ₹140. If the stock drops to ₹130, the investor can sell it at ₹140, securing a ₹10 profit minus the premium.
NSE:TATASTEELEducation
by SkyTradingZone
10
PCR Trading StrategiesCommon Mistakes & Myths about Options Myth: Options are only for experts. (Truth: Beginners can use basic strategies safely.) Mistake: Treating options like lottery tickets. Mistake: Ignoring time decay and volatility. Mistake: Over-trading due to low cost of buying options. Future of Option Trading Algo & Quant Trading: Algorithms dominate global options volume. Retail Boom: Platforms like Zerodha, Robinhood, and Binance bring retail investors into options. AI & Machine Learning: Predictive models for volatility and pricing. Global Expansion: Options on new assets like carbon credits, crypto, and ETFs. Conclusion Option trading is a powerful tool — a double-edged sword. It can be used for risk management, speculation, or income generation. To master options, one must: Learn the basics (calls, puts, pricing). Understand strategies (spreads, straddles, condors). Respect risk management and psychology. Stay updated with market trends and regulations. With proper discipline, options can transform how you interact with markets, offering opportunities that stocks and bonds alone cannot.
CRYPTO:ETHUSDEducation
by SkyTradingZone
8
Divergence SecretsPsychology of an Options Trader Trading is not just numbers, it’s emotions. Fear and greed drive bad decisions. Over-leverage leads to blowing up accounts. Patience and discipline are more important than intelligence. A successful trader has a trading plan, risk management, and psychological control. Options in Different Markets Options exist in many markets: Equity Options (stocks like Reliance, TCS, Tesla, Apple). Index Options (NIFTY, BANKNIFTY, S&P500). Commodity Options (Gold, Crude, Agricultural products). Forex Options (EUR/USD, USD/INR). Crypto Options (Bitcoin, Ethereum). Regulatory Aspects & Margin Requirements In India, SEBI regulates options trading. Margin requirements are high for sellers due to unlimited risk. Exchanges like NSE and BSE provide liquidity in equity & index options. Globally, SEC (USA) and ESMA (Europe) govern options.
NSE:BAJFINANCEEducation
by SkyTradingZone
6
Part 2 Support and ResistanceOption Trading Strategies This is the most exciting part. Strategies range from simple to complex. Beginner Strategies Covered Call: Hold stock + sell call → generates income. Protective Put: Hold stock + buy put → insurance against fall. Cash-Secured Put: Sell put with enough cash reserved to buy stock if assigned. Intermediate Strategies Vertical Spread: Buy one option, sell another at different strikes. Straddle: Buy call + put at same strike → profit from volatility. Strangle: Buy call + put at different strikes. Advanced Strategies Iron Condor: Combines spreads to profit in low-volatility markets. Butterfly Spread: Profit from limited movement near strike. Calendar Spread: Exploit time decay by buying long-term and selling short-term options. Risk Management in Options Trading Options can wipe out capital if not managed properly. Key practices include: Position Sizing: Never risk more than a fixed % of capital. Stop Loss & Exit Rules: Define risk before entering. Diversification: Avoid concentrating all trades on one asset. Understanding Margin: Selling options requires large margin because risks are unlimited. Hedging: Use spreads to limit risk.
NSE:RELIANCEEducation
by SkyTradingZone
4
Part 1 Support and ResistanceThe Role of Options in Financial Markets Options exist because they provide flexibility and risk management tools. Their role includes: Hedging: Protecting portfolios from adverse price movements (insurance against loss). Speculation: Betting on price direction with limited capital. Leverage: Controlling large positions with small investment. Income Generation: Selling options to earn premium income. Arbitrage: Exploiting price differences between markets or instruments. Why Traders Use Options Options serve different purposes: Investors: Hedge portfolios (e.g., protective puts). Traders: Speculate on price moves (buying calls/puts). Institutions: Manage risk exposure across assets. Market Makers: Provide liquidity and earn spreads. Psychology of an Options Trader Trading is not just numbers, it’s emotions. Fear and greed drive bad decisions. Over-leverage leads to blowing up accounts. Patience and discipline are more important than intelligence. A successful trader has a trading plan, risk management, and psychological control.
NSE:TATASTEELEducation
by SkyTradingZone
10
Part 1 Candlestick PatternIntroduction to Options Options are one of the most fascinating and versatile instruments in financial markets. Unlike traditional investments where you buy and hold an asset (like stocks, bonds, or commodities), options give you choices — hence the name. They allow traders and investors to speculate, hedge risks, generate income, and create strategies that fit different market conditions. At their core, options are derivative contracts. This means they derive their value from an underlying asset (like a stock, index, currency, or commodity). If you understand how they work, you gain the ability to control large positions with relatively small capital. That’s why options are often referred to as “leverage instruments.” However, with great power comes great responsibility. Options can be rewarding, but they also involve risks that many beginners overlook. Learning options trading is like learning a new language: at first, the terminology may seem overwhelming, but once you understand the basics, it becomes logical and structured. History & Evolution of Options Options are not a modern invention. Their roots go back thousands of years. Ancient Greece: The earliest recorded use of options was by Thales, a philosopher who secured the right to use olive presses before harvest. When olive yields turned out abundant, he profited by leasing the presses at higher prices. 17th Century Netherlands: Options became popular in the Dutch tulip mania, where people speculated on tulip bulb prices. Modern Options: Organized option trading as we know it started in 1973 with the creation of the Chicago Board Options Exchange (CBOE). Alongside, the Black-Scholes model for option pricing was introduced, which gave traders a scientific framework to value options. Today, options are traded globally — from U.S. exchanges like CBOE, CME, and NASDAQ to Indian platforms like NSE’s Options Market. They’ve also expanded into forex, commodities, and even cryptocurrencies like Bitcoin.
NSE:BANKNIFTYEducation
by SkyTradingZone
9
Part 9 Trading Masterclass With ExpertsWhy Trade Options? Beginners often ask: “Why not just buy stocks directly?” Here’s why many traders prefer options: Leverage: With a small premium, you can control a large quantity of shares. Limited Risk (for Buyers): Your maximum loss is the premium paid. Profit from Any Direction: Options let you benefit from rising, falling, or even stagnant markets. Hedging: Protect your portfolio from adverse price moves. For example, buying puts on Nifty can protect your stock portfolio during market crashes. Income Generation: By selling options, traders collect premiums regularly (popular among professionals). Risks of Options Trading Options can be powerful but come with risks: Time Decay (Theta): Options lose value as expiry nears. High Volatility: Premiums can fluctuate wildly. Leverage Trap: While leverage amplifies profits, it also magnifies losses. Unlimited Risk (for Sellers): If you sell options, your risk can be theoretically unlimited. Complex Strategies: Advanced option strategies require deep knowledge. Factors Affecting Option Prices Option premiums are influenced by multiple factors: Underlying Price: Moves directly impact intrinsic value. Time to Expiry: Longer duration = higher premium (more time value). Volatility: Higher volatility = higher premium (more uncertainty). Interest Rates & Dividends: Minor factors but can influence pricing. The famous Black-Scholes Model is often used to calculate theoretical option prices.
NSE:BANKNIFTYEducation
by SkyTradingZone
8
Part 4 Learn Institutional Trading Risks of Options Trading Options can be powerful but come with risks: Time Decay (Theta): Options lose value as expiry nears. High Volatility: Premiums can fluctuate wildly. Leverage Trap: While leverage amplifies profits, it also magnifies losses. Unlimited Risk (for Sellers): If you sell options, your risk can be theoretically unlimited. Complex Strategies: Advanced option strategies require deep knowledge. How Options Work in Practice Let’s take a step-by-step breakdown using a Nifty Call Option Example: Nifty Spot: 20,000 You buy a Call Option with Strike = 20,000, Premium = 150, Expiry = 1 month. Scenario A: Nifty goes to 20,500 Option intrinsic value = 500 (20,500 - 20,000) Profit = 500 - 150 = 350 per unit × Lot size (say 50) = ₹17,500 profit. Scenario B: Nifty falls to 19,800 Option expires worthless. Loss = Premium × Lot size = ₹150 × 50 = ₹7,500 loss. This shows both the leverage and limited risk nature of options.
NSE:BANKNIFTY1!Education
by SkyTradingZone
5
Part 8 Trading Masterclass With ExpertsReal-Life Example – Hedging a Portfolio Suppose you hold ₹5,00,000 worth of Indian equities. You worry about a market correction. Instead of selling your holdings, you buy Nifty Put Options as insurance. Nifty at 20,000 You buy Put Option at Strike 19,800, Premium = 200 × 50 lot = ₹10,000. If Nifty falls to 19,000: Put gains = (19,800 – 19,000) × 50 = ₹40,000 Your portfolio loss is partially offset by option profit. This is how professionals use options for protection. Psychological Aspects of Options Trading Options trading is as much about mindset as knowledge: Stay disciplined. Don’t chase every trade. Accept losses—they’re part of the game. Avoid greed—taking profits early is better than losing them later. Learn patience—sometimes the best trade is no trade. Options trading is a powerful tool in the world of financial markets. For beginners, it may look overwhelming, but once broken down into clear concepts, options are simply another way to express your view on the market. Whether you want to speculate, hedge, or generate income, options offer flexibility that stocks alone cannot match. The key for beginners is education + risk management + practice. Start small, learn continuously, and slowly expand your strategies. Over time, you’ll realize that options aren’t scary—they’re opportunities waiting to be unlocked. With the right approach, options trading can transform your trading journey, making you not just a participant in the markets, but a smart strategist who uses every tool available.
BITSTAMP:BTCUSDEducation
by SkyTradingZone
4
Part 1 Ride The Big MovesIntroduction The world of financial markets offers countless opportunities for investors and traders to grow wealth, hedge risks, and speculate on price movements. Among these opportunities, options trading stands out as both exciting and intimidating. For beginners, the term "options" might sound complex, but once you understand the building blocks, options open the door to powerful strategies that stocks alone cannot provide. Options trading is not gambling, though many mistake it for that. Instead, it’s a sophisticated tool that—when used wisely—can help traders generate income, protect their portfolios, or profit from both rising and falling markets. In this guide, we’ll walk through every fundamental aspect of options trading, simplifying concepts for beginners while also highlighting practical examples. By the end of this guide, you’ll know: What options are and how they work Key terms every beginner must understand Why people trade options The risks and benefits of options Basic strategies suitable for beginners Mistakes to avoid in your early journey A roadmap to becoming a skilled options trader
NSE:INFYEducation
by SkyTradingZone
5
Divergence SecretsOption Trading in India India has seen a boom in retail options trading. 1. Exchanges NSE (National Stock Exchange): Leader in index & stock options. BSE (Bombay Stock Exchange): Smaller but growing. 2. Popular Underlyings Nifty 50 Options (most liquid). Bank Nifty Options (very volatile). Stock Options (Infosys, Reliance, HDFC Bank, etc.). 3. SEBI Regulations Compulsory margin requirements. Weekly index expiries (Thursday). Physical settlement of stock options at expiry. Option trading is a double-edged sword. It can create wealth through leverage, hedging, and smart strategies. But it can also destroy capital if misused without understanding risks. The secret is balance: Learn the basics. Practice with small positions. Respect risk management. Master volatility and Greeks. If stocks are like playing cricket, options are like playing 3D chess—complex, dynamic, but highly rewarding for disciplined traders.
NSE:M&MEducation
by SkyTradingZone
6
PCR Trading StrategiesWhy Trade Options? Options exist because they allow flexibility and creativity in financial markets. Some common uses: 1. Leverage Small premium controls large exposure. 2. Hedging Portfolio managers buy Puts to insure against downside. 3. Income Generation Writing covered calls generates steady premium income. 4. Speculation Options let traders profit from not just direction, but also time and volatility. Option Trading Strategies for Different Market Conditions Bullish Market: Long Calls, Bull Call Spreads. Bearish Market: Long Puts, Bear Put Spreads. Sideways Market: Iron Condors, Butterflies. Volatile Market: Straddles, Strangles.
NSE:NIFTYEducation
by SkyTradingZone
2