Basic options strategies for new traders


Well-Known Member
Here are basic ones, this will just help you to understand products.
Please refer to NSE site for more detail guide.

Long Call- Buy Call. (naked)
Short Call- Short/ Sell Call. (naked)
Long Put- Buy Put.(naked)
Short Put- Short/Sell Put. (naked)
Synthetic long Call- Buy underlying stock + Buy OTM Put.
Synthetic long Put- Sell/ Short underlying stock + Buy OTM Call.
Covered Call- Buy underlying stock + Sell OTM Call.
Covered Put - Short/ Sell underlying stock + Sell OTM Put.
Long Combo- Short/Sell Put + Buy Call
Long straddle- Buy ITM/ATM Call + Buy ITM/ATM Put
Short Straddle- Short/Sell ITM/ATM Call + Short/Sell ITM/ATM Put
Long Strangle -Buy OTM Call + Buy OTM Put
Short Strangle - Short/Sell OTM Call + Short/Sell OTM Put
Collar- Buy underlying stock + Sell OTM Call + Buy OTM Put
Bull Call Spread- Buy ITM Call + Sell OTM Call
Bear Call Spread- Sell ITM Call+ Buy OTM Call
Bull Put Spread - sell ITM Put + Buy OTM Put
Bear Put spead - Buy ITM Put + Sell OTM Put
Long Butterfly Call- Sell 2 ATM Calls + Buy 1 ITM Call + Buy 1 OTM call
Short Butterfly Call- Buy 2 ATM Calls + Short 1 ITM Call + Short 1 OTM Call
Long Call Condor- Buy 1 ITM lower strike + Sell 1 ITM lower middle +sell 1 OTM higher middle + buy 1 OTM Highest strike
Short Call Condor - Short 1 ITM call lower strike +Long 1 ITM lower middle + Long 1 OTM higher middle + short 1 OTM highest strike

What is ITM, ATM, OTM?
If Nifty is at 5200, then
5100 Call is In the money Call - ITM Call
5200 Call is At the money Call - ATM Call
5300 Call is Out of money Call - OTM Call
5100 Put is Out of money Put- OTM Put
5200 Put is At the money Put- ATM Put
5300 Put is In the money Put- ITM Put

On expiry day, if Nifty expires at 5200 then, value/price of
5100 call will be 100
5200 call will be Zero
5300 & above Call will be Zero
5100 Put & below Put will be Zero
5200 Put will be Zero
5300 Put will be 100

In current month options, remember theta effect starts for all calls and puts which are not ITM, which means prices will keep heading to zero from 2nd week onwards, subject to market volatility.

If you are buyer of any ITM/ATM/OTM, Call/Put options, you must execute sell order to avoid NSE charges & extra STT on expiry, even if price of ATM/OTM is zero. If you are seller of ATM/OTM Call/Put options, you don't need to execute buy order.

Options are very attractive, I suggest to understand underlying maths, have live system to calculate all parameters as per options pricing models before jumping in trading options. If you don't know options as product, you are actually visiting las vegas and gambling.

Similar threads