Look, first of all, if you are thinking that I will tell you very complicated strategies, I will not tell you. I will tell you the strategies that I use and you will be able to use them very easily. And these are the strategies that your broker or people who work in options do not want you to know.
Because it is so simple, if I get to earn money in a simple way, why will I work in 5, 6, 7, 10 call puts? I will not. Sowed are going to talk about simple strategies. I assume this and will tell you. By the way, this basic will be clear after the strategies. If you genuinely want to know which strategies the broker wants you to do and pushes you, if you want to know this too, then tell us. If necessary, we will try to talk about it too.
Let’s go to the first and very simple strategy. Covered call. Here you have to sell something. What to sell? As the name says, call. You have to sell the call while covering. With what will you cover? With your portfolio. Means first of all you will buy a stock. Suppose it is Reliance. According to my personal strategy, according to the technical, suppose Reliance is running at 2400and here my buy signal came and I want to buy it.
My target is 2500, 2600, anything can happen. For the timing, we believe that our target is 2500. I have bought at 2400. My target is 2500. What do have to do? Wait. But why wait when you can earn something? At this time, you can Sella call of 40 rupees. That will be your income. When the stock goes to 2600, you will sell it anyway.
But if the buy chance did not go in a month, then at least your income will be 40 rupees. Do you have any tension? No, because you already have the stock. You already have the stock. To reduce its cost, to earn some additional income, you covered it and sold the call. As soon as you sold the call, your actual net cost has been 2360 without doing anything.
This is a very simple covered call strategy. I would like to tell you one thing in this strategy that if you sell, then look carefully here. Sir said it right that it is of 2400 rupees and our target is 2500. When it goes to2500, it will go.
But even if it does not go to 2500, you can start earning money before that. As soon as you sell, if you sell the out of money option of 2500, you know that it works in lots.
Now if it is a lot of 250, then you get 10,000 rupees according to 40 rupees. If you want to earn 10,000 rupees, then you can use this strategy. This is an example of Reliance. You can do it in any stock. You can also do it in index. Suppose the market is going on now, 16000 nifties. I want to go to my portfolio, which is a mutual fund or index fund portfolio.
When nifty goes to 18000, I have to book some profit there. My mindset is made. So you keep selling nifty calls of 18000. Until it is not going, at least you will have some additional income. And anyway, when it goes to 18000, you have to sell.
Sell it easily. At that time, your almost premium will also be because of time value of money, which is your biggest best friend. You must have given a good profit in this complete option selling. Absolutely. Now let’s talk about the positives and negatives of the strategy. I will tell you the negatives and also the solution.
The first positive is why wait? When youkan earns some extra, there is a portfolio, there is a stock, why wait? Let us do some call selling and start earning some extra. Second, there is no additional risk. You are buying the stock anyway.
You have the portfolio anyway. You are just hedging it by doing call selling. It is going to be so simple for you. What is the negative? Annand, if our stock, which was 2400, was reliance, it broke.
So, brother, even if you were not doing call selling, it would have broken, you would have lost. There, whatever stop loss you have to maintain, you have too. You should assume that instead of 2400, your cost is 2360.At least you will have loss. Second, Annand, there is a limited upside. What if the reliance reached 3000?
Sir, you have done call selling for your target. If 3000 would have gone, but you would have gone 99%. So, if you had to go, then remove this mental block and understand what we are trying to do in the strategy. When is the exit in this strategy?
The level of call selling is very high. If I had bought a stock at a price of 2400 and sold it at a call of 2500, when the stock price reaches 2500, I will book a profit in my stock and close the call at whatever price it is.
This is the best risk-reward ratio for you. You will go for net-to-net profit. You will go for a very good profit. Usually, if a little time is spent in this, then the premium of your call would have also reduced. You ate that too. You put some money in your pocket from the call buyer’s pocket and the second stock that increased, you easily made a profit.
Right, first strategy over. Very nice. You will say, make it complicated. You can make it complicated. If you genuinely tell me, I will tell you such complicated strategies. You will say, Annand, it was fun to listen, but you will not be able to apply.
Let’s go to the second simple strategy. The name is put selling. And one thing I would like to tell you is that the strategies you are listening to, maybe this is the first time for you.
So you can read this blog many times so that you get clarity. Because it is explained very well. Once I may have to understand, make your notes. You can also do paper trade to trade first. Then you can see that the profits coming, how much fun it is, and then you can take advantage of these strategies. Absolutely right. And anyway, you are getting the whole series freely at the request of Pushkar sir.
There is no restriction that you have to see it in one day or you cannot revise it after day. It has been freely available on YouTube. So take advantage of it. Let’s got the second strategy. The name is put selling. What happens many times is that the price of Reliance is 2400.My wish is that I want to buy Reliance at 2300.
I am waiting for 2300 to come. Or suppose Nifty is running at 14000. I have to make my portfolio. But I will make it at the time when I get 14000, the price of Nifty, I want to buy something in the index. Right. How many times does it happen that the price does not come? And we are left in the waiting game.
Later, FOMO happens. Fear of missing out. Did I miss out? So why wait when you can use put selling strategy? The price of Reliance is running at 2400.I have to buy at 2300.So I will sell put at 2300.
I have sold right to sell at 2300.So until my stock comes to 2300, my premium will keep on decaying. I will wait. What if it comes to 2300 ogres below it? So nothing. As soon as it comes to 2300, the cash that you have already in your bank account or in your D-mat, you have to buy the stock. And the put you have sold, you have to cover it.
You will be able to buy at the price you want to buy. And until you can’t do it, there will be regular income. Right. Positives. Regular incomes happening. By chance, the price did not come. It did not come this month. So the premium of 40 you got this month has come in your pocket. It did not come next month.
Next month₹ 40 has come in your pocket. Regular income. And second, you’re able to make your lovely stock, your lovely portfolio at your desired level. What is negative? Infinite. We sold put at 2300. What if the stock keeps on falling? So nothing sir. If you have sold put at 2300, the price was the one you wanted to buy the stock at.
So I assume that as soon as 2300 came, you would have bought the stock. So you are getting a loss in put instead of that, you would have been getting a loss in stock. The thingies the same. It is a mind game. Change your mind a little. It will be easy for you. And if your stop loss is hit, then you can go out with a little loss.
You said that we covered it in the next slide. How do we do risk management? He said very well that you don’t have to buy every time. You have money available. So you buy the stock first. Otherwise, it is a simple stop loss. Suppose you have taken a premium of 40 from selling. If it becomes 200%, you covert. It’s okay. We made a mistake. We lost.
The winning probability is on your side when you trade and understand the framework properly, apply the technical sand trade. The winning probability is with you. If there is a stop loss at some places, then you apply the rule of risk management and you will get an exit. It means that if you were making a profit here, then if you ate 40, then you went to minus 40, right?
So as soon as you go to minus 40, you will go out. The time we know that we have fallen into a hole, don’t dig that hole any more. Don’t wait for 200%. Don’t wait. Because you are getting 70% plus chances of making money. I am not saying that. It is for the probability. The math says that you will win. 80% chance of winning.
If you work carefully. The first two strategies ‘main problem or loophole was that as you said before this blog that you need sufficient margin. If your capital is very less, you may not be able to use those strategies. But the solution is our third strategy. You will be successful in your trade. There should be a strategy in option selling where margin is less and margin is more. It is called vertical credit.
Two parts of vertical credit are bull put spread and bear call spread. The name will tell you what you are going to do. Bull means you will increase in this particular stock. Put means you will increase while using put.
Spread means you will buy and sell. You are going to make a transition on two legs. Bear call spread. Bear means you will sell. Call means you will sell while using put. Spread means you will buy and sell.
Two legs of transition will come in the same transition and strategy. Example Reliance. Because it is important to continue one example in the whole series. The price is 2400.I think reliance will increase here. The market is also in uptrend. Everything is in my favor. The first leg of transaction happens for us that we sell put.
We got 40 rupees. What happened? We did the same strategy that we sold naked put. But on selling naked put like we are talking about this example your margin of 1 lakh rupees is going to be required. If we want to reduce it, we will continue the second leg.
In the first leg, we sold putout of the money. In the second leg, we sold put instead of 2300we sold it at 2200.Obviously, the premium will be less because we have gone further out of the money. And this is your bull put spread. Maximum gain is 30 rupees.
The difference between the two. And max loss? What will happen in this scenario? Is this 90 written right? Actual answer is7T loss. How? The price fell by 100 rupees. So I have lost 100 rupees. And I have got a net premium of 30 rupees. So my net loss of 7T will be done. If the price of my stock goes below 2200then a major crash will occur in my stock.
You may get hurt here. You just said that the risk reward ratio is bad. But here you have taken cushioning. The probability of successes on your side. You have to take risk reward on the negative side. Only then this strategy will work. Because here was discussing with him that you have a vision of the market that the market will increase.
That’s why we have put. And put means we are going to trade with put option. So if you make a bull call spread then the risk to reward ratio will be better there. If you use any option strategy builder, then you will see that here the risk to reward ratio is bettering making a bull call spread. But sir told that if you see from their experience then the winning probability is more. We are not only seeing the risk to reward ratio.
The chances of you making money are more. And the main reason for that, I will give you a small hint. You will understand everything. When we make a bull call spread, your net will not inflow. You have to give net outflow. You will start buying options.
And our strategy is of selling options. In the first day, you have paid some premium. And as we have discussed in our previous blog, if you have paid premium, the probability of success is not on your side. Here, it is possible that your 1 is to 2 or 1 is to 3risk to reward ratio is on the reverse side. But the probability of your successes on your side.
Plus, you think the price is running at 2400.You are already bullish. Here, you will only need money to run your business. If you are not bullish, and the stock price is 2100 or 2000,then obviously, we have to pay some cost. But that is also our limit because we have covered it. In contrast, if we talk about bear call spread, And this is also opposite.
We are playing Mandi. We have a vision of the market. But we are trading with call option instead of put option. So, it is amazing because most people do not do this. So, if you put bear put spread, you will have to pay some cost.
You will get to know easily. In this strategy, you have understood that the price is running at 2400.We sold the call at 2500 out of the money. We bought it at 2600 further out of the money. My net of 30 rupees premium has come. The risk-reward ratio has become the same. Until the stock price goes above 2600 drastically or does not reach 2600,I will not have any loss. Suppose it reaches 2500,I am in profit.
2510, I am in profit.2520, I am in profit.2540, I am in no profit, no loss. My loss will start above that. Finally, If you have not liked the positives and negatives of this strategy, then do it. If you have not subscribed, then do it. Because this is just one content that I am giving. You get amazing content regularly by pushing it.
You should get it regularly. Positives, limited loss. Risk management is already built in this strategy. On the first day, you know how much is your risk and how much is your reward. You can sit quietly. Here, you don’t have to see the market again and again. Once you make this strategy, leave the market for the whole month.
The risk-reward ratio will automatically take care of you. Here, the next important point comes. Sometimes, your stock will go against you. Suppose, you made a bear call spread. The price of the stock went up to 2700.But you are still in the game.
Your loss is already this much. It is possible that it went away. Towards the end of the month, it will go back. You are in the game because your stop-loss is already decided.
You are not out of the game. You are not out of the stock market. You knew the loss on the first day. But still, by chance, it reversed. Without doing anything. We are not doing a whooping game here. We have not made our stop-loss. We are not doing a whooping game. We have set our stop-loss on the first day.
But you are still in the game. And finally, this is a good way to earn regular income. You can earn good money by regularly doing bull put spreader bear call spread. Negative, this is a boring strategy.
If you want to do something in the morning. If I don’t put a deal, then my morning tea will not get off. Then this strategy is not for you. You don’t have to wait. You want to sell today. If I want to make a profit tomorrow, then I won’t. This strategy is a boring strategy. You have to wait for the whole month. Because you have worked in a monthly expiry.
You have to wait for the whole month. Then you will make a profit. And finally, you have to take care that the strike price you are working for, you get liquidity. Sometimes, if you don’t get liquidity, then it becomes a problem. And it depends on the stock. You have to choose stocks where you get liquidity at a different strike price. I hope you liked this complete series.