NSE Option Chain Strategies for Directional Trading: Profiting from Anticipated Price Movements
Directional trading in the NSE Option Chain involves taking positions based on anticipated price movements in the underlying asset. By strategically utilizing option contracts, traders can profit from these price movements and enhance their trading returns. In this article, we will explore some popular option-chain strategies for directional trading in the NSE. Check what is demat?
Long Call Strategy: The long call strategy is a bullish strategy used when traders anticipate an increase in the price of the underlying asset. Traders buy call options, which provide the right to buy the underlying asset at a predetermined price (the strike price) within a specified timeframe. If the price of the underlying asset rises above the strike price, traders can exercise the call option or sell it for a profit.
Long Put Strategy: The long put strategy is a bearish strategy used when traders anticipate a decrease in the price of the underlying asset. Traders buy put options, which provide the right to sell the underlying asset at a predetermined price within a specified timeframe. If the price of the underlying asset falls below the strike price, traders can exercise the put option or sell it for a profit. Check what is demat?
Bull Call Spread: The bull call spread is a strategy used when traders anticipate a moderate increase in the price of the underlying asset. Traders simultaneously buy a call option at a lower strike price and sell a call option at a higher strike price within the same expiration cycle. The premium received from selling the higher strike call option helps offset the cost of buying the lower strike call option. If the price of the underlying asset rises above the higher strike price, traders can realise a profit.
Bear Put Spread: The bear put spread is a strategy used when traders anticipate a moderate decrease in the price of the underlying asset. Traders simultaneously buy a put option at a higher strike price and sell a put option at a lower strike price within the same expiration cycle. The premium received from selling the lower strike put option helps offset the cost of buying the higher strike put option. If the price of the underlying asset falls below the lower strike price, traders can realise a profit. Check what is demat?
Long Straddle: The long straddle strategy is used when traders anticipate a significant price movement in either direction. Traders simultaneously buy a call option and a put option with the same strike price and expiration date. If the price of the underlying asset moves significantly above or below the strike price, traders can realise a profit. This strategy benefits from volatility expansion rather than the direction of the price movement.
Long Strangle: The long strangle strategy is similar to the long straddle strategy, but the call and put options have different strike prices. Traders buy a call option with a higher strike price and a put option with a lower strike price. This strategy is used when traders anticipate a significant price movement but are unsure of the direction. If the price of the underlying asset moves significantly above the higher strike price or below the lower strike price, traders can realise a profit. Check what is demat?
