If the Strike Price is less than the current market price of the underlying security, then the option is said to have an intrinsic value. This means that the option buyer will find it worthy to exercise his right. This scenario is also called in the money. Scenario 1. Trade: Buy a Call 2. Risk: Limited 4. Reward: Unlimited 5. Break-even point: Strike price plus premium In a Put Option trade, the counterparties remain the same as Call Option trade.

But their views about the direction of the price of the underlying security change. The Put Option buyer believes that the price of the security is going to fall while the Put Option writer believes that the price of the underlying security is going to rise.

Understanding an Option Chain

If the strike price is more than the current market price of the underlying, then the Put Option is said to be in the money. This means it has some intrinsic value which makes it worthy for the Put Option buyer to exercise his right. Trade: Buy a Put 2. Reward: Limited 5.

Break-even point: Strike price minus premium Iron Condor option strategy is a limited risk-limited reward option trading strategy and can be seen as a combination of Bull Put spread and Bear Call spread. In a Bull Put spread, the option trader sells a Put option and at the same time buys a Put option at a lower strike price but with the same expiry. In this strategy, both risk and reward is limited.

Increase in volatility typically hurts the option trader. In a Bear Call Spread, the option trader sells a Call option and at the same time buys another Call option with a higher strike but with the same expiry.

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In an Iron Condor option strategy, an option trader sells a Call option while at the same time buys another Call with a higher strike price. Simultaneously, he buys a Put option and at the same time buys another Put option at a lower strike price, but both expiring at the same time. In this strategy, the option trader believes that the market is neutral or rangebound. Both risk and reward in this strategy is limited.

The maximum profit is attained when the stock price is between the strike price of the Short Put and Short Call.

Time decay helps the options trader whereas an increase in volatility hurts position. Two break-even points are created in an Iron Condor option strategy. Strike price in Short Call plus net premium received 2.

Strike price in Short Put minus net premium received The payoff diagram for a Condor options strategy is shown below Let us take a scenario Current market price of stock X: Rs An option trader executes the following trades 1. Writes a Feb Call option at strike price Rs and receives a premium of Rs 20 2. Buys a Feb Call option at strike price Rs and earns a premium of Rs 20 3. Sells a Feb Put option at strike price Rs and receives a premium of Rs 40 4.

In this case, the maximum profit will be equal to Rs Now assuming that the stock price fell to Rs before expiry, the option trader will benefit from the trade. The following are the trading scenarios: So in the above strategy, there is only one situation where the option is in-the-money or in other words, has an intrinsic value. Related Definitions. BTC Ascending Channel breakdown Bias bearish below Upper and lower targets mentioned Hi Traders, As the title is suggesting a clear view of this post, You can see the whole detail in the video link given in the comment box below. Yogesh vats.

Buying at pull back would be a better option Targets would be , , SL according to your risk Banknifty simple trade setup. After Breakout wait for the second candle confirmation. You can give your suggestions in comment box. Notes on the chart. Inverted head and shoulders target mentioned in charts. Only for educational purpose. Wyckoff developed a price action market theory which is still a leading principle in today's trading practice. The Wyckoff method states that the price cycle of a traded instrument consists of 4 stages — Accumulation, Markup, Distribution, and MarkDown. There are two key steps to creating alerts: 1.

Find Important Price Levels Do your research. Find a price level that looks important and wait.

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Patience is everything. You have all of the tools available to you to research and follow markets. Whether it's a simple trend line , moving average or a custom Pine Script, use the tools to make better decisions.

This is one of the most asked queries. It resembles the doubt in many newbie traders mind. If I trade in stocks, my profit will be 0. But index options are cheap. But I keep on losing money.

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What to do? Let us Every week we got one or two days where there is no momentum and market trade in a Range. Then Hedge position with selling PE near Support. This is an update for the PTracker v1 that I published couple of days ago. In my opinion, that info box is the most important element in this tool and that's the piece i was most looking for.

First order pivot points are defined as 3 or 5 bar "V" shaped patterns. For example a high with a lower high either side of the peak and in the case of the 5 bar variant with lower highs adjacent to a high below the peak. Second order pivot points are defined by three first order pivots in the same manner. For example a peak pivot high with a lower pivot high to It also has a Sights feature for each timeframe which points from it's middle towards the current price.

The tool is also highly customizable for you to take this indicator over This why I created this post, you may have seen in the 3 legs, how our risk is converted from Unlimited loss to Limited Loss. In case if you are interested to buy the Options Payoff Graph Excel Spreadsheet for a fee, You can write an email to me here : mailto1stopinvestment gmail.

Also, Please Check out other tools available here! No content on the site constitutes — or should be understood as constituting — a recommendation to enter in any securities transactions or to engage in any of the investment strategies presented in our site content. We do not provide personalised recommendations or views as to whether a stock or investment approach is suited to the financial needs of a specific individual.

It should not be considered as financial advice. You should consult with your own financial advisor before using any information provided here. Save my name, email, and website in this browser for the next time I comment. Skip to content.

Hello Trader, So far, you always thought that futures and options were only high risk instruments to trade.