Tactis
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Options
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Introduction
Introduction
What is an option?
An option is a contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset (a stock or...
- Pricing
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Strategies
Buy Call
Buying or “Going Long” on a Call is a strategy that must be devised when the investor is bullish on the market direction moving up in the short term.
A Long Call Option is...
Buy Put
Buying or “Going Long” on a Put is a strategy that must be devised when the investor is Bearish on the market direction going down in the short-term.
A Put Option gives th...
Sell Call
Selling or “Going Short” on a Call is a strategy that must be devised when the investor is not so bullish on the market. On selling a Call, the investor earns a Premium (from the buy...
Sell Put
Selling or “Going Short” on a Put is a strategy that must be devised when the investor is Bullish on the market direction and expects the stock price to rise or stay sideways at the ...
Buy Straddle
Buy or Long Straddle is considered as a non-directional strategy and is used when the underlying is expected to show large movements in either direction i.e. Upside or Downside.
This ...
Sell Straddle
Sell or Short Straddle is the opposite of Buy Straddle. It is used when the investor is expecting underlying to show no large movement. Investor expects the underlying to show little volatility ...
Bull Call Spread
Bull Call Spread is a strategy that must be devised when the investor is moderately bullish on the market direction going up in the short-term.
A Bull Call Spread is formed by buying ...
Bull Put Spread
Bull Put Spread is a strategy that must be devised when the investor is moderately bullish on the market direction going up in the short-term.
A Bull Put Spread is formed by buying an...
Long Strangle
Long Strangle is a strategy to be used when the investor is Neutral on the market direction and bullish on volatility. This strategy involves buying an “Out-of-the-Money Call Option”...
Short Strangle
Short Strangle is a strategy to be used when the investor is Neutral on the market direction and bearish on volatility expecting markets to trade in a narrow range.
This strategy invo...
Long Call Butterfly
Long Call Butterfly is a strategy that must be devised when the investor is neutral on the market direction and expects volatility to be less in the market.
A Long Call Butterfly stra...
Short Call Butterfly
Short Call Butterfly is a strategy that must be devised when the investor is neutral on the market direction and expects volatility to be significant in the market.
A Short Call Butte...
Long Call Condor
Long Call Condor is a strategy that must be devised when the investor is neutral on the market direction and expects volatility to be less in the market.
A Long Call Condor strategy i...
Short Call Condor
Short Call Condor is a strategy that must be devised when the investor is neutral on the market direction and expects markets to break out of a trading range, but is not sure in which direction....
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Introduction
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Futures
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Futures
What are Futures?
The terms "futures contract" and "futures" refer to essentially the same thing. A futures contract is a type of derivative instrument, or financial contract where two pa...
Basic Terminologies
Lot Size –
Lot size refers to the quantity in which an investor in the markets can trade in a future of a particular scrip.For Ex-Nifty Futures have a lot size ...
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Futures
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Reducing Risk With Options
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What Is Leverage?
What Is Leverage?
Leverage has two basic definitions applicable to option trading. The first defines leverage as the use of the same amount of money to capture a larger position. This is the definition th...
Interpreting the Numbers
Consider the following example. If you're going to invest Rs.10,000 in a Rs.50 stock, you might be tempted to think you would be better off investing that Rs.10,000 in Rs.10 options instea...- Conventional Risk Calculation
Conventional Risk Calculation
The first method you can use to balance risk disparity is the standard, tried and true way. Let's go back to our stock trade to examine how this works:
If you were going to invest...
- Being Opportunistic
Being Opportunistic
This Rs.25,450 savings can be used in several ways. First, it can be used to take advantage of other opportunities, providing you with greater diversification. Another interesting concept is tha...
- Positioning your Stock
Positioning your Stock
Let's start with your stock position: buying 1,000 shares of a Rs.41.75 stock for a total investment of Rs.41,750. Being the risk-conscious investor that you are, let's suppose you also ...
- Alternative Risk Calculation
Alternative Risk Calculation
The other alternative for balancing cost and size disparity is based on risk.
As you've learned, buying Rs.10,000 in stock is not the same as buying Rs.10,000 in options in terms ...
- The Bottom Line
The Bottom Line
Determining the appropriate amount of money you should invest in an option will allow you to use the power of leverage. The key is keeping a balance in the total risk of the option position over...
- Fed QE and Tapering and its effect on India
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What is Quantitative easing?
What is Quantitative easing?
“Tapering” is a term that exploded into the financial lexicon on May 22, when U.S. Federal Reserve Chairman Ben Bernanke stated in testimony before Congress that that Fed may taper t...
QE1 and QE2
To stimulate the economy through its policy of quantitative easing in the interval from November 25, 2008 through March 2010. The program had little impact initially, so the Fed announced an exp...
QE3 Launched in September 2012
On September 13, 2012, the U.S. Federal Reserve launched its third round of quantitative easing. In addition, the Fed officially stated – for the first time – that it would keep shor...
How QE tapering could affect India?
The reason for not tapering the QE was it felt that the unemployment rate in the US is still high. Though the unemployment rate in US has come down from 8.1 per cent in June 2013 to 7.3 per cent...
- Conventional Risk Calculation
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What Is Leverage?
