Bearish Strategies

A Thread, read till the end to compare three

strategies, tried explaining in simple language🧵🧵👇

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If we want to trade in F&O, we have to create a view

If our view is bearish, then following strategies can be deployed.

1⃣ Buy Put

👉If our view is to bearish, we can simply buy ATM put and ride the downward momentum.

👉Risk would be limited to the premium we have paid
Reward would be unlimited, as long as it goes below (strike price- premium paid).

Example :

You bought 17200 put option at 135.9

Max loss is nifty lot size = 50 * premium paid

50*135.9 = 6795

In order to be in profit on expiry it should close below 17200 - 135.9 = 17064

Called as breakeven shown in chart👇

✅Bear Spreads

👉Spread strategies are used when our view is neutral to bearish

👉These strategy's are limited risk and limited reward strategies.

2⃣Bear Put Spread (Debit Spread)

👉We use only put to trade our bearish view

👉In this spread we buy a put option at ATM strike and sell a put option below that strike

👉Risk is limited to the premium which got debited

👉Reward would be limited when it goes below the sold strike.

Example : We bought 17200 put at 135.9

Now, we sell below strike 17050 at 75.85

In order to be in profit Nifty at expiry should be below 135.9 - 75.85 = 60.05

So, 17200 - 60.05 = Rounding off to 61 so 17139 👇

3⃣Bear Call Spread (Credit Spread)

👉We use only call option to trade our bearish view

👉In this spread we sell a call option at ATM strike of and buy a call option above that strike

👉Risk is limited and when it goes above sold call option strike price.

👉Reward is also limited as long as it trades below sold strike price.

Example : Sold 17200 at 109.6

And bought 17350 at 51.3

So, in order to be in profit it has to trade above
109.6 - 51.3 = 58.3

Now, breakeven is at 17200 + 58.3 = 17258 as shown in below chart👇

Here, you can compare the chart of 3 views which we shared above 👇

Goal is to educate and help small traders to trade with hedge, which will help to minimize their risk😀

Tried explained about bear spreads in simple language, please let me know if you have any doubts.

You can join my telegram channel through below link 👇

If not you can search with options trading with swapnil in telegram

https://t.co/yY38y9Eepi

More from Swapnil Kommawar

Swapnil Kommawar
@KommawarSwapnil

How I trade monthly short strangles for regular income

A thread 🧵🧵

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👉Short strangle means,
Selling OTM call option and Selling OTM put option

Here is a detailed thread on short strangle

NEUTRAL STRATEGIES

If market is sideways, These strategies can be deployed

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A Thread \U0001f9f5\U0001f9f5\U0001f9f5
— Swapnil Kommawar (@KommawarSwapnil) August 5, 2022

👉Generally, this strategy gives good returns when market is sideways but most trader get wrong entries and wrong exist

👉Ahead of major event option price will increase because of uncertainty. We have to take advantage of that

👉As the VIX is the derivative of option price, we have to check this parameter first

When VIX is >20, it is the right opportunity to deploy short strangle

👉If we look at the weekly and monthly candles of nifty, it is easier to identify which strikes to choose

Entry conditions:

👉VIX >20
👉Choose the strikes which are 6% above and below of nifty in next month contracts
👉Combined premium should be in the range of 160-170
👉Next month contracts should be taken at the mid of current month

Swapnil Kommawar
@KommawarSwapnil

NEUTRAL STRATEGIES

If market is sideways, These strategies can be deployed

Retweet for max reach!

A Thread 🧵🧵🧵

If our view is sideways or market is moving sideways, it is not good for option buyer. In that case we use this OPTION SELLING STRATEGIES to benefit from the sideways market

SHORT STRADDLE

In this strategy we sell ATM CALL OPTION and PUT OPTION with the same underlying INSTRUMENT, same STRIKE PRICE and same EXPIRY DATE

We receive premium, we benefit from the premium decay. Theta is our friend in this strategy.

The combined premium we receive, added to strike price becomes our upside break even

When the same premium is subtracted from the strike price becomes our downside break even

As long the underlying trades in this range, we benefit from the THETA DECAY and becomes our profit.

The huge risk is overnight carrying of the position. We never know when the market open LC because of BLACK SWAN events.

pay off chart for your reference

Swapnil Kommawar
@KommawarSwapnil

Generally, VWAP is used to know the strength in a buying or selling. VWAP means VOLUME WEIGHTED AVERAGE PIRCE

A thread 🧵🧵🧵🧵🧵

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👉when price starts rising it would be pulled back to VWAP line. Then buyers would again rush in to buy the stock taking price higher.

👉If we compare the CALL and PUT charts, we can identify the correct entry. On trending days VWAP acts as support/resistance.

👉If market is trending UPSIDE, VWAP acts as support in CALL option charts of ATM STRIKES and same VWAP acts as RESISTANCE in PUT option charts of ATM STRIKES

(Use VWAP on 5 minutes chart on OPTION CHARTS)

https://t.co/TLmAiypV45

👉If market is trending DOWNSIDE, VWAP acts as support in PUT option charts of ATM STRIKES and same VWAP acts as RESISTANCE in CALL option charts of ATM STRIKE

Swapnil Kommawar
@KommawarSwapnil

BULLISH STRATEGIES

If we want to trade in F&O then, first we have to create a view.

A thread on strategies 🧵🧵

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If our view is BULLISH then we can deploy following strategies

1⃣Call Buy

👉If our view is TOO BULLISH then we can simply buy a CALL option of ATM strike

👉Risk would be the premium we have paid and
Reward would be unlimited only If it goes above strike price + premium paid

Consider below example :

You bought 17200 CE at 110, at expiry in order to be in profit

Nifty has to stay above 17200 + your premium you paid 110 = 17310.

2⃣Bull Call Spread

👉Spreads are deployed when our view is NEUTRAL TO BULLISH

👉These are limited risk and limited reward strategies

👉In this spread, we use only calls to trade our bullish view

👉We buy a CALL option of ATM strike and SELL a CALL option above that strike.

👉Risk would be the premium debited and
Reward when ever it goes above SOLD STRIKE.

Example : You bought 17200 CE at 110

And sold 17350 at 51

So, 110 - 51 = 59👇

So you will be in profit if it stays above
17200 + 59 = 17259

When this was developed, nothing had UPC codes yet because they'd just been invented.
Back when this mistake was made, There was only one Phone Company, because they hadn't been broken up yet. Ted Bundy was still on the loose. Babe Ruth's home run record was about to fall.

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WHEN THIS STUPID MISFEATURE WAS INVENTED, THE GODFATHER PART II HAD JUST OPENED IN THEATERS.

So, why does this happen? So Unix (which was only 5 years old at this point) had the good idea of "everything is a file" which mean you could do things like write to sockets, pipes, the console, etc with the same commands and instructions.

Conviction | Patience
@unseenvalue

H was always unseen in S2NL :)

Those who exited at 1500 needed money. They can always come back near 969. Those who exited at 230 also needed money. They can come back near 95.

Those who sold L @ 660 can always come back at 360. Those who sold S last week can be back @ 301

Sir, Log yahan.. 13 days patience nhi rakh sakte aur aap 2013 ki baat kar rahe ho. Even Aap Ready made portfolio banakar bhi de do to bhi wo 1 month me hi EXIT kar denge \U0001f602

Neuland 2700 se 1500 & Sequent 330 to 230 kya huwa.. 99% retailers/investors twitter par charcha n EXIT\U0001f602
— BhavinKhengarSuratGujarat (@IntradayWithBRK) September 19, 2021