Part 4 Institutional Trading

Types of Option Strategies

Here’s the heart of the discussion: strategies.

Single-Leg Strategies (Simple & Beginner-Friendly)
a) Long Call (Buying a Call)

View: Bullish

Risk: Limited to premium paid

Reward: Unlimited (theoretically)

Example: Buy Reliance 2800 CE @ ₹50 → If Reliance goes to 2900, profit = ₹50.

b) Long Put (Buying a Put)

View: Bearish

Risk: Limited to premium paid

Reward: Large downside profit potential

Example: Buy Nifty 22,000 PE → If Nifty falls, profit rises.

c) Covered Call

View: Neutral to mildly bullish

How it works: Hold stock + Sell a Call option

Goal: Earn income from option premium

Risk: Stock falls significantly.

d) Cash-Secured Put

View: Neutral to bullish

How it works: Sell a Put with enough cash to buy stock if assigned.

Goal: Collect premium or buy stock cheaper.