9 Option Strategies if you are bullish in the market
Buying call option involves one transaction of buying a call option with an upfront premium. It allows you the power of leveraging to optimise your profit.
Short put means an investor is ready to buy an underlying asset at a calculated price in the future date. An investor will gain benefit if the price rise in the future. However, applying this strategy contains risk because it involves purchasing the physical asset, which later on increases their risk volume.
Bull Call Spread
It means an investor is buying an in-the-money (ITM) call option and selling another out-of-the-money (OTM) call option.The premium is majorly collected from selling a call option is used to balance the premium paid for the long call.
Bull Put Spread
Bull put spread needs two transactions that are buying one bull put and simultaneously selling another. However,it is considered a complicated strategy because of the high stakes involved, which is clearly not recommended for all beginners.
Bull Ratio Spread
Bull ratio spread delivers more flexibility, but it seems like a complex strategy. Bull call spread involves two calls, i.e., buying and writing to spread in a ratio. Usually, an investor sells more than what they buy.
Short Bull Ratio Spread
Traders enter into a short bull ratio spread when they are confident that asset price will rise significantly but also at the same time want to cover for any loss in case the price falls. It involves two transactions of buying calls and writing calls with a lower strike rate for the same underlying and expiration date.
Bull Butterfly Spread
Bull butterfly is a complex strategy that creates a debit spread and involves three transactions.Write calls of the price you expect the stock/index to reach on expiry date.Buy one call of a strike price lower then where the calls are being sold and one call of a higher strike price.
Bull Condor Spread
There are two different types of bull condor spread, i.e. call and put condor spread. This strategy creates a debit spread around four different transactions.Several traders apply it to minimize the cost, which is upfront and optimize profit when they are confident that security prices will move upward to their level of expectation.
Bull Call Ladder Spread
It involves buying one call and writing two calls simultaneously, containing different strikes. The spread is created by buying 1 ITM call and writing off 1 ATM and OTM call each.This strategy is most commonly used when the trader expects the price of the security to rise steadily.