Lets understand strategies for F&O Call options & Put Options

 

Options trading can be a complex and challenging way to invest, but it can also be a highly profitable one if done correctly. A call option gives you the right to buy a stock at a certain price, while a put option gives you the right to sell a stock at a certain price. Here are some strategies to consider when trading call and put options:

 

 

 

1. Covered call: In this strategy, you own the underlying stock and sell a call option on the same stock. This can generate income in a flat or declining market and also allows you to potentially sell your stock at a higher price if the call option is exercised.

    

2. Protective put: This strategy involves buying a put option to hedge against a decline in the value of your underlying stock. This allows you to lock in a minimum price for the stock and protects you from losses in a bear market.
   

    

3. Bull call spread: This strategy involves buying a call option at a lower strike price and selling a call option at a higher strike price. This creates a limited profit potential and limited risk.

    

4. Bear put spread: This strategy involves buying a put option at a higher strike price and selling a put option at a lower strike price. This creates a limited profit potential and limited risk in a bear market.

    

5. Straddle: This strategy involves buying a call option and a put option at the same strike price and expiration date. This allows you to profit from both a rise and fall in the price of the underlying stock.

    

6. Strangle: This strategy involves buying a call option at a higher strike price and a put option at a lower strike price. This allows you to profit from both a rise and fall in the price of the underlying stock, but with a wider strike price range than the straddle.

    

It's important to keep in mind that options trading can be risky, and it's crucial to have a solid understanding of the market and the mechanics of options trading before entering into any trades. Consider seeking the advice of a financial advisor or taking a course in options trading to help you make informed decisions.