📌 What Are Options in Trading?
Before we get into strategies, let’s understand what options actually are.
In the simplest form, options are contracts that give a trader the right, but not the obligation, to buy or sell an asset (like a stock, index, or commodity) at a specific price before or on a specific date.
There are two main types of options:
Call Option – Gives you the right to buy something at a set price.
Put Option – Gives you the right to sell something at a set price.
These tools can be used to hedge, speculate, or generate income. Now that you know what options are, let’s go deeper into strategies.
🎯 Why Use Options Strategies?
Options trading is not just about buying Calls and Puts randomly. It’s about smart combinations and planned risk management. With the right strategies, you can:
Profit in up, down, or sideways markets
Limit your losses
Leverage small capital
Hedge your stock or portfolio
Earn regular income
Let’s now dive into some popular options trading strategies—from basic to advanced—with examples.
✅ 1. Covered Call Strategy
💡 Use When: You own a stock and expect neutral or slightly bullish movement.
You own shares of a stock and you sell a Call Option on the same stock. You receive a premium from selling the Call, which gives you extra income even if the stock doesn’t move.
📘 Example:
You own 100 shares of Reliance at ₹2800. You sell a 2900 Call Option and receive ₹30 per share as premium.
If Reliance stays below ₹2900 – You keep your stock and the premium.
If Reliance goes above ₹2900 – Your stock gets sold (you deliver), but you still profit from stock rise + premium.
✅ Pros:
Earn extra income
Lower risk than buying naked calls
❌ Cons:
Limited upside
Need to own stock
✅ 2. Protective Put Strategy
💡 Use When: You own a stock but want to protect from downside risk.
Here, you buy a Put Option along with owning the stock. It acts like insurance – if the stock crashes, the Put will rise in value.
📘 Example:
You buy HDFC Bank shares at ₹1700 and buy a 1650 Put Option for ₹25.
If HDFC drops to ₹1600 – Your stock loses ₹100, but your Put may gain ₹50–₹75.
If HDFC goes up – You lose only the premium ₹25.
✅ Pros:
Protects your portfolio
Peace of mind in volatile markets
❌ Cons:
You pay a premium (like insurance)
Can eat into profits
✅ 3. Bull Call Spread
💡 Use When: You are moderately bullish on a stock.
You buy a Call Option at a lower strike and sell another Call Option at a higher strike (same expiry). This reduces your cost and risk.
📘 Example:
Buy Nifty 22500 Call at ₹100
Sell Nifty 23000 Call at ₹50
Your net cost = ₹50
Max profit = ₹500 (if Nifty ends above 23000)
✅ Pros:
Lower cost than naked Call
Defined risk and reward
❌ Cons:
Limited profit potential
✅ 4. Bear Put Spread
💡 Use When: You are moderately bearish.
You buy a Put at higher strike and sell another Put at lower strike. This is just like Bull Call, but for falling markets.
📘 Example:
Buy Bank Nifty 50000 Put at ₹120
Sell 49500 Put at ₹60
Net Cost = ₹60
Max Profit = ₹500
✅ Pros:
Risk-managed way to profit in downtrend
❌ Cons:
Limited profits if market crashes heavily
✅ 5. Iron Condor
💡 Use When: You expect the market to stay sideways or within a range.
It’s a neutral strategy involving four options:
Sell 1 lower Put, Buy 1 far lower Put
Sell 1 upper Call, Buy 1 far upper Call
📘 Example:
Sell 22500 Put
Buy 22200 Put
Sell 23000 Call
Buy 23300 Call
You receive a net premium. If the index stays between 22500–23000, you make full profit.
✅ Pros:
Profits in range-bound market
Low risk, fixed reward
❌ Cons:
Requires margin
Complicated setup
✅ 6. Straddle Strategy
💡 Use When: You expect a big move in either direction, but not sure which.
Buy both a Call and a Put at the same strike price and expiry. One side will definitely move.
📘 Example:
Buy Nifty 23000 Call at ₹80
Buy Nifty 23000 Put at ₹90
Total cost = ₹170
If Nifty makes a big move (up or down), one side can explode in value.
✅ Pros:
Unlimited potential if market breaks out
Great for news events
❌ Cons:
Expensive to enter
Needs big movement to profit
✅ 7. Strangle Strategy
💡 Use When: You expect a big move, but want to reduce cost compared to straddle.
Buy an Out-of-the-Money Call and Put.
📘 Example:
Buy Nifty 23200 Call at ₹40
Buy Nifty 22800 Put at ₹50
Total cost = ₹90
You still profit from big movement, but cheaper than a straddle.
✅ Pros:
Lower cost
Profits from big moves
❌ Cons:
Requires even larger movement than straddle
✅ 8. Short Straddle (for experts)
💡 Use When: You think the market will stay flat (low volatility).
Sell a Call and a Put at the same strike. You earn double premium.
⚠️ Risk: Unlimited risk if market moves too much!
This strategy is not for beginners. You need tight stop losses or hedges.
🔐 Risk Management Is Key
No matter which strategy you use:
Always define your maximum risk and reward.
Avoid taking naked positions without hedging.
Use stop losses and trailing SLs.
Don’t bet your whole capital – use position sizing.
Avoid trading right before major events unless you understand the risks.
Strangle
🤔 Real-Life Example (Simple Breakdown)
Let’s say the market is range-bound and Nifty is stuck between 22500–23000 for weeks. You can go with an Iron Condor:
Sell 22500 Put at ₹80
Buy 22200 Put at ₹40
Sell 23000 Call at ₹70
Buy 23300 Call at ₹35
Net Premium = ₹75
If Nifty expires between 22500–23000, you get full ₹75 profit per lot. If it breaks the range, losses are capped due to hedges.
💬 Final Thoughts
Options trading strategies are like different weapons in your trading arsenal. But using them without understanding or discipline is dangerous. Always know:
What is your market view?
What is your max risk?
How will you manage losses?
The smartest traders don’t gamble—they plan. They treat options like a business, not a lottery ticket.
So whether you’re trading with ₹5000 or ₹5 lakhs, always use a strategy with:
✔ Proper Risk-Reward
✔ Defined Exit Plan
✔ Strong Logic (not emotion)
Before we get into strategies, let’s understand what options actually are.
In the simplest form, options are contracts that give a trader the right, but not the obligation, to buy or sell an asset (like a stock, index, or commodity) at a specific price before or on a specific date.
There are two main types of options:
Call Option – Gives you the right to buy something at a set price.
Put Option – Gives you the right to sell something at a set price.
These tools can be used to hedge, speculate, or generate income. Now that you know what options are, let’s go deeper into strategies.
🎯 Why Use Options Strategies?
Options trading is not just about buying Calls and Puts randomly. It’s about smart combinations and planned risk management. With the right strategies, you can:
Profit in up, down, or sideways markets
Limit your losses
Leverage small capital
Hedge your stock or portfolio
Earn regular income
Let’s now dive into some popular options trading strategies—from basic to advanced—with examples.
✅ 1. Covered Call Strategy
💡 Use When: You own a stock and expect neutral or slightly bullish movement.
You own shares of a stock and you sell a Call Option on the same stock. You receive a premium from selling the Call, which gives you extra income even if the stock doesn’t move.
📘 Example:
You own 100 shares of Reliance at ₹2800. You sell a 2900 Call Option and receive ₹30 per share as premium.
If Reliance stays below ₹2900 – You keep your stock and the premium.
If Reliance goes above ₹2900 – Your stock gets sold (you deliver), but you still profit from stock rise + premium.
✅ Pros:
Earn extra income
Lower risk than buying naked calls
❌ Cons:
Limited upside
Need to own stock
✅ 2. Protective Put Strategy
💡 Use When: You own a stock but want to protect from downside risk.
Here, you buy a Put Option along with owning the stock. It acts like insurance – if the stock crashes, the Put will rise in value.
📘 Example:
You buy HDFC Bank shares at ₹1700 and buy a 1650 Put Option for ₹25.
If HDFC drops to ₹1600 – Your stock loses ₹100, but your Put may gain ₹50–₹75.
If HDFC goes up – You lose only the premium ₹25.
✅ Pros:
Protects your portfolio
Peace of mind in volatile markets
❌ Cons:
You pay a premium (like insurance)
Can eat into profits
✅ 3. Bull Call Spread
💡 Use When: You are moderately bullish on a stock.
You buy a Call Option at a lower strike and sell another Call Option at a higher strike (same expiry). This reduces your cost and risk.
📘 Example:
Buy Nifty 22500 Call at ₹100
Sell Nifty 23000 Call at ₹50
Your net cost = ₹50
Max profit = ₹500 (if Nifty ends above 23000)
✅ Pros:
Lower cost than naked Call
Defined risk and reward
❌ Cons:
Limited profit potential
✅ 4. Bear Put Spread
💡 Use When: You are moderately bearish.
You buy a Put at higher strike and sell another Put at lower strike. This is just like Bull Call, but for falling markets.
📘 Example:
Buy Bank Nifty 50000 Put at ₹120
Sell 49500 Put at ₹60
Net Cost = ₹60
Max Profit = ₹500
✅ Pros:
Risk-managed way to profit in downtrend
❌ Cons:
Limited profits if market crashes heavily
✅ 5. Iron Condor
💡 Use When: You expect the market to stay sideways or within a range.
It’s a neutral strategy involving four options:
Sell 1 lower Put, Buy 1 far lower Put
Sell 1 upper Call, Buy 1 far upper Call
📘 Example:
Sell 22500 Put
Buy 22200 Put
Sell 23000 Call
Buy 23300 Call
You receive a net premium. If the index stays between 22500–23000, you make full profit.
✅ Pros:
Profits in range-bound market
Low risk, fixed reward
❌ Cons:
Requires margin
Complicated setup
✅ 6. Straddle Strategy
💡 Use When: You expect a big move in either direction, but not sure which.
Buy both a Call and a Put at the same strike price and expiry. One side will definitely move.
📘 Example:
Buy Nifty 23000 Call at ₹80
Buy Nifty 23000 Put at ₹90
Total cost = ₹170
If Nifty makes a big move (up or down), one side can explode in value.
✅ Pros:
Unlimited potential if market breaks out
Great for news events
❌ Cons:
Expensive to enter
Needs big movement to profit
✅ 7. Strangle Strategy
💡 Use When: You expect a big move, but want to reduce cost compared to straddle.
Buy an Out-of-the-Money Call and Put.
📘 Example:
Buy Nifty 23200 Call at ₹40
Buy Nifty 22800 Put at ₹50
Total cost = ₹90
You still profit from big movement, but cheaper than a straddle.
✅ Pros:
Lower cost
Profits from big moves
❌ Cons:
Requires even larger movement than straddle
✅ 8. Short Straddle (for experts)
💡 Use When: You think the market will stay flat (low volatility).
Sell a Call and a Put at the same strike. You earn double premium.
⚠️ Risk: Unlimited risk if market moves too much!
This strategy is not for beginners. You need tight stop losses or hedges.
🔐 Risk Management Is Key
No matter which strategy you use:
Always define your maximum risk and reward.
Avoid taking naked positions without hedging.
Use stop losses and trailing SLs.
Don’t bet your whole capital – use position sizing.
Avoid trading right before major events unless you understand the risks.
Strangle
🤔 Real-Life Example (Simple Breakdown)
Let’s say the market is range-bound and Nifty is stuck between 22500–23000 for weeks. You can go with an Iron Condor:
Sell 22500 Put at ₹80
Buy 22200 Put at ₹40
Sell 23000 Call at ₹70
Buy 23300 Call at ₹35
Net Premium = ₹75
If Nifty expires between 22500–23000, you get full ₹75 profit per lot. If it breaks the range, losses are capped due to hedges.
💬 Final Thoughts
Options trading strategies are like different weapons in your trading arsenal. But using them without understanding or discipline is dangerous. Always know:
What is your market view?
What is your max risk?
How will you manage losses?
The smartest traders don’t gamble—they plan. They treat options like a business, not a lottery ticket.
So whether you’re trading with ₹5000 or ₹5 lakhs, always use a strategy with:
✔ Proper Risk-Reward
✔ Defined Exit Plan
✔ Strong Logic (not emotion)
Hello Guys ..
WhatsApp link- wa.link/d997q0
Email - techncialexpress@gmail.com ...
Script Coder/Trader//Investor from India. Drop a comment or DM if you have any questions! Let’s grow together!
WhatsApp link- wa.link/d997q0
Email - techncialexpress@gmail.com ...
Script Coder/Trader//Investor from India. Drop a comment or DM if you have any questions! Let’s grow together!
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Hello Guys ..
WhatsApp link- wa.link/d997q0
Email - techncialexpress@gmail.com ...
Script Coder/Trader//Investor from India. Drop a comment or DM if you have any questions! Let’s grow together!
WhatsApp link- wa.link/d997q0
Email - techncialexpress@gmail.com ...
Script Coder/Trader//Investor from India. Drop a comment or DM if you have any questions! Let’s grow together!
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.