BEST OF 5 STRATEGY CAN BE USED TO TRADE OPTIONS PROFITABLY IN INDIA
As an investor in the stock market, you would always be eager to invest in the shares that have less risk exposure and that's why we advise the investor should beware of the various options strategies. Adopt the best trade options strategy in the market to manage risks and enhance returns.
However, in this blog we'll discuss the top five options trading strategies that helps an investor to reduce the risk exposure and gain potential returns for your investment.
TOP 5 OPTIONS TRADING STRATEGIES:
1. PROTECTIVE PUT STRATEGY:
A protective put strategy offers effective risk management while trading options contract. When an investor implements the protective put strategy, it guards the stock or other assets against the loss of funds. The protective put strategy provides downside protection in the event price when the asset declines.
2. COVERED CALL STRATEGY:
The covered call option strategy generates income in the form of options premiums. Covered call options strategy involves selling call options to buy against stocks that have the right options. An investor can also generate additional income from the shares with the help of covered call options.
3. BUTTERFLY STRATEGY:
Butterfly options strategy is a non-directional option strategy that has higher potential to earn limited future with limited risk. This is because the butterfly strategy depends on the volatility of future underlying assets. The butterfly strategy is a combination of both protective and covered call strategy in order to reduce the net cost of the put option purchased.
4. BULL CALL SPREAD STRATEGY:
This strategy is implemented when the investor is moderately bullish on the stock. By adopting this strategy, an investor would buy the call option at a lower strike and later, sell the same stock at the higher strike. The bull call spread strategy is designed for stocks that has limited increase in price.
5. LONG STRANGLE STRATEGY:
The investor adopting long strangle strategy would buy an out of the money call and an out of the money option. The price of the call option would be higher when compared to the put options assets. The long strangle option strategy offers high cost strategy and it's recommended for an investor to use if they are confident of a large move.
CHOOSE THE BEST OPTIONS TRADING STRATEGY:
Being an investor in the stock market, you can invest in the options strategies as they possess less risk and higher return potential. Remember, while choosing the option contracts, it's recommended that an investor should analyze the stocks performance to meet their financial goals.
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