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Index Option Strategies Stock option strategy – Buying calls and puts both and Get fixed profit

Index Option Strategies Stock option strategy – Buying calls and puts both and Get fixed profit

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 Index Option Strategies – Buying Calls & Puts for Fixed Profit

Options trading offers various strategies to limit ris                                    k and maximize profit. One such approach is using call and put options together to get a fixed profit or reduce risk in volatile markets. Here are some effective strategies:

 1. Long Straddle Strategy (Profit in High Volatility)

 How It Works?

 Best When?

 Profit & Loss

Profit = If the index moves significantly (up or down), one option will gain more than the other loses.
Loss = If the index stays near the strike price (low volatility), both premiums decay.

Example:

 2. Long Strangle Strategy (Less Cost, Higher Profit)

 How It Works?

 Best When?

 Profit & Loss

Profit = If the index moves significantly beyond either strike price.
Loss = If the index stays within the strikes, you lose both premiums.

Example:

 3. Iron Condor Strategy (Limited Profit but High Win Rate)

 How It Works?

 Best When?

 Profit & Loss

Profit = If the index stays within a defined range, both sold options’ premiums decay.
Loss = If the index moves beyond the range, but losses are limited.

Example:

 4. Butterfly Spread (Fixed Profit, Low Risk)

 How It Works?

 Best When?

 Profit & Loss

Profit = If the index closes near the ATM strike price, you get max profit.
Loss = If the index moves too far in either direction.

 Conclusion

Strategy When to Use? Risk Reward
Straddle High volatility expected Medium High
Strangle High volatility expected (cheaper than Straddle) Medium High
Iron Condor Low volatility (sideways market) Low Limited Profit
Butterfly Spread Limited movement expected Low Moderate Profit

 Which strategy do you want a detailed explanation or live example of?

Index Option Strategies Stock option strategy – Buying calls and puts both and Get fixed profit

Analysis of Option Trading Strategies as an Effective …

Bank Nifty Option Strategies Booklet

Module 6_Option Strategies.pdf

Using Index Options (like Nifty or S&P 500 options) to earn a fixed profit involves defined-risk strategies that combine call and put options. These strategies work well when you’re expecting certain market conditions like high volatility, range-bound movement, or directional bias.

Here are three effective option strategies involving buying both calls and puts:


1. Long Straddle Strategy – Profit from Volatility

When to Use:

How It Works:

Example (Nifty at 22,000):

Profit/Loss:


2. Long Strangle Strategy – Cheaper than Straddle

When to Use:

How It Works:

Example (Nifty at 22,000):

Profit/Loss:


3. Iron Condor (Credit Strategy with Limited Risk) – Fixed Profit if Market is Range-bound

When to Use:

How It Works:

Example:

Net Premium = ₹60 (Credit)
Max Risk = ₹100 (difference between strikes – premium)

Profit/Loss:


Key Tips


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Index Option Strategies Stock option strategy – Buying calls and puts both and Get fixed profit