1

Options Strategies for Bullish Market

Complex Options. Simple Solutions.

2

Buy Call / Long Call

Sell Put / Short Put

Bull Call Spread

Bull Put Spread

Call Ratio Back Spread & Call Ratio Back Spread Ladder

Covered Call (Buy Stock + Sell Call)

Protective Put (Long Stock + Long Put)

Bullish Market Strategies

3

Buy Call / Long Call

Market Scenario: Bullish

Risk: Limited

Reward: Unlimited

BEP: Call Strike + Premium

Investor uses long Call when he is bullish about the market. A long Call is simply the purchase of one Call Option.

4

Sell Put / Short Put

Market Scenario: Bullish

Risk: Unlimited

Reward: Limited to premium

BEP: Strike - Premium

Investor uses Short Put when he is bullish on the market direction and bearish on market volatility. A Short Put is simply the selling of one Put Option.

5

Bull Call Spread

Market Scenario: BullishRisk: Limited || Reward: LimitedBEP: Strike Price of Purchased Call + Net Debit Paid

Bull: This Strategy will earn profit when market is Bullish and will lose money when market is Bearish.

Call: We will use Call Options to make this Spread.

Spread: Spread means combination of Bought and Sold Options.

6

Bull Put Spread

Market Scenario: BullishRisk: Limited || Reward: LimitedBEP: Higher Strike - Net Premium Received

Bull: This Strategy will earn profit when market is Bullish and will lose money when market is Bearish.

Put: We will use Put Options to make this Spread.

Spread: Spread means combination of Bought and Sold Options.

7

Call Ratio Back Spread

Market Scenario: Bullish || Risk: Limited || Reward: Unlimited Lower BEP: Lower Strike + Net Premium Received

(in case trader has received net Premium otherwise there will not be any lower BEP) Upper BEP: Upper Strike + (Upper Strike - Lower Strike) - Net Premium Received

(in case trader has received net Premium otherwise we will add the Net Premium paid amount)

Call: We will use Call Options to make this Spread.

Ratio: The proportion of quantity bought and Quantity sold is there in some Ratio.

Back Spread: When we buy more quantity of one Strike compare to Quantity sold of other Strike, it is called Back Spread.

8

Call Ratio Back Spread Ladder

Market Scenario: Highly Bullish || Risk: limited || Reward: Unlimited Cost of Spread: Total premium received || Spread Range: Sell Strike - Lower Buy Strike Lower BEP: Call sell Strike + Cost of Spread || Upper BEP: Call higher buy Strike + Maximum loss Maximum Profit: Unlimited || Maximum Loss: Spread range - Cost of Spread

Call: We will use Call Options to make this Spread.

Ratio: The proportion of quantity bought and Quantity sold is there in some Ratio.

Back: We will buy more Options and sell less Options

Spread: Combination of Buy and Sell Options

Ladder: the quantity of trade which will be more (e.g. we buy more in Back spread) will use 2 different strikes instead of the same.

9

Covered Call (Buy Stock + Sell Call)

Market Scenario: Neutral to Bullish

Reward: Strike + Premium

BEP: Stock Price Paid - Premium

Risk: if stock is moving down you will lose your stock value but you will gain the premium as buyer is not going to buy. If stock is moving up beyond the Strike, you have to give up all the gain.

The covered Call is a strategy in which an investor sells a Call Option on a stock he owns. The Call Option sold is usually an OTM Call.

10

Protective Put (Long Stock + Long Put)

Market Scenario: Bullish

Reward: Unlimited

BEP: Put Premium + Stock Price

Risk: Losses limited to Stock price + Put Premium – Put Strike price

In Protective Put, we purchase a stock since we feel bullish about it, but what if the price of the stock goes down. You wish you had some insurance against the price fall. So buy a Put on the stock.

11

www.facebook.com/finideas

www.twitter.com/finideas

www.youtube.com/finideas

http://finideasmspl.blogspot.in/

-: Contact :-

FinIdeas Management Solutions Pvt. Ltd.803, City Centre, Nr. Sosyo Circle, Udhana Magdalla Road, Surat – 395 004

1002, Luxuria Business Hub, Gaurav Path Road, Surat – 395 007www.finideas.com || info@finideas.com

Thank You