Option Strategies
Option Trading Strategies and Their Effectiveness in the Indian Market
The project starts with introduction to: * Overview of Derivatives and mainly Options. * The working and mechanics of options and how they help in hedging and trading. * History of Options with respect to Global & Indian Markets. * The advantages of Options
The project mainly aims to cover the conceptual and theoretical background of the study including option terminology, option payoffs, payoff profiles of long & short underlying & long and short call and put options followed by options theory, knowledge and outline of the various possible trading and hedging strategies with options that are widely known including : * When to use the strategy * Basic legs involved * Other derivatives/underlying used with the strategy * The payoff profile of the strategy * The risk and reward * Breakeven points and profit and loss analysis
Some of the strategies intended to be covered are: Long Call, Short Call, Synthetic Long Call, Long Put, Short Put, Covered Call, Straddles, Strangles, Collars, Spreads, Butterflies and Condors
The various strategies are individually analysed with the help of detailed examples and then further studied taking real life examples of hypothetical positions from past data of Indian Derivatives market, mainly from the historical data archives of NSE as given on website of NSE. (Preferably recent month expiry contracts)
Drawing of inferences from this study in each strategy would help in understanding working of options market in real life and also help determine the extent of effectiveness of Options strategies in Indian Market in as to whether it helps create good risk/reward profiles for that particular strategy to be effectively and widely used.
Finally the project aims to analyse the strength and limitations of this
The project starts with introduction to: * Overview of Derivatives and mainly Options. * The working and mechanics of options and how they help in hedging and trading. * History of Options with respect to Global & Indian Markets. * The advantages of Options
The project mainly aims to cover the conceptual and theoretical background of the study including option terminology, option payoffs, payoff profiles of long & short underlying & long and short call and put options followed by options theory, knowledge and outline of the various possible trading and hedging strategies with options that are widely known including : * When to use the strategy * Basic legs involved * Other derivatives/underlying used with the strategy * The payoff profile of the strategy * The risk and reward * Breakeven points and profit and loss analysis
Some of the strategies intended to be covered are: Long Call, Short Call, Synthetic Long Call, Long Put, Short Put, Covered Call, Straddles, Strangles, Collars, Spreads, Butterflies and Condors
The various strategies are individually analysed with the help of detailed examples and then further studied taking real life examples of hypothetical positions from past data of Indian Derivatives market, mainly from the historical data archives of NSE as given on website of NSE. (Preferably recent month expiry contracts)
Drawing of inferences from this study in each strategy would help in understanding working of options market in real life and also help determine the extent of effectiveness of Options strategies in Indian Market in as to whether it helps create good risk/reward profiles for that particular strategy to be effectively and widely used.
Finally the project aims to analyse the strength and limitations of this