OPTION TRADING STRATEGIES

There are 3 simple option strategies .Straddle, Strangle and Gut.

1. Straddle is a volatile option strategy or what we call Market Neutral Strategy. Being market neutral means that a long Straddle profits no matter if the underlying asset goes up or down. Yes, a Long Straddle allows you to simply put on the position and then totally take your mind off the stock as you will be in profit no matter if the underlying asset goes up or down.(Example: when nifty is around 4100 buying 1 lot 4100 call and 1 lot 4100put)

2. Strangle is a volatile option trading strategy that profits when the stock goes up or down strongly. The Strangle is a cousin of the long Straddle and the Long Gut, making up a family of basic volatile options strategies. Learning the Straddle first makes the Strangle easy to understand.(Example: when nifty is around 4100 buying 1 lot 4200 call and 1 lot of 4000 put)

3. Gut Spread is a volatile option trading strategy designed to profit when the underlying stock moves strongly upwards or downwards. The Long Gut Spread is a cousin of the Long Straddle and the Long Strangle with the only difference being that in the money options are used instead. The Long Gut Spread is useful when no at the money options are available when you want to use a Straddle. In fact, since exactly at the money options are so rare, the Long Gut Spread using in the money options and the Long Strangle using out of the money options are far more commonly used than the Straddle. (Example: when nifty is around 4100 buying 1 lot 4000 call and 1 lot 4200 put)