Netural Trading Strategy
Long Straddle
Short Straddle
Long Strangle
Short Strangle
Long Call Butterfly
Short Call Butterfly
A netural strategy is used when an options trader expects the price of an underlying stock will stay in range.
Long Straddle
Profit : Unlimited
Loss: Limited
This strategy involves buying of one Call option and one Put option of the same strike price, same expiry date and of the same underlying asset. Now a trader is bound to make profits once stock moves in either direction. If the prices rise significantly, the call generates income and put expires worthless
Short Straddle
Profit : Limited
Loss: Unlimited
This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price,same expiry date and of the same underlying asset.
Long Strangle
Profit : Unlimited
Loss: Limited
In this strategy trader will purchase one OTM Call Option and one OTM Put Option, of the same expiry date and the same underlying asset. Trader will make profits, if the market moves sharply in either direction and gives extra-ordinary returns in the near future so that either of the options will make money
Short Strangle
Profit : Unlimited
Loss: Limited
Short Strangle involves selling of one OTM Call Option and selling of one OTM Put Option, of the same expiry date and same underlying asset. Here the probability of making profits is more as there is a spread between the two strike prices, and if the markets do remain less volatile, then this strategy will start making profits for traders.
Long Call Butterfly
Profit : Limited
Loss: Limited
A trader, who is neutral in nature and believes that there will be very low volatility i.e. expects the market to remain range bound, will implement this strategy. This strategy involves selling of 2 ATM Call Options, buying 1 ITM Call Option & buying 1 OTM Call Option of the same expiry date & same underlying asset.
Short Call Butterfly
Profit : Limited
Loss: Limited
This strategy is opposite of the Long Call Butterfly Strategy, a trader expects the market to remain range bound in Long Call Butterfly, but here he expects the market to move beyond strike boundaries in Short Call Butterfly
Analyse Risk
Stock Market investments are subject to market risk. Please read the offer documents carefully before investing. Past performances are no guarantee of future returns.Please consult your financial advisor before making any decision.