Options Strategy Trading – Sounds Heavy, Isn’t it? Well, don’t worry, we are here to help you in this regard. It involves a combination of buying and selling calls and put options of different strike prices & expiry dates in order to limit the losses and have a great return on your investment.
Professional traders do perform pre-defined option strategies to earn decent returns on a recurring basis and a few handy tools make their life way easier. MarketXLS provide such tools and templates which bring the best for retailers at very competitive prices and on the software on which we are the most equipped, i.e., Excel.
In this article, we will explain a couple of strategies followed by professional traders and how marketXLS provides the resources to make it pretty easy for even a novice trader.
Strategies used when assumption being Bullish on the Underlying asset:
1. Bull Call Spread –
It consists of buying a call option at the money strike price and at the same time selling a call option with a higher strike price which is out of the money. Both the call options should be of the same underlying asset and expiry date. It is a limited profit and limited risk strategy used by professional traders. They aim to generate a couple of percentage returns on their capital every month by pursuing this strategy. MarketXLS has a built template for this particular strategy which lets you analyze and choose the best possible return.
Template Link: https://marketxls.com/template/bull-call-spread-option-strategy-2
Video Link on how to use this template: https://www.youtube.com/watch?v=9rinJL4eqvs
Blog explaining details: https://marketxls.com/bull-call-spread-option-strategy
2. Call Ratio Back Spread –
It consists of selling In the Money call option and buying Out of the Money call option of the same underlying asset and expiry date in a defined ratio. It is a unlimited profit and limited risk strategy used by the professional traders. Whenever they are bullish on any underlying asset, they pursue this strategy to have a chance of gaining big with limited risk. Here in marketxls, we have built template which provides easier way to simulate and execute the strategy.
Template Link: https://marketxls.com/template/call-ratio-back-spread
Video Link on how to use: https://www.youtube.com/watch?v=edLMRFmpvkQ
Strategies used when assumption being Bullish on the Underlying asset:
1. Bear Put Spread –
It consists of buying a put option with at the money strike price and at the same time selling a put option with a lower strike price which is out of the money. Both the put options should be of the same underlying asset and expiry date. It is a limited profit and limited risk strategy used by the professional traders.
Template Link: https://marketxls.com/template/bear-put-spread-option-strategy-2
Video Link on how to use: https://www.youtube.com/watch?v=e6eeIr7AFh0
2. Put Back Ratio Spread –
It consists of selling In the Money put option and buying Out of the Money put option of the same underlying asset and expiry date in a defined ratio. It is a unlimited profit and limited risk strategy used by the professional traders. Whenever they are bearish on any underlying asset, they pursue this strategy to have a chance of gaining big with limited risk. Here in marketxls, we have built template which provides easier way to simulate and execute the strategy.
Template Link: https://marketxls.com/template/put-ratio-back-spread
Video Link on how to use: https://www.youtube.com/watch?v=igHTpiZNgUQ
Strategies used when assumption being Sideways on the Underlying asset:
1. Iron Condor –
It is a combination of Bull Put Spread and Bear Call Spread strategies which consists of selling out of the money call and put options and buying deeper out of the money call and put options of the same underlying asset and expiry date. It is a limited profit and limited risk strategy. Whenever professional traders feel that there will be non-directional moves in the underlying asset, they execute this strategy to get return on their investment. MarketXLS provides the ready-made template for this which aids in analysing and executing traders in much easier manner.
Template Link: https://marketxls.com/template/iron-condor-option-strategy
Video Link on how to use: https://www.youtube.com/watch?v=hyVGFduCQU8
Bottom Line –
There are a lot of other option strategies like Straddles, Strangles, Calendar Spread, Ladders, and many more which are used by the traders and hedge funds to earn a return on their investments. MarketXLS has in-built templates which aid to analyze all these strategies and choose which one suits best for your risk appetite and market view and execute the same.
You can go through the MarketXLS template (https://marketxls.com/marketxls-templates) and MarketXLS Youtube Channel (https://www.youtube.com/channel/UC6pNfl-Re61QbCkjRb-6mYg/videos) to further understand all these strategies.
