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Naked Call Buy

a. Naked Call Buy:

The buyer of a call option expects the asset price to go up in the short term or in a brief period. It is a single-long call option contract.

Directional view: Bullish

Implied Volatility view: Increase

Max loss: Limited

Max Profit: Unlimited

Greeks impact:

Increase in IV: Positive

Theta Decay: Negative

Delta: Positive

Unfavorable Scenario:

a. The asset price falls or remains sideways

b. Decrease in Implied Volatility (IV)

Payoff Diagram:

Call Payoff.jpg
Call Spread

b. Call Spread:

Call Spread is the combination of buying an ATM (at-the-money) call option contract & shorting an OTM (out-of-the-money) call option contract. It is a debit option strategy

Directional view: Mild Bullish

Implied Volatility view: Increase

Max loss: Limited

Max Profit: Limited

Greeks impact:

Increase in IV: Positive

Theta Decay: Negative

Delta: Positive

Unfavorable Scenario:

a. The asset price falls or stays sideways

b. Decrease in Implied Volatility (IV)

Payoff Diagram:

Call Spread Payoff.jpg
Calendar Call

c. Calendar Call:

A calendar call is a combination of shorting the current expiry ATM (at-the-money) call option contract & going long next expiry ATM call option contract. 

Directional view: Mild Bullish

Implied Volatility view: Increase

Max loss: Limited

Max Profit: Limited

Greeks impact:

Increase in IV: Positive

Theta Decay: Positive

Delta: Positive

Unfavorable Scenario:

a. The asset price stays outside the breakeven range

b. Decrease in Implied Volatility (IV)

Payoff Diagram:

Bullish Calendar.jpg
Diagonal Put

d. Diagonal Put:

Diagonal Put is a bullish strategy. It is a combination of shorting the near-expiry ATM put and the long far-expiry OTM put.

Directional view: Bullish

Implied Volatility view: Decrease

Max loss: Limited

Max Profit: Limited

Greeks impact:

Increase in IV: Negative

Theta Decay: Positive

Delta: Positive

Unfavorable Scenario:

a. The asset price falls below the short strike price

b. Increase in Implied Volatility (IV)

Payoff Diagram:

Diagonal Put.jpg
Call Ratio Backspread

e. Call Ratio Backspread:

Call Ratio Backspread is a bullish strategy. It is a combination of shorting the near-expiry ATM call and buying twice the quantity of slight OTM calls.

Directional view: Bullish

Implied Volatility view: Increase

Max loss: Limited

Max Profit: Limited

Greeks impact:

Increase in IV: Positive

Theta Decay: Negative

Delta: Positive

Unfavorable Scenario:

a. The asset price falls or remains below bought option strike price

b. Decrease in Implied Volatility (IV)

Payoff Diagram:

Call Ratio Backspread.jpg
Modified Call Butterfly

f. Modified Call Butterfly:

Modified call butterfly is a bullish strategy. It is a combination of going long ITM call option & shorting twice the quantity ATM calls option & long far OTM call option

Directional view: Mild Bullish

Implied Volatility view: Decrease

Max loss: Limited

Max Profit: Limited

Greeks impact:

Increase in IV: Negative

Theta Decay: Positive

Delta: Positive

Unfavorable Scenario:

a. The asset price falls or remains below bought option strike price

b. Increase in Implied Volatility (IV)

Payoff Diagram:

Modified Butterfly.jpg
Bull Put Spread

g. Bull Put Spread:

Bull Put Spread is a bullish strategy. It is a combination of shorting the OTM put option & buying a far lower strike OTM put option as a hedge.

Directional view: Neutral to Bullish

Implied Volatility view: Decrease

Max loss: Limited

Max Profit: Limited

Greeks impact:

Increase in IV: Negative

Theta Decay: Positive

Delta: Positive

Unfavorable Scenario:

a. The asset price falls or remains below bought option strike price

b. Increase in Implied Volatility (IV)

Payoff Diagram:

Bull Put Spread.jpg
Strap

h. Strap:

Strap is similar to the long straddle options strategy. It only requires one adjustment of buying additional call options for bullish bias.

Directional view: Bullish

Implied Volatility view: Increase

Max loss: Limited

Max Profit: Unlimited

Greeks impact:

Increase in IV: Positive

Theta Decay: Negative

Delta: Positive

Unfavorable Scenario:

a. The asset price remains in a range

b. Decrease in Implied Volatility (IV)

Payoff Diagram:

Strap.jpg

h. Long Combo:

Long Combo

Long Combo is a strong bullish bias strategy. It is a combination of a long OTM call option & short OTM put option.

Directional view: Bullish

Implied Volatility view: Neutral

Max loss: Unlimited

Max Profit: Unlimited

Greeks impact:

Increase in IV: Positive

Theta Decay: Negative

Delta: Positive

Unfavorable Scenario:

The asset price falls or remains below the long call option strike price

Payoff Diagram:

Long Combo.jpg
IMG-20221208-WA0003_edited.jpg
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