# Option buy strategy, Options Trading Strategies: A Guide for Beginners

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A put option contract with a strike price of is trading at Rs. If you expect that the price of Nifty will surge in the coming weeks, so you will sell strike and receive upfront profit of Rs. This transaction option buy strategy result in net credit because you will receive the money in your broking account for writing the put option.

This will be the maximum amount that you will gain if the option expires worthless. If the market moves against you, then you should have a stop loss based on your risk appetite to avoid unlimited loss.

Option buyers are charged an amount called a "premium" by the sellers for such a right. In contrast, option sellers option writers assume greater risk than the option buyers, which is why they demand this premium. Options are divided into "call" and "put" options. There are some advantages to trading options. The following are basic option strategies for beginners.

So, as expected, if Nifty Increases to or higher by expiration, the options will be out of the money at expiration and therefore expire worthless. You will not have any further liability and amount of Rs.

If Nifty goes against your expectation and falls to then the loss would be amount to Rs. Following is the payoff schedule assuming different scenarios of expiry.

For the ease of understanding, we did not take into account commission charges and Margin. Analysis of Short Put Option Trading Strategy A short put options trading strategy can option buy strategy in generating regular income in a rising or sideways market but it does carry significant risk and it is not suitable for beginner traders.

A Bull Put Spread involves one short put with higher strike price and one long put with lower strike price of the same expiration date. A Bull Put Spread is initiated with flat option buy strategy positive view in the underlying assets.

When to initiate Bull Put Spread Bull Put Spread Option strategy is used when the option trader believes that the underlying assets will rise moderately or hold steady in the near term. It consists of two put options — short and long put. How to Construct the Bull Put Spread?

Strike price can be customized as per the convenience of the trader.

He has provided education to individual traders and investors for over 20 years.