For eg. I will not trade on a RBI announcement or in the second half of the expiry day.

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Than on each day I write down the all the details of trade with an exact reason as to why I took the trade. Than I highlight positive and negatives from that day and make sure from the next day I eliminate the negatives and keep up the positives. This all might sound unnecessary or silly but trust me reading the trading journal daily trains your sub conscious mind to automatically react in the best possible way every time the trade comes. Also it helps me bring discipline in trading which is the crux of success in trading as a profession… I also ensure emotional stability all the way through.

Have a happy and profitable trading journey ahead!!! Chintan salute respect …very beautifully explained. I suggest you study option trading module at Zerodha Varsity. That should give you a fairly good idea about option trading. Mathematical arbitrage uses option delta to ensure that the net position always makes profits.

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You just need an option calculator to calculate the net delta. For mathematical arbitrage, refer to the Youtube channel of UCLA, where a mathematics professor explains the concept in details. Option calculator is available with Omnesysindia. Contact Zerodha support for setting up an account with omnesysindia. Suppose the Infosys stock is currently trading at Rs.

I have already explained this is a question to understand better how options work, I'm learning, that's the purpose of this site after all — Enrique Jul 15 '18 at Add a comment. Active Oldest Votes. Improve this answer.

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Bob Baerker Bob Baerker I didn't understand why 3 is the same, you are mixing put and calls there, Also I don't understand what do you mean with "they cost money", do you mean the extra fee from the broker? I mean the butterfly costs money, that's why we loose on the wings, the straddle costs money, that's why we loose on the center. But then combined the win and loose zones cancel each other and final cost is 0 there, and because Bfly is limited loss and straddle unlimited win we have a zone with profit — Enrique Jul 15 '18 at It's like an algebra equation.

You need to study it and familiarize yourself with the substitutions. It's all right there in 's And yes, you're welcome for the detailed explanation. If you don't understand why all 3 Butterflies are the same then try Plan B. Here are some made up quotes. Plug those quotes into all three Butterflies and determine what the debit cost of each Fly is. If done correctly, it will be the same for each. I will explain how I see it because I think I'm reading the graphs in thw wrong way, maybe you can point where is my error: I see the graph as the final net profit or loss when the options expires, and that includes already the cost to start the strategy.



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If that's true we can just sum graphs to get the final net profit for combined strategies. And if we sum the butterfly with the straddle we get the green graph. To generate it I needed to add a big spread to the butterfly, but I don't know if this is a problem, and if it is, why? So while 2 cents approaches zero it's NOT zero and still costs money.

Zero Loss Option Strategies -- Strategies For Working People Part 6 -- Safest Nifty Option Hedging

The average delta for this Strangle is about. If you think that's a good bet, have at it. Show 3 more comments.

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The question was asked as to how one can place a Butterfly Spread by "mixing puts and calls". That's very interesting Bob, thanks for the detailed explanation! Sign up or log in Sign up using Google.



Sign up using Facebook. Buy out-of-the money call option and simultaneously sell out-of-the money put option in same stock for that month.

Low Risk Options Trading Strategies 101: The Essential Guide

When you are bearish in particular stock then opt to build bearish position as discussed below:. Buy out-of-the money put option and simultaneously sell out-of-the money call option in same stock for that month. While constructing above strategies, it can be observed we generally use the sale of one out-of- the-money put or call option to fund the purchase of the counter options which makes this option strategy at zero cost.

In these positions, you have potential to earn unlimited profit but there is equal risk of unlimited losses too will be explained in example. However, you would not incur additional cost to enter in this position apart from broker commissions — see: what is a stockbroker? The options lot size of Microsoft is considered as shares. If the prices of Microsoft are expected to rise then opt to buy out-of-the money Feb 31 call option and simultaneously sell out-of-the money Feb 29 put option.