Part11 Trading Masterclass

Types of Option Traders
1. Speculators
They aim to profit from market direction using options. Their goal is capital gain.

2. Hedgers
They use options to protect investments from unfavorable price movements.

3. Income Traders
They sell options to earn premium income.

Option Trading Strategies
1. Basic Strategies
A. Buying Calls (Bullish)
Used when you expect the stock to rise.

B. Buying Puts (Bearish)
Used when expecting a stock to fall.

C. Covered Call (Neutral to Bullish)
Own the stock and sell a call option. Earn premium while holding the stock.

D. Protective Put (Insurance)
Own the stock and buy a put option to limit losses.

2. Intermediate Strategies
A. Vertical Spreads
Buying and selling options of the same type (call or put) with different strike prices.

Bull Call Spread: Buy a lower strike call, sell a higher strike call.

Bear Put Spread: Buy a higher strike put, sell a lower strike put.

B. Iron Condor (Neutral)
Sell OTM put and call options, buy further OTM put and call to limit risk. Profit if the stock stays within a range.

C. Straddle (Volatility)
Buy a call and a put at the same strike price. Profits from big price movement in either direction.