(Class-6) Stock Market for Beginners in India: Advanced Trading Strategies
📌 Table of Contents
1️⃣ Introduction to Advanced Trading Strategies
2️⃣ Bullish Strategies
- Bull Call Spread
- Bull Put Spread
3️⃣ Bearish Strategies - Bear Call Spread
- Bear Put Spread
4️⃣ Neutral Strategies - Iron Condor
- Iron Butterfly
- Straddle & Strangle
5️⃣ Hedging Strategies - Protective Puts
- Delta Hedging
6️⃣ Example of Nifty & Bank Nifty Options Trading
7️⃣ Live Trading Example (Screenshots)
8️⃣ Summary of Class-6
9️⃣ What’s Next? (Class-7: Algo & Automated Trading)
📌 Introduction to Advanced Trading Strategies
Once you understand basic options trading, it’s time to learn advanced strategies to maximize profit and minimize risk. These strategies are used by professional traders to handle different market conditions.
📌 Why Use Advanced Strategies?
✅ Limited risk, higher reward potential
✅ Works in different market conditions (bullish, bearish, or sideways)
✅ Reduces emotional trading by following a structured approach
📈 Bullish Trading Strategies (For Rising Markets)
1. Bull Call Spread
- Buy a Call Option at a lower strike price
- Sell a Call Option at a higher strike price
- Used when you expect the market to go up moderately 📈
🔹 Example:
- Nifty Spot Price: ₹19,500
- Buy Nifty 19,500 Call (₹150)
- Sell Nifty 19,600 Call (₹80)
- Net Cost: ₹70
- Max Profit: ₹100 (if Nifty closes above 19,600)
2. Bull Put Spread
- Sell a Put Option at a higher strike price
- Buy a Put Option at a lower strike price
- Used when the market is mildly bullish 📈
🔹 Example:
- Bank Nifty Spot Price: ₹44,000
- Sell Bank Nifty 44,000 Put (₹200)
- Buy Bank Nifty 43,800 Put (₹100)
- Net Premium: ₹100
- Max Profit: ₹100 (if Bank Nifty stays above 44,000)
📉 Bearish Trading Strategies (For Falling Markets)
1. Bear Call Spread
- Sell a Call Option at a lower strike price
- Buy a Call Option at a higher strike price
- Used when the market is mildly bearish 📉
🔹 Example:
- Nifty Spot Price: ₹19,500
- Sell Nifty 19,500 Call (₹150)
- Buy Nifty 19,600 Call (₹80)
- Net Credit: ₹70
- Max Profit: ₹70 (if Nifty closes below 19,500)
2. Bear Put Spread
- Buy a Put Option at a higher strike price
- Sell a Put Option at a lower strike price
- Used when the market is moderately bearish 📉
🔹 Example:
- Bank Nifty Spot Price: ₹44,000
- Buy Bank Nifty 44,000 Put (₹200)
- Sell Bank Nifty 43,800 Put (₹100)
- Net Cost: ₹100
- Max Profit: ₹100 (if Bank Nifty falls below 43,800)
📊 Neutral Trading Strategies (For Sideways Markets)
1. Iron Condor
- Sell a Call & Put near the current market price
- Buy a Call & Put further away for risk control
- Used when the market stays within a range 📊
🔹 Example:
- Sell Nifty 19,400 Put & 19,600 Call
- Buy Nifty 19,300 Put & 19,700 Call
- Collect premium & profit if Nifty stays between 19,400-19,600
2. Iron Butterfly
- Sell ATM Call & Put
- Buy OTM Call & Put
- Used for high volatility events 📊
🔹 Example:
- Stock: Infosys (Results Announcement Week)
- Sell ₹1,500 Call & Put
- Buy ₹1,400 Put & ₹1,600 Call
- Profit if Infosys stays near ₹1,500
3. Straddle & Strangle
- Straddle: Buy ATM Call & Put (for big moves in any direction)
- Strangle: Buy OTM Call & Put (for larger moves but lower cost)
🔹 Example:
- Stock: Reliance (Earnings Day)
- Buy ₹2,500 Call & Put (Straddle)
- Buy ₹2,400 Put & ₹2,600 Call (Strangle)
- Profits from a sharp move, regardless of direction
🔒 Hedging Strategies (Protecting Investments)
1. Protective Put
- Buy a Put Option to protect stocks from falling
🔹 Example: If you own TCS shares at ₹3,500, buy a TCS ₹3,400 Put to protect against downside.
2. Delta Hedging
- Adjusting option positions to reduce directional risk
🔹 Example: If you hold Nifty Futures, you can sell Nifty Calls to hedge risk.
📊 Example of Nifty & Bank Nifty Options Trading
Nifty Example:
- Current Nifty Price: ₹19,500
- Buy Nifty 19,500 Call (₹100)
- Sell Nifty 19,600 Call (₹60)
- Net Cost: ₹40
- Profit if Nifty moves above ₹19,600
Bank Nifty Example:
- Current Bank Nifty Price: ₹44,000
- Sell Bank Nifty 44,000 Put (₹200)
- Buy Bank Nifty 43,800 Put (₹100)
- Net Premium: ₹100
- Profit if Bank Nifty stays above ₹44,000
📚 Summary of Class-6
| Strategy | Market Type | Best For |
|---|---|---|
| Bull Call Spread | Bullish | Moderate gains |
| Bear Put Spread | Bearish | Downtrend profits |
| Iron Condor | Neutral | Sideways market |
| Protective Put | Hedging | Risk management |
🚀 What’s Next? (Class-7: Algo & Automated Trading)
In the next class, we’ll cover algorithmic trading, including:
✅ How to use trading bots
✅ Best algo trading platforms
✅ Live algo trading examples