The NSE Option Chain is a powerful tool that novice and experienced traders can use to identify opportunities for profit in the stock market, but advanced traders can also benefit from certain strategies that can help them maximize their gains and minimize their risks. In this article, we will explore some advanced NSE option chain strategies that experienced traders can use to their advantage.
The Butterfly Spread Strategy
Butterfly Spread is an advanced NSE option chain strategy that involves buying both call and put options with the same expiration date. The strategy involves buying one call option with a lower strike price, selling two call options at the same expiry date with a higher strike price and buying a call option with the highest strike price.
For instance, an experienced trader can buy a call option contract with a lower strike price, sell two call option contracts with a delta higher than the first option and then buy a call option contract with an even higher delta. This advanced strategy can be used when the market is range-bound. When using this strategy, traders should choose options that expire in a short period.
The Iron Condor Strategy
The Iron Condor strategy is an advanced options trading strategy that uses both call and put options. The strategy involves selling both a call and a put option on the same stock with strike prices that are equidistant from the current stock price. Then, the trader will purchase call and put options with higher and lower strike prices, respectively.
In the Iron Condor strategy, the trader sells the options with higher premiums. The aim of this is to profit from the premium without the stock price going up or down significantly during the option period. The trader can also unwind the position before the option period expires to avoid the risks associated with probable market fluctuations. The Iron Condor strategy is typically ideal when the market is moving sideways.
Straddle Strategy
The Straddle strategy is an advanced NSE option chain strategy that involves buying both call and put options at the same strike price and expiration date. This strategy is used when the trader expects that stock prices will have a significant increase or decrease. It is wise to use this strategy when the underlying stock has the potential to make a breakout within a short period of time.
For instance, if a trader buys a Straddle option contract with a strike price of $100 with an expiry within one week. If the price of the stock increases to $120 within the week, the trader can sell the call options and keep the remaining put option until it expires. This strategy can also be modified by traders who wish to use a Strangle option instead. In a Strangle option, the trader buys calls and puts options with a different strike price, allowing them to make profits in the event of significant movements in the stock price. So, why not take a plunge in the NSE option chain and earn big with your investment in it. All the best!
