PCR Tradng Strategies

Types of Options Strategies

Options strategies can be classified based on complexity and purpose:

A. Basic (Beginner) Strategies

Covered Call

Protective Put

Long Call / Long Put

B. Intermediate Strategies

Bull Call Spread

Bear Put Spread

Collar Strategy

Straddle and Strangle

C. Advanced (Professional) Strategies

Butterfly Spread

Iron Condor

Calendar Spread

Ratio Spreads

Diagonal Spreads

Each of these strategies has its own setup, payoff diagram, and risk–reward profile. Let’s explore the most important ones.

Popular Options Strategies Explained with Examples
Covered Call

Setup: Buy stock + Sell Call option (same stock).

When to Use: Mildly bullish or neutral view.

Logic: You earn premium from the call while holding stock. If stock rises, gains are capped at strike price.

Example: Stock at ₹100. Buy stock and sell a Call at strike ₹110 for ₹5. If stock goes to ₹115, your profit is capped at ₹15 (₹10 from stock + ₹5 premium). If stock stays flat, you still keep the ₹5 premium.

Protective Put

Setup: Buy stock + Buy Put option.

When to Use: Bullish but want downside protection.

Logic: Works like insurance—limits potential loss if stock falls.

Example: Stock at ₹100. Buy stock + Put at strike ₹95 for ₹3. If stock drops to ₹80, your loss is capped (you can sell at ₹95).