Option Buying Strategies (Long Volatility Strategies)
These Strategies to be followed when you expect Big moves or increase in Volatility.
A Thread🧵:
These Strategies to be followed when you expect Big moves or increase in Volatility.
A Thread🧵:
Simple Long Call:
View: Very Bullish
Strike: Can be ATM, ITM or max 1 Strike OTM.
I don't recommend buying deep OTM options, it is pure gambling or Lottery buying.
Reward: Unlimited upside
Risk: Premium paid
POP: Low
View: Very Bullish
Strike: Can be ATM, ITM or max 1 Strike OTM.
I don't recommend buying deep OTM options, it is pure gambling or Lottery buying.
Reward: Unlimited upside
Risk: Premium paid
POP: Low
Simple Long Put:
View: Very Bearish
Strike: Can be ATM, ITM or max 1 Strike OTM.
I don't recommend buying deep OTM options, it is pure gambling or Lottery buying.
Reward: Unlimited downside
Risk: Premium paid
POP: Low
View: Very Bearish
Strike: Can be ATM, ITM or max 1 Strike OTM.
I don't recommend buying deep OTM options, it is pure gambling or Lottery buying.
Reward: Unlimited downside
Risk: Premium paid
POP: Low
Simple Long Call:
View: Very Bullish
Strike: Can be ATM, ITM or max 1 Strike OTM.
I don't recommend buying deep OTM options, it is pure gambling or Lottery buying.
Reward: Unlimited
Risk: Premium paid
POP: Low
View: Very Bullish
Strike: Can be ATM, ITM or max 1 Strike OTM.
I don't recommend buying deep OTM options, it is pure gambling or Lottery buying.
Reward: Unlimited
Risk: Premium paid
POP: Low
Call Debit Spread:
View: Bullish
Strike: Should be selected such that max profit is at least 2x of max risk
Reward: Limited
Risk: Limited to the net premium paid
POP: higher than pure call buy
Margin: approx 18k per lot required
View: Bullish
Strike: Should be selected such that max profit is at least 2x of max risk
Reward: Limited
Risk: Limited to the net premium paid
POP: higher than pure call buy
Margin: approx 18k per lot required
Put Debit Spread
View: Bearish
Strike: Should be selected such that max profit is at least 2x of max risk
Reward: Limited
Risk: Limited to the net premium paid
POP: higher than pure Put buy
Margin: approx 18k per lot required
View: Bearish
Strike: Should be selected such that max profit is at least 2x of max risk
Reward: Limited
Risk: Limited to the net premium paid
POP: higher than pure Put buy
Margin: approx 18k per lot required
Long Straddle:
View: Big move in either direction
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Reward: Unlimited
Risk: Limited to the net premium paid (high)
POP: high
View: Big move in either direction
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Reward: Unlimited
Risk: Limited to the net premium paid (high)
POP: high
Long Strangle:
View: Big move in either direction
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Reward: Unlimited
Risk: Limited to the net premium paid (Lower than Straddle)
POP: Lower than Straddle
View: Big move in either direction
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Reward: Unlimited
Risk: Limited to the net premium paid (Lower than Straddle)
POP: Lower than Straddle
Long Guts:
Similar to Strangle but buying ITM options
View: Big move in either direction
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Rwrd: Unlmtd
Risk: Lmtd to the net premium paid (< Straddle)
POP: <Straddle
Similar to Strangle but buying ITM options
View: Big move in either direction
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Rwrd: Unlmtd
Risk: Lmtd to the net premium paid (< Straddle)
POP: <Straddle
Strip:
Buy 2 lots of ATM Put and Buy 1 lot of ATM Call
View: Big move in either direction (Bearish Bias)
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Reward: Unlimited
Risk: Lmtd to the net premium paid (high)
POP: high
Buy 2 lots of ATM Put and Buy 1 lot of ATM Call
View: Big move in either direction (Bearish Bias)
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Reward: Unlimited
Risk: Lmtd to the net premium paid (high)
POP: high
Strap:
Buy 2 lots of ATM Calls & Buy 1 lot of ATM Put
View: Big move in either direction (Bullish Bias)
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Reward: Unlimited
Risk: Lmtd to the net premium paid (high)
POP: high
Buy 2 lots of ATM Calls & Buy 1 lot of ATM Put
View: Big move in either direction (Bullish Bias)
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Reward: Unlimited
Risk: Lmtd to the net premium paid (high)
POP: high
Long Iron Fly
View: Move expected in either direction
When to make: When market is rangebound for long time & move is expected or an event is upcoming
Reward: Limited
Risk: Limited
POP: Very High
View: Move expected in either direction
When to make: When market is rangebound for long time & move is expected or an event is upcoming
Reward: Limited
Risk: Limited
POP: Very High
Long Call ButterFly (Same as Long ironfly but made only from Calls)
But sometimes better rewards
View: Move expected in either direction
When to make: When market is rangebound for long time & move is expected or an event is upcoming
Reward: Limited
Risk: Limited
POP: Very High
But sometimes better rewards
View: Move expected in either direction
When to make: When market is rangebound for long time & move is expected or an event is upcoming
Reward: Limited
Risk: Limited
POP: Very High
Long Put ButterFly (Same as Long ironfly but made only from Puts)
But sometimes better rewards
View: Move expected in either direction
When to make: When market is rangebound for long time & move is expected or an event is upcoming
Reward: Limited
Risk: Limited
POP: Very High
But sometimes better rewards
View: Move expected in either direction
When to make: When market is rangebound for long time & move is expected or an event is upcoming
Reward: Limited
Risk: Limited
POP: Very High
Long Iron Condor
View:, Big Move expected in either direction
When to make: When market is rangebound for long time & Big move is expected or an event is upcoming
Reward: Bigger
Risk: < IronFly
POP: <Ironfly
(also have Similar results for Long Call Condor & Long Put Condor)
View:, Big Move expected in either direction
When to make: When market is rangebound for long time & Big move is expected or an event is upcoming
Reward: Bigger
Risk: < IronFly
POP: <Ironfly
(also have Similar results for Long Call Condor & Long Put Condor)
Bullish Long Call Ratio Spread
Short ATM Call & Buy 2 OTM Calls less than half price of ATM Call
View: Bullish
When to make: When market is rangebound for long time & move is expected upside
Reward: Unlmtd upside & Limited downside
Risk: Lmtd if market is rangeboud
POP: Very High
Short ATM Call & Buy 2 OTM Calls less than half price of ATM Call
View: Bullish
When to make: When market is rangebound for long time & move is expected upside
Reward: Unlmtd upside & Limited downside
Risk: Lmtd if market is rangeboud
POP: Very High
Bearish Long Put Ratio Spread
Short ATM Put & Buy 2 OTM Put less than half price of ATM Put
View: Bearish
When to make: When market is rangebound for long time & move is expected upside
Reward: Unlmtd downside & Limited upside
Risk: Lmtd if market is rangeboud
POP: Very High
Short ATM Put & Buy 2 OTM Put less than half price of ATM Put
View: Bearish
When to make: When market is rangebound for long time & move is expected upside
Reward: Unlmtd downside & Limited upside
Risk: Lmtd if market is rangeboud
POP: Very High
Strangled Strip
Buy 2lots of OTM Put & Buy 1lot of OTM Call
View: Big move in either direction (Bearish Bias)
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Reward: Unlimited
Risk: Lmtd to the net premium paid (low)
POP: low
Buy 2lots of OTM Put & Buy 1lot of OTM Call
View: Big move in either direction (Bearish Bias)
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Reward: Unlimited
Risk: Lmtd to the net premium paid (low)
POP: low
Strangled Strap
Buy 2lots of OTM Call & Buy 1lot of OTM Put
View: Big move in either direction (Bullish Bias)
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Reward: Unlimited
Risk: Lmtd to the net premium paid (low)
POP: low
Buy 2lots of OTM Call & Buy 1lot of OTM Put
View: Big move in either direction (Bullish Bias)
When to make: When market is rangebound for long time and big move is expected or an event is upcoming
Reward: Unlimited
Risk: Lmtd to the net premium paid (low)
POP: low
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