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Sigma Capital - Financial Intelligence 101 - Options Lesson
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Click-1   |    Click-2
Bullish
Bearish
Volatile
Flat1  |  Flat 2
Buy Instrument
Stock / Futures Index, Forex,
Commodity etc
Short Sell Instrument
Stock / Futures Index, Forex,
Commodity, etc
Delta Neutral
Butterfly Call
Butterfly Put
Buy Call
Buy Put
For Gapping Market
DB Straddle =
Buy Call + Put ATM
Iron Condor
CR Call Spread +
CR Put Spread
Buy DB Bull Call Spread
Buy DB Bear Put Spread
For Gapping Market
DB Strangle =
Buy Call + Put OTM
CR Strangle
Sell CR Put (Naked)
Sell CR Call (Naked)
  CR Straddle
Sell CR Bull Put Spread
Sell CR Bear Call Spread
Call Back Spread
Call Ratio Spread
Covered Call
Covered Put
Put Back Spread
Put  Ratio Spread
Buy Stock +
Protective Buy Put
Sell Stock +
Protective Buy Call
  Horizontal Spread or
Calendar Spread
Diagonal Spread
    Diagonal Spread
Call Back Spread
Put Back Spread
  Sell CR Call (Naked)
Ratio Put Spread
Ratio Call Spread
  Sell CR Put (Naked)
Collar (see Flat strategy)
Collar (see Flat Strategy)
Collar (see Flat Strategy)
Collar
      Covered Call
      Covered Put
      Sell CR Bull   Put Spread
      Sell CR Bear Call Spread
80% T-Bonds + 10% MM
80% T-Bonds + 10% MM
80% T-Bonds + 10% MM
80% T-Bonds + 10% MM
 
Strategy Flat / Sideways 1
Strategy Flat / Sideways 2
Flat Strategy
   
Buy DB CALL Butterfly Spread
Buy 1 Call ITM  
Sell 2 Call ATM
Buy 1 Call OTM
  • Buy 1X ITM Call Options (Lower than Stock Current Price)
  • Sell 2X ATM Call Options (Near the Stock Current Price)
  • Buy 1X OTM Call Options (Further UP from the Stock Current Price)
Market is Flat. Objective is to earn limited profit from options time value and limited movement from stock

  • Buy 1 X ITM  Call Options Strike 28 @              (2.5)
  • Sell 2 X ATM Call Options Strike 30 @ +2 X 2 = +4
  • Buy 1 X OTM Call Options Strike 32 @               (1)    -> Tot DB = (0.5)  

  • Max Loss      = DB = (0.5) if stock < 28 and > 32
  • Max Profit     = Size = + 2                                 -> If stock is at 30 during options expiration
  • Net  Profit     = Size - DB = 2 - 0.5 = +1.5
  • BEP 1            =  28.5
  • BEP 2            =  31.5
 
Initial Stock 30
Expiry Day
Stock = 29
Expiry Day
Stock = 30
Expiry Day
Stock = 28.5
Expiry Day
Stock = 20
Expiry Day
Stock =31.5
DB Call Butterfly Sp
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
B 1*C28@2.5
(2.5)
+1
(1.5)
+2
(0.5)
+0.5
(2)
0
(2.5)
+3.5
+1
S 2*C30@1.5
+3
0
+3.0
0
+3
0
+3
0
+3.0
(3.0)
0
B 1*C32@1
(1)
0
(1.0)
0
(1.0)
0
(1)
0
(1.0)
0
(1)
  (0.5)
+1
+0.5
+2
+1.5
+0.5
0
0
(0.5)
(0.5)
0
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$50
  +$150
  0
  ($50)
  0
ROI
P/DB
  100%
  Max 300%
  BEP
      BEP
 
Flat Strategy
   
Buy DB CALL Butterfly Spread
Buy 1 Call ITM  
Sell 2 Call ATM
Buy 1 Call OTM
  • Limited Profit = +1.5 if stock =30
  • Limited Loss   =  DB = (0.5) If stock <28 & > 32
Buy - DB CALL Butterfly Spread – Profit & Loss Diagram
Market View
Bearish
▬▬o▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Flat Strategy
   
Buy DB PUT Butterfly Spread
Buy 1 Put ITM  
Sell 2 Put ATM
Buy 1 Put OTM
  • Buy 1X ITM Put Options (Higher than Stock Current Price)
  • Sell 2X ATM Put Options (Near the Stock Current Price)
  • Buy 1X OTM Put Options (Further DOWN from Stock Current Price)
Market is Flat. Objective is to earn limited profit from options time value and limited movement from stock

  • Buy 1 X ITM  Put Options Strike 32 @                (1)
  • Sell 2 X ATM  Put Options Strike 30 @ +2 X 2 = +4
  • Buy 1 X OTM Put Options Strike 28 @               (2.5)    -> Tot DB = (0.5)  

  • Max Loss      = DB = (0.5) if stock > 28 and < 32
  • Max Profit     = Size = + 2                                 -> If stock is at 30 during options expiration
  • Net  Profit     = Size - DB = 2 - 0.5 = +1.5
  • BEP 1            =  28.5
  • BEP 2            =  31.5
 
Initial Stock 30
Expiry Day
Stock = 31
Expiry Day
Stock = 30
Expiry Day
Stock = 31.5
Expiry Day
Stock = 40
Expiry Day
Stock =28.5
DB Put Butterfly Sp
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
B 1*P32@2.5
(2.5)
+1
(1.5)
+2
(0.5)
+0.5
(2)
0
(2.5)
+3.5
+1
S 2*P30@1.5
+3
0
+3.0
0
+3
0
+3
0
+3.0
(3.0)
0
B 1*P28@1
(1)
0
(1.0)
0
(1.0)
0
(1)
0
(1.0)
0
(1)
  (0.5)
+1
+0.5
+2
+1.5
+0.5
0
0
(0.5)
(0.5)
0
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$50
  +$150
  0
  ($50)
  0
ROI
P/DB
  100%
  Max 300%
  BEP
      BEP
 
Flat Strategy
   
Buy DB PUT Butterfly Spread
Buy 1 Put ITM  
Sell 2 Put ATM
Buy 1 Put OTM
  • Limited Profit = +1.5 if stock =30
  • Limited Loss   =  DB = (0.5) If stock <28 & > 32
Buy - DB PUT Butterfly Spread – Profit & Loss Diagram
Market View
Bearish
▬▬o▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Bullish Strategy
Bearish Strategy
Volatile Strategy
Flat Strategy
Buy DB Collar Spread #1
Buy Stock  
Buy 1 Put  ATM (Protect)
Sell 1 Call ATM
  • Buy Stock (Flat View)
  • Buy 1X ATM Put Options (Protective Put -> Strike = Near Stock Current Price)
  • Sell 1X ATM Call Options (Near Stock Current Price)
  • Condition: Price Call > Price Put  or Price Put > Call
  • Market is Bullish, Bearish, Volatile or Flat. Objective is to earn limited profit from Options Time Value.
  • This is suitable if we are uncertain about the market, but we want a certain profit.
  • This strategy is better if we have medium - large capital, and we want zero risk or almost zero risk
  • Note: We can tailor made Collar to adjust the Risk and Profit Profile
  • Normally we choose this strategy if Price Call > Price Put only (although we can do it otherwise)

  • Buy Stock ABC                                 @ (30)
  • Buy 1 X ATM Put Options Strike 30 @   (2)
  • Sell 1 X ATM Call Options Strike 30 @  +3           -> Tot DB = (29)  

  • Max Loss      = None = 0 if stock  0 or > 30
  • Max Profit     = Size = + 1 (from DB till Strike Call 30)
  • Net  Profit     = +1 on Expiry Date
  • ROI               = Profit / DB = 1 / 29 = 3.5% one month
 
Initial Stock 30
Expiry Day
Stock = 30
Expiry Day
Stock = 0
Expiry Day
Stock = 60
Expiry Day
Stock =
Expiry Day
Stock =
DB Collar Spread #1
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
B 100 Stock
(30)
+30
0
0
(30)
+60
+30
       
Buy 1 P 30 @
(2)
0
(2)
+30
+28
0
(2)
       
Sell 1 C 30 @
+3
0
+3
0
+3
(30)
(27)
       
  (29)
+30
+1
+30
+1
+30
+1
       
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$100
  +$100
  +$100
       
ROI
P/DB
  +3.5%
  +3.5%
  +3.5%
       
 
Bullish Strategy
Bearish Strategy
Volatile Strategy
Flat Strategy
Buy DB Collar Spread #1
Buy Stock  
Buy 1 Put  ATM (Protect)
Sell 1 Call ATM
  • Limited Profit = +1 if stock =30 & <30 or > 30. Or Any price
  • Limited Loss   =  None
  • Zero Risk
Buy - DB Collar Spread #1 – Profit & Loss Diagram
Market View
Bearish
▬▬o▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Bullish Strategy
Bearish Strategy
Volatile Strategy
Flat Strategy
Buy DB Collar Spread #2
Buy Stock  
Buy 1 Put  OTM (Protect)
Sell 1 Call ATM
  • Buy Stock (Moderately Bullish view)
  • Buy 1X OTM Put Options (Protective Put -> Strike = Lower than Stock Price)
  • Sell 1X ATM Call Options (Near Stock Current Price)
  • Condition: Price Call > Price Put  or Price Put > Call
  • Market is Bullish, Bearish, Volatile or Flat. Objective is to earn limited profit from Options Time Value.
  • This is suitable if we are uncertain about the market, but we want a certain profit.
  • This strategy is better if we have medium - large capital, and we want zero risk or almost zero risk
  • Note: We can tailor made Collar to adjust the Risk and Profit Profile
  • Normally we choose this strategy if Price Call > Price Put only (although we can do it otherwise)

  • Buy Stock ABC                                 @ (30)
  • Buy 1 X OTM Put Options Strike 29 @   (1)
  • Sell 1 X ATM Call Options Strike 30 @  +3           -> Tot DB = (28)  

  • Max Loss      = None = 0 if stock  0 or > 30
  • Max Profit     = Size = + 2 (from DB till Strike Call 30)
  • Net  Profit     = +2 on Expiry Date
  • ROI               = Profit / DB = 1 / 29 = 7% one month
 
Initial Stock 30
Expiry Day
Stock = 30
Expiry Day
Stock = 0
Expiry Day
Stock = 60
Expiry Day
Stock =
Expiry Day
Stock =
DB Collar Spread#2
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
B 100 Stock
(30)
+30
0
0
(30)
+60
+30
       
Buy 1 P 29 @
(1)
0
(1)
+30
+29
0
(1)
       
Sell 1 C 30 @
+3
0
+3
0
+3
(30)
(27)
       
  (28)
+30
+2
+30
+2
+30
+2
       
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$200
  +$200
  +$200
       
ROI
P/DB
  +7 %
  +7 %
  +7 %
       
 
Bullish Strategy
Bearish Strategy
Volatile Strategy
Flat Strategy
Buy DB Collar Spread #2
Buy Stock  
Buy 1 Put  OTM (Protect)
Sell 1 Call ATM
  • Limited Profit = +2 if stock =30 & <30 or > 30. Or Any price
  • Limited Loss   =  None
  • Zero Risk
  • Note: This is for Moderately Bullish View
Buy - DB Collar Spread #2 – Profit & Loss Diagram
Market View
Bearish
▬▬o▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Bullish Strategy
Bearish Strategy
Volatile Strategy
Flat Strategy
Buy DB Collar Spread #3
Buy Stock  
Buy 1 Put  ATM (Protect)
Sell 1 Call FOTM
  • Buy Stock (Strong Bullish view)
  • Buy 1X ATM Put Options (Protective Put -> Strike= Near Stock Price)
  • Note: We take Direct protection from Insurance Options Put
  • Sell 1X OTM Call Options (Higher than Current Stock Price)
  • Condition: Price Call > Price Put Or Put > Call. Limited Loss Spread Setting
  • Market is Bullish, Bearish, Volatile or Flat. Objective is to earn limited profit from Options Time Value.
  • This is suitable if we are uncertain about the market, but we want a certain profit.
  • This strategy is better if we have medium - large capital, and we want zero risk or almost zero risk
  • Note: We can tailor made Collar to adjust the Risk and Profit Profile
  • Normally we choose this strategy if Price Call > Price Put only (although we can do it otherwise)

  • Buy Stock ABC                                @   (30)
  • Buy 1 X ATM Put Options Strike 30 @     (1)
  • Sell 1 X ATM Call Options Strike 32 @   +2          -> Tot DB = (29). Protection from Put Options start from 30

  • Max Loss      =  None
  • Min Profit      = TV    = + 1 (if stock < 30)
  • Max Profit     = Size = + 3  (from DB till Strike Call 32)
  • ROI Min         = Profit / DB = 1 / 29 = 3.5% one month
  • ROI Max        = Profit / DB = 3 / 29 =  10% one month
 
Initial Stock 30
Expiry Day
Stock = 30
Expiry Day
Stock = 31
Expiry Day
Stock = 32
Expiry Day
Stock = 0
Expiry Day
Stock = 40
DB Collar Spread#3
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
B 100 Stock
(30)
+30
0
+31
+1
+32
+2
0
(30)
+40
+10
Buy 1 P 30@
(1)
0
(1)
0
(1)
0
(1)
+30
+29
0
(1)
Sell 1 C 32@
+2
0
+2
0
+2
0
+2
0
+2
(8)
(6)
  (29)
+30
+1
+30
+2
+27.5
+3
+30
+1
+32
+3
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$100
  +$200
  +$300
  +$100
  +$300
ROI
P/DB
  +3.5 %
  +7 %
  Max+10%
  +3.5 %
  Max+10%
 
Bullish Strategy
Bearish Strategy
Volatile Strategy
Flat Strategy
Buy DB Collar Spread #3
Buy Stock  
Buy 1 Put  ATM (Protect)
Sell 1 Call FOTM
  • Limited Profit = +1 if stock <30
  • Max      Profit = + 3 if stock > 32
  • Loss   =  None
  • Note: This is for Strong Bullish View,
  • We take no risk - Full Protection - Buying Insurance ATM Put Options
Buy - DB Collar Spread #3 – Profit & Loss Diagram
Market View
Bearish
▬▬o▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Bullish Strategy
Bearish Strategy
Volatile Strategy
Flat Strategy
Buy DB Collar Spread #4
Buy Stock  
Buy 1 Put  FOTM (Protect)
Sell 1 Call ATM
  • Buy Stock (Strong Bullish view)
  • Buy 1X OTM Put Options (Protective Put -> Strike= Much Lower than Stock Price)
  • Note: We take partial protection only from Insurance Options Put
  • Sell 1X ATM Call Options (Near Stock Current Price)
  • Condition: Price Call > Price Put Or Put > Call. Limited Loss Spread Setting
  • Market is Bullish, Bearish, Volatile or Flat. Objective is to earn limited profit from Options Time Value.
  • This is suitable if we are uncertain about the market, but we want a certain profit.
  • This strategy is better if we have medium - large capital, and we want zero risk or almost zero risk
  • Note: We can tailor made Collar to adjust the Risk and Profit Profile
  • Normally we choose this strategy if Price Call > Price Put only (although we can do it otherwise)

  • Buy Stock ABC                                @   (30)
  • Buy 1 X ATM Put Options Strike 27 @   (0.5)
  • Sell 1 X ATM Call Options Strike 30 @   +3          -> Tot DB = (27.5). Protection from Put Options will start from 27

  • Max Loss      =  (0.5) if stock  < 27
  • Max Profit     = Size = + 2.5  (from DB till Strike Call 30)
  • Net  Profit     = +2.5 on Expiry Date
  • ROI Max        = Profit / DB = 2.5 / 27.5 = 9% one month
 
Initial Stock 30
Expiry Day
Stock = 29
Expiry Day
Stock = 30
Expiry Day
Stock = 27.5
Expiry Day
Stock = 0
Expiry Day
Stock =
DB Collar Spread#4
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
B 100 Stock
(30)
+29
(1.0)
+30
0
+27.5
(2.5)
0
(30)
   
Buy 1 P 27@
(0.5)
0
(0.5)
0
(0.5)
0
(0.5)
+27
+26.5
   
Sell 1 C 30@
+3
0
+3.0
0
+3.0
0
+3.0
0
+3.0
   
  (27.5)
+29
+1.5
+30
+2.5
+27.5
0
+27
(0.5)
   
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$150
  +$250
  0
  ($50)
   
ROI
P/DB
  +5.6 %
  Max+9%
  BEP
  Max Loss
   
 
Bullish Strategy
Bearish Strategy
Volatile Strategy
Flat Strategy
Buy DB Collar Spread #4
Buy Stock  
Buy 1 Put  FOTM (Protect)
Sell 1 Call ATM
  • Limited Profit = +2.5 if stock =30
  • Limited Loss   =  (0.5)
  • Note: This is for Strong Bullish View,
  • We take small risk - Partial Protection - Buying Insurance Far OTM Put Options
Buy - DB Collar Spread #4 – Profit & Loss Diagram
Market View
Bearish
▬▬o▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Flat Strategy
   
Buy DB Call Condor Spread
Buy 1 ITM    Call
Sell 1 ATM   Call
Sell 1 OTM   Call
Buy 1 FOTM Call
  • Buy 1X ITM    Call Options 28 (Lower than Current Stock Price)
  • Sell 1X ATM   Call Options 30 (Near Current Stock Price)
  • Sell 1X OTM   Call Options 32 (Higher than Current Stock Price)
  • Buy 1X FOTM Call Options 34 (Much Higher than Current Stock Price)
  • Market is Flat. Stock is 30. Objective is to earn limited profit from Options Time Value.


  • Buy 1 X ITM   Call Options Strike 28 @    +3
  • Sell 1 X ATM   Call Options Strike 30 @    (2)
  • Sell 1 X OTM   Call Options Strike 32 @   (1)
  • Buy 1 X FOTM Call Options Strike 34 @  (0.5)       -> Tot DB = (0.5).

  • Max Loss         =  (0.5) (if stock < 28 and > 32)
  • Max Profit        = + 2.0 (if stock >30 & <32)
  • Net Max Profit  = + 1.5 (from Size Spread +2 - DB 0.5)
  • ROI Max           = Profit / DB = 1.5 / 0.5 =  300% on expiry day
 
Initial Stock 30
Expiry Day
Stock = 30 <=32
Expiry Day
Stock = 28.5
Expiry Day
Stock = 33.5
Expiry Day
Stock = 20
Expiry Day
Stock = 40
DB CALL Condor Sp
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
Buy 1 C 28@
(3.0)
+2
(1.0)
+0.5
(2.5)
+5.5
+2.5
0
(3.0)
+12
+9.0
Sell 1 C 30@
+2.0
0
+2.0
0
+2.0
(3.5)
(1.5)
0
+2.0
(10)
(8.0)
Sell 1 C 32@
+1.0
0
+1.0
0
+1.0
(1.5)
(0.5)
0
+1.0
(8)
(7.0)
Buy 1 C 34@
(0.5)
0
(0.5)
0
(0.5)
0
(0.5)
0
(0.5)
+6
+5.5
  (0.5)
+2
+1.5
+0.5
0
+0.5
0
0
(0.5)
0
(0.5)
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$150
  0
  0
  ($50)
  ($50)
ROI
P/DB
  Max+300%
  BEP
  BEP
  Max Loss
  Max Loss
 
Flat Strategy
   
Buy DB CALL Condor Spread
Buy 1 ITM    Call
Sell 1 ATM   Call
Sell 1 OTM   Call
Buy 1 FOTM Call
  • Limited Profit = +1.5   if stock >=30 & <=32
  • Limited Loss   =  (0.5) if stock <=28 & >= 34
Buy - DB Call Condor Spread – Profit & Loss Diagram
Market View
Bearish
▬▬o▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Flat Strategy
   
Buy DB PUT Condor Spread
Buy 1 ITM    Put
Sell 1 ATM   Put
Sell 1 OTM   Put
Buy 1 FOTM Put
  • Buy 1X ITM    Put Options 32 (Higher than Current Stock Price)
  • Sell 1X ATM   Put Options 30 (Near Current Stock Price)
  • Sell 1X OTM   Put Options 28 (Lower than Current Stock Price)
  • Buy 1X FOTM Put Options 26 (Much Lower than Current Stock Price)
  • Market is Flat. Stock is 30. Objective is to earn limited profit from Options Time Value.


  • Buy 1 X ITM   Put Options Strike 32  @  +3
  • Sell 1 X ATM   Put Options Strike 30  @  (2)
  • Sell 1 X OTM   Put Options Strike 28 @  (1)
  • Buy 1 X FOTM Put Options Strike 26 @  (0.5)       -> Tot DB = (0.5).

  • Max Loss         =  (0.5) (if stock < 26 and > 32)
  • Max Profit        = + 2.0 (if stock >28 & <30)
  • Net Max Profit  = + 1.5 (from Size Spread +2 - DB 0.5)
  • ROI Max           = Profit / DB = 1.5 / 0.5 =  300% on expiry day
 
Initial Stock 30
Expiry Day
Stock = 30 >=28
Expiry Day
Stock = 31.5
Expiry Day
Stock = 26.5
Expiry Day
Stock = 40
Expiry Day
Stock = 20
DB PUT Condor Sp
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
Buy 1 P 32@
(3.0)
+2
(1.0)
+0.5
(2.5)
+5.5
+2.5
0
(3.0)
+12
+9.0
Sell 1 P 30@
+2.0
0
+2.0
0
+2.0
(3.5)
(1.5)
0
+2.0
(10)
(8.0)
Sell 1 P 28@
+1.0
0
+1.0
0
+1.0
(1.5)
(0.5)
0
+1.0
(8)
(7.0)
Buy 1 P 26@
(0.5)
0
(0.5)
0
(0.5)
0
(0.5)
0
(0.5)
+6
+5.5
  (0.5)
+2
+1.5
+0.5
0
+0.5
0
0
(0.5)
0
(0.5)
Total
CR
Lmt DB
Net P/L
Lmt DB
Net P/L
Lmt DB
Net P/L
Lmt DB
Net P/L
Lmt DB
Net P/L
Total
P/L
  +$150
  0
  0
  ($50)
  ($50)
ROI
P/DB
  Max+300%
  BEP
  BEP
  Max Loss
  Max Loss
 
Flat Strategy
   
Buy DB PUT Condor Spread
Buy 1 ITM    Put
Sell 1 ATM   Put
Sell 1 OTM   Put
Buy 1 FOTM Put
  • Limited Profit = +1.5 if stock >=28 & <=30
  • Limited Loss   =  (0.5) if stock <=26 & >= 32
Buy - DB Put Condor Spread – Profit & Loss Diagram
Market View
Bearish
▬▬o▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Flat Strategy
   
Iron Condor Spread
Buy 1 OTM Call
Sell 1 ATM Call
Sell 1 ATM Put
Buy 1 OTM Put
  • Buy 1X OTM Call Options 32 (Higher than Current Stock Price)
  • Sell 1X ATM  Call Options 30 (Near Current Stock Price)
  • Sell 1X ATM  Put Options 30 (Near Current Stock Price)
  • Buy 1X OTM  Put Options 28 (Much Lower than Current Stock Price)
  • Market is Flat. Stock is 30. Objective is to earn limited profit from Options Time Value.
  • We are selling Cr Call Spread & Cr Put Spread, both are ATM Spread

  • Buy 1 X OTM  Call Options Strike 32 @  (0.5)
  • Sell 1 X ATM  Call Options Strike 30 @  +1.0
  • Sell 1 X ATM   Put Options Strike 30 @  +1.0
  • Buy 1 X OTM  Put Options Strike 28 @  (0.5)       -> Tot CR = +1.

  • Max Loss         =  (1) (if stock < 28 and > 32)
  • Max Profit        =
  • Net Max Profit  = + 1 (if stock = 30)
  • ROI Max           = Profit / DB = 1 / 3 =  30% on expiry day
 
Initial Stock 30
Expiry Day
Stock = 30
Expiry Day
Stock = 31
Expiry Day
Stock = 27
Expiry Day
Stock = 20
Expiry Day
Stock = 40
Iron Condor Sprd
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
Buy 1 C 32@
(0.5)
0
(0.5)
0
(0.5)
0
(0.5)
0
(0.5)
+8
+7.5
Sell 1 C 30@
+1.0
0
+1.0
(1)
0
0
+1.0
0
+1.0
(10)
(9.0)
Sell 1 P 30@
+1.0
0
+1.0
0
+1.0
(1)
0
(10)
(9.0)
0
+1.0
Buy 1 P 28@
(0.5)
0
(0.5)
0
(0.5)
0
(0.5)
+8
+7.5
0
(0.5)
  +1.0
0
+1.0
(1)
0
(1)
0
0
(1.0)
0
(1.0)
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$100
  0
  0
  ($100)
  ($100)
ROI
P/DB
  Max+30%
  BEP
  BEP
  Max Loss
  Max Loss
 
Flat Strategy
   
Iron Condor Spread
Buy 1 OTM Call
Sell 1 ATM Call
Sell 1 ATM Put
Buy 1 OTM Put
  • Limited Profit = +1 if stock =30
  • Limited Loss   =  (1) if stock <=28 & >= 32
Iron Condor Spread – Profit & Loss Diagram
Market View
Bearish
▬▬o▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Bullish Strategy
Flat Strategy
 
DB Calendar CALL Spread
Buy 1 ATM Call - Long  Term
Sell 1 ATM Call - Short Term
  • Buy 1X ATM Call Options 30 (Near Current Stock Price - 3 Months)
  • Sell 1X ATM Call Options 30 (Near Current Stock Price - 1 Month)
  • Market is Flat. Stock is 30. Objective is to earn limited profit from Options Time Value.
  • We buy and sell ATM Call Options with different months, to get profit from shorter month Time Value
  • This is to cover the cost of longer term Call Options.

  • Buy 1 X ATM  Mar Call Options Strike 30 @  (3)
  • Sell 1 X ATM  Feb  Call Options Strike 30 @  +2.0       -> Tot DB = (1)

  • Max Loss         =  Db = (1)
  • Max Profit        =  
  • Net Max Profit  =  Variable
  • ROI Max           = Profit / DB = Variable
  • Best Example   = Stock at the End of January is still 30 & Call Options January is expire.
 
Initial Stock 30
Expiry Day Feb
Stock = 30
Expiry Day Feb
Stock = 31
Expiry Day Feb
Stock = 28
Expiry Day Feb
Stock = 20
Expiry Day Feb
Stock = 40
DB Calendar Call Sp
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
B 1*Mar C30
(3)
+2.5
(0.5)
+4
+1
+1
(2)
0
(3)
+12
+9
S 1*Feb C30
+2
0
+2
(1)
+1
0
+2
0
+2
(10)
(8)
  (1)
+2.5
+1.5
+3
+2
+1
0
0
(1.0)
+2
+1
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$150
  +$200
  0
  ($100)
  +$100
ROI
P/DB
          +/- BEP
  Max Loss
   
 
Bullish Strategy
Flat Strategy
 
DB Calendar CALL Spread
Buy 1 ATM Call - Long  Term
Sell 1 ATM Call - Short Term
  • Limited Profit = +Variable around  < +3
  • Limited Loss   =  DB = (1) if stock < 30 on expiry day
DB Calendar Call Spread – Profit & Loss Diagram
Market View
Bearish
▬▬o▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Bearish Strategy
Flat Strategy
 
DB Calendar PUT Spread
Buy 1 ATM Put  - Long  Term
Sell 1 ATM Put  - Short Term
  • Buy 1X ATM Put Options 30 (Near Current Stock Price - 3 Months)
  • Sell 1X ATM Put Options 30 (Near Current Stock Price - 1 Month)
  • Market is Flat. Stock is 30. Objective is to earn limited profit from Options Time Value.
  • We buy and sell ATM Call Options with different months, to get profit from shorter month Time Value
  • This is to cover the cost of longer term Put Options.

  • Buy 1 X ATM  Mar Put Options Strike 30 @  (3)
  • Sell 1 X ATM  Feb  Put Options Strike 30 @  +2.0       -> Tot DB = (1)

  • Max Loss         =  Db = (1)
  • Max Profit        =  
  • Net Max Profit  =  Variable
  • ROI Max           = Profit / DB = Variable
  • Best Example   = Stock at the End of January is still 30 & Put Options January is expire.
 
Initial Stock 30
Expiry Day Feb
Stock = 30
Expiry Day Feb
Stock = 29
Expiry Day Feb
Stock = 32
Expiry Day Feb
Stock = 40
Expiry Day Feb
Stock = 20
DB Calendar Put Sp
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
B 1*Mar P30
(3)
+2.5
(0.5)
+4
+1
+1
(2)
0
(3)
+12
+9
S 1*Feb P30
+2
0
+2
(1)
+1
0
+2
0
+2
(10)
(8)
  (1)
+2.5
+1.5
+3
+2
+1
0
0
(1.0)
+2
+1
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$150
  +$200
  0
  ($100)
  +$100
ROI
P/DB
          +/- BEP
  Max Loss
   
 
Bearish Strategy
Flat Strategy
 
DB Calendar PUT Spread
Buy 1 ATM Put  - Long  Term
Sell 1 ATM Put  - Short Term
  • Limited Profit = +Variable around  < +3
  • Limited Loss   =  DB = (1) if stock > 30 on expiry day
DB Calendar Put Spread – Profit & Loss Diagram
Market View
Bearish
▬▬o▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Bullish Strategy
Flat Strategy
 
DB Diagonal CALL Spread
Buy 1 ATM Call - Long  Term
Sell 1 OTM Call - Short Term
  • Buy 1X ATM Call Options 30 (Near Current Stock Price - 9 Months - 2 yr
    LEAPS)
  • Sell 1X OTM Call Options 32 (Higher than Current Stock Price - 1 Month)
  • Market is Flat / Slightly Bullish. Stock is 30. Objective is to earn limited profit from Options Time Value.
  • We buy and sell ATM Put Options with different months, to get profit from shorter month Time Value
  • This to cover the cost of longer Call / Call LEAPS options, until it becomes FREE (if possible)

  • Buy 1 X ATM  Dec Call Options Strike 30 @     (5)
  • Sell 1 X OTM  Feb Call Options Strike 32 @  +2.0       -> Tot DB = (3).

  • Max Loss         =  Db = (3)
  • Max Profit        =  
  • Net Max Profit  =  Variable
  • ROI Max           = Profit / DB = Variable
  • Best Example   = Stock at the End of January is still 30 & Call Options January is expire.
 
Initial Stock 30
Expiry Day Feb
Stock = 30
Expiry Day Feb
Stock = 31
Expiry Day Feb
Stock = 25
Expiry Feb
Stock = 20
Expiry Day Feb
Stock = 40
DB Diagonal Call Sp
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
B 1*Dec C30
(5)
+5
0
+6
+1
+2
(3)
+2
(3)
+14
+9
S 1*Feb C32
+2
0
+2
0
+2
0
+3
0
+2
(8)
(6)
  (3)
+5
+2
+6
+3
+2
0
+2
(1.0)
+6
+3
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$200
  +$300
  0
  ($100)
  +$300
ROI
P/DB
          +/- BEP
  Loss
   
 
Bullish Strategy
Flat Strategy
 
DB Diagonal CALL Spread
Buy 1 ATM Call - Long  Term
Sell 1 OTM Call - Short Term
  • Limited Profit = +Variable around  < +5
  • Limited Loss   =  DB = (1) if stock < 30 on expiry day of longer term Call
  • Note: We can sell Short Term Call every month to earn Premium.
DB Diagonal Call Spread – Profit & Loss Diagram
Market View
Bearish
▬▬▬o▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Bearish Strategy
Flat Strategy
 
DB Diagonal PUT Spread
Buy 1 ATM Put  - Long  
Time
Sell 1 OTM Put  -Short
Time
  • Buy 1X ATM Put Options 30 (Near Current Stock Price - 9 Months - 2 yr LEAPS)
  • Sell 1X OTM Put Options 28 (Lower than Current Stock Price - 1 Month)
  • Market is Flat / Bearish. Stock is 30. Objective is to earn limited profit from Options Time Value.
  • We buy ATM and sell OTM Put Options with different months, to get profit from shorter month Time Value
  • This to cover the cost of longer Put / Put LEAPS options, until it becomes FREE (if possible)

  • Buy 1 X ATM  Dec Put Options Strike 30 @    (5)
  • Sell 1 X OTM  Feb Put Options Strike 28 @  +2.0       -> Tot DB = (3)

  • Max Loss         =  Db = (1)
  • Max Profit        =  
  • Net Max Profit  =  Variable
  • ROI Max           = Profit / DB = Variable
  • Best Example   = Stock at the End of February is still 30 & Put Options February is expire.
 
Initial Stock 30
Expiry Day Feb
Stock = 30
Expiry Day Feb
Stock = 29
Expiry Day Feb
Stock = 35
Expiry Feb
Stock = 40
Expiry Day Feb
Stock = 20
DB Diagonal Put Sp
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
B 1*Dec P30
(5)
+5
0
+6
+1
+2
(3)
+2
(3)
+14
+9
S 1*Feb P28
+2
0
+2
0
+2
0
+3
0
+2
(8)
(6)
  (3)
+5
+2
+6
+3
+2
0
+2
(1.0)
+6
+3
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$200
  +$300
  0
  ($100)
  +$300
ROI
P/DB
          +/- BEP
  Loss
   
 
Bearish Strategy
Flat Strategy
 
DB Diagonal PUT Spread
Buy 1 ATM Put  - Long  Time
Sell 1 ATM Put  - Short Time
  • Limited Profit = +Variable around  < +5
  • Limited Loss   =  DB = (1) if stock > 30 on expiry day of longer term Put
  • Note: We can sell Short Term Put every month to earn Premium.
DB Diagonal Put Spread – Profit & Loss Diagram
Market View
Bearish
▬o▬▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
“Trading Futures instruments such as Index, Foreign exchange, Commodity, Bonds, or other high leverage instruments on margin carries a high level of risk,
and may not be suitable for all investors
. The high degree of leverage can work against you as well as for you. Before deciding to invest in these high
leverage instruments you should carefully consider your investment objectives, level of experience, and risk appetite.

The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to
lose.
You should be aware of all the trading risks associated with all of these instruments, and seek advice from an independent financial advisor if you
have any doubts.”