Part 4 Learn Institutional Trading

Intermediate Option Strategies

Straddle – Buy Call + Buy Put (same strike/expiry). Best for high volatility.

Strangle – Buy OTM Call + Buy OTM Put. Cheaper than straddle.

Bull Call Spread – Buy lower strike call + Sell higher strike call.

Bear Put Spread – Buy higher strike put + Sell lower strike put.

Advanced Option Strategies

Iron Condor – Sell OTM call + OTM put, hedge with farther strikes. Good for sideways market.

Butterfly Spread – Combination of multiple calls/puts to profit from low volatility.

Calendar Spread – Buy long-term option, sell short-term option (same strike).

Ratio Spread – Sell multiple options against fewer long options.

Hedging with Options

Options aren’t just for speculation; they’re powerful hedging tools.

Portfolio Hedge: If you own a basket of stocks, buying index puts protects against a market crash.

Currency Hedge: Importers/exporters use currency options to lock exchange rates.

Commodity Hedge: Farmers hedge crops using options to lock minimum prices.