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Option Trading Strategies - Vertical Spread - Bull Call Spread Strategy- Part 6

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Option Trading Strategies - Vertical Spread - Bull Call Spread Option Strategy - Part 6 This is the part 6 of Option Trading strategies video series. In this particular part, I have explained in detail about Bull Call Spread Option Strategy. Bull Call Spread is a type of Vertical Spread Option Strategy. Option trading for beginners remains my focus and this entire how to trade options video series is structured around the same. I have begun with the very basics of Bull Call Spread and explained the entire concept with help of an example. While doing the same, I have covered how Bull call spread remains a Debit Vertical spread options strategy. I have also explained the various conditions under which Bull Call Spread Option Strategy should be executed. Bull Call Spread Vertical Spread strategy is when a Option Trader Buys ATM Call Option and simultaneously Writes OTM Call Option of same underlying asset within the same Option expiry series. By doing so, Trader limits his both Profit and Loss potential and stands to benefit if underlying Price remains in a range or with mild bullish bias. Unlike Long Call Option Strategy, Bull Call Spread Option Strategy enables trader to remain Bullish while limiting the amount of loss he can undertake on positions. Profit is also capped though. Towards the end, I have also explained one variant of Bull Call Spread strategy and that is how a Trader can create Aggressive Bull Call spread strategy to profit more by limiting his risk. Link to Other Trading Options videos is given below, *********** Options Trading Strategies - Basics Part 1 - https://www.youtube.com/watch?v=mNHXZlKSUgo Options Trading Strategies - Long Call Strategy Part 2 - https://www.youtube.com/watch?v=WsLLG1h7Aiw Options Trading Strategies - Truth About Selling Options Part 3 - https://www.youtube.com/watch?v=RtnO7rw7wbA Options Trading Strategies - Covered Call Writing Part 4 - https://www.youtube.com/watch?v=N2Krdczwr_I Options Trading Strategies - Bank Nifty Covered Call Writing Part 5 - https://www.youtube.com/watch?v=wgCMUdhh-yM *********** Indian Stock Market Analysis Video is released every Friday 7 Pm IST Education Video on Markets is released every alternate Friday 7 Pm. *********** Thank You for Visiting Trade With Trend Channel ***********
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Text Comments (58)
ajay agrawal (1 month ago)
Hi What is the margin required to create vertical spread? Is it the max possible loss? I mean if I both buy and sell simultaneously, what is the amount of money required?
TradeWithTrend (1 month ago)
Margin will depend on your broker as well. But in general, if you create a Bull call spread by Buying 1 ATM NIFTY 10800 CE @ 75 and selling 1 OTM NIFTY 11100 CE @ 10, then the margin required would typically be , Span Margin र 40,800.00 Exposure Margin र 24,975.00 Value At Risk Margin र 0.00 Extreme Loss Margin र 0.00 Net Premium र 5,085.00 Total Amount Required र 65,775.00
Shekhar Upreti (2 months ago)
Part 5 is missing in sequence Or "Options Trading Strategies - Straddle Options Trading Strategy" at Sr No. 7 is Part 5?
TradeWithTrend (2 months ago)
Sure will do so. Thanks Shekhar
Shekhar Upreti (2 months ago)
I got it in your Description Box, the complete list is there. Actually, I had opened Options Related Videos from the Play-List Tab in that List it is not there So please add Part 5 on that list(In the PlayList), So that someone route through there got the complete sequence. Thank you very much for the Great Content and also for your prompt response!
TradeWithTrend (2 months ago)
It's not missing. That's a video on Bank Nifty options. Just search in the Videos section.
Vikash Kumar (3 months ago)
Great video bro...where is part 5 ? do theta and delta will matter for this strategy ? PLease share a link where we can check theta and gamma of stock
TradeWithTrend (3 months ago)
Sorry missed it Vikash. Who is your broker? Most brokers provide this data.
Vikash Kumar (3 months ago)
As per my understanding, theta and delta will matter because delta and theta will be different for both strike price.
Vikash Kumar (3 months ago)
+TradeWithTrend thanks bro....but u have answered only half of question
TradeWithTrend (3 months ago)
This is part 5 https://m.youtube.com/watch?v=wgCMUdhh-yM
TradeWithTrend (3 months ago)
Part 5 is example part where I have taken up Bank Nifty. Check the videos section.
Arup kumar das (3 months ago)
Sir,If I mildly bullish Which is best for intraday .....long call,short put or bull call spread...??? please reply with explaination... Thanks for your nice helpful videos.
TradeWithTrend (3 months ago)
Hi Arup, Intraday is a bit more complex. What I have explained is not for Intraday. Avoid applying this strategy for Intraday.
shibu purkayastha (3 months ago)
Hello Sir, I would like to seek an appointment to talk to you in person to understand about the various tricks of the trade related to trading. I would be highly grateful if you would provide me with your valuable time for the same. Thank you Regards Shibendu Kumar Purkayastha Mob: 8787454959
TradeWithTrend (3 months ago)
Dear Shibu I dont reside in India. You can contact me here or on Email if you doubts.
Kannapiran R.P (3 months ago)
Explained clearly thank you sir
TradeWithTrend (3 months ago)
Thank you. Watch how to apply it on Bank Nifty. https://www.youtube.com/watch?v=ekCc1NGNH2Q
Sridhar Singamsetty (3 months ago)
The overall idea or assumption is that we need to wait till expiry. If I am mildly bullish and want to benefit from it with in a +or- 7 sessions, is it good idea to go for a credit spread on puts (buying OTM PUT and selling ATM PUT). I hope this would give me some profit within few trading sessions, the reason for taking PUT credit spread is IV Skew!! What is your opinion on this idea?
TradeWithTrend (3 months ago)
Hi Sridhar, I will cover this in Puts Options series. Currently on Call Options and do not want to mix the two.
Vibhuti Jain (3 months ago)
guide me
Vibhuti Jain (3 months ago)
today's trade pidilite(f) long at 1138 and short call (option) .current price 1158 change in premium +7.7.values for delta 1.409 and theta .384 now what is the strategy for tommorow
Vibhuti Jain (3 months ago)
+TradeWithTrend thanks
TradeWithTrend (3 months ago)
No requirement as such. For each stock its different. Just look at Reliance Options or TCS or Tata Steel and then look at Pidilite. You would know then what I am referring too.
Vibhuti Jain (3 months ago)
minimum requirement for liquidity/ trade numbers
Vibhuti Jain (3 months ago)
+TradeWithTrend tomorrow should i try to squire off my position in option first
TradeWithTrend (3 months ago)
First requirement is to select Liquid Index or Stocks. Else you cannot apply any Option Strategy.
Rajiv kumar Jain (3 months ago)
Sir, Thanks for explanation with example about Bull call Spread option Strategy. I am new one, that's why a doubt, please clear that as we buy call option and sell it for profit booking, it will be same in selling call option also means if we sell then we have to buy. Moreover, If sell the call option so in the end of expiry automatically closed the position by broker or we have to close. please clear my doubt. Thanks with Regards
Rajiv kumar Jain (3 months ago)
+TradeWithTrend Thanks a Lots for clearing queries.
TradeWithTrend (3 months ago)
No Problem Rajiv. You can ask as many doubts as you want. In the end, if both are zero, then maximum you lose is the net Premium you paid for while creating this strategy. That is, (Premium Per Lot You Paid To Buy The ATM Call ) - ( Premium Per Lot You Receive When You Sold OTM Call)
Rajiv kumar Jain (3 months ago)
+TradeWithTrend Thanks for clearing my queries. But again one more question that if in the end of the expiry both will be zero and if we did not exercise to both, after that how much we have to loss. Please can you clear me. Sorry for disturbing. Actually your video is fully in English, so some point could not understand.
TradeWithTrend (3 months ago)
Hi Rajiv, Welcome to Trade With Trend. You are buying ATM Call Option and Selling OTM Call Option. Near Expiry, if ATM Call Option is in Profit, Sell it to realize the gains. Near Expiry, if Spot is below OTM Call Option Strike Price that you sold, it will expire worthless and you dont have to exercise it. If you are new and you don't yet understand implications of STT on Options, then its better to exercise both for Psychological comfort. I encourage new traders to close their positions till they become Professionals in Options. Stress is less while doing so. Let me know if you have any other doubt. ST
AJAY SAHA (3 months ago)
Sir, one kind request to you that if you want to spread maximum view of your research on youtube like India please start with Hindi version because maximum viewer of youtube in India. Please find uptrend viewership of Sunil Miglani and others bloggers.
TradeWithTrend (3 months ago)
Hi Ajay, Thanks for your suggestion. I'm aware of this. But I have my limitation in explaining in Hindi. Plus, I have to balance my Work & Family life. I wish I had more free time. I would have catered to Hindi and other Regional languages as well.
niraj jha (3 months ago)
Any video about ratio spread strategy
TradeWithTrend (3 months ago)
In the pipeline. Will be covered at a later stage.
Sandeep Verma (3 months ago)
Hi, thanks for this video. I want to ask if in this strategy is it mandatory to hold both legs till expiry. And other thing if one can close either of the leg if underline starts moving in either of the direction decisively for more gains. Thanks.
TradeWithTrend (3 months ago)
Hi Sandeep, Yes your understanding is correct. You can do this to gain further.
kkmb (3 months ago)
Thanks Mr. ST, I am a beginner in stock market and all your videos are very much helpful. I feel like entering into a seminar hall while watching your videos. I have few doubts in some of your old videos. Can i post the questions in the relevant videos? Thanks a lot
TradeWithTrend (3 months ago)
Thank you Kkmb Sure you can go ahead and post the queries. If possible, mention the time stamp where you have the doubt. Will be easier for me to answer.
Srinivasulu M (3 months ago)
Thanks for the video. Can we buy 1220 or 1230(for Bull call spread example) also to maximize our profits if we are anticipating bullish case. I understand that we pay more Premium here. Just a hypothetical question
Prabha S (3 months ago)
+Srinivasulu M In this particular case you will benefit.....Surely
TradeWithTrend (3 months ago)
Will let you know tomorrow once I have a look at the data.
Srinivasulu M (3 months ago)
+TradeWithTrend yes,we have 1160 Ce by n 1200 ce sold already i want to add 1230 CE
TradeWithTrend (3 months ago)
Thank you Srinivasulu Are you referring to Reliance as of CMP ?
swarup das (3 months ago)
U r great sir. Very easy explanation. Kon bolta hain YT pe achhi bate nehi hota? I must share to my frnds and colleagues. Keep it up sir. We r enriched greatly. Thanks
TradeWithTrend (3 months ago)
Thank you so much Swarup
Prabhakar Shenoy (3 months ago)
You have taught the subject very well, examples too. Thanks. 👌🏽🍒🙏🏻
TradeWithTrend (3 months ago)
Thank you Prabhakar
SHANKAR Subramanian (3 months ago)
Although Theoretically the profit seems good, it is only the max loss that is always correct. the profit never reaches the maximum level . so the ratio is not practical if you create the spread on the same day. eg. take the case of a bull spread 1100 and 1140, for nov, and if u take the position on the 26th oct, some difference could be seen only on 19th nov although the closing was 1168 for the nov series theoretical profit of 40 was never there even at the highest price diff on 29th Nov . here the profit was just 30 that is if you were quite nimble to get out of both the positions at the highest level otherwise it ranged between 0 and 24 between 19nov and 28 nov..
TradeWithTrend (3 months ago)
Very well written Shankar. Theory and Practical are two different things. That's a given in our Profession and broadly applies to everything we do in life. To be Successful, one needs skill. For skill, one needs practice. But, to start in the right direction, Theory is as important, if not the most important aspect. ST
joethim (3 months ago)
Good one, thanks for sharing the links as well!
TradeWithTrend (3 months ago)
Thank you Joethim
kushal Aggarwal (3 months ago)
Hi, thnx for the above. What's the primary difference between a bull call spread and iron butterfly. Like in the abv example I buy 1160ce x 1, sell 1200ce x 2 & buy 1240ce x 1.
TradeWithTrend (3 months ago)
Hi Kushal, Long Iron Butterfly is a four part Strategy. Along with Bull Call Spread it also has a Bear Put Spread. ST
TradeWithTrend (3 months ago)
Hi Guys, This is the part 6 of Option Trading strategies video series. In this particular part, I have explained in detail about Bull Call Spread Option Strategy. Bull Call Spread is a type of Vertical Spread Option Strategy. Option trading for beginners remains my focus and this entire how to trade options video series is structured around the same. I have begun with the very basics of Bull Call Spread and explained the entire concept with help of an example. While doing the same, I have covered how Bull call spread remains a Debit Vertical spread options strategy. I have also explained the various conditions under which Bull Call Spread Option Strategy should be executed. Let me know if you have any doubt. Will try to address it as soon as possible. Thanks for watching the video. ST

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