LONG CALL

1-Jun TCS 1732.45

Option expiring on 28 june july 2050 strike
premium 6.75

End july ACTION G/L premium TOTAL

1950 DISCARD 0 -6.75 -6.75 OTM
1970 DISCARD 0 -6.75 -6.75 OTM
1990 DISCARD 0 -6.75 -6.75 OTM
2010 DISCARD 0 -6.75 -6.75 OTM
2030 DISCARD 0 -6.75 -6.75 OTM
2050 DISCARD 0 -6.75 -6.75 OTM
2070 EXERCISE 20 -6.75 13.25 ITM
2090 EXERCISE 40 -6.75 33.25 ITM
2110 EXERCISE 60 -6.75 53.25 ITM
2130 EXERCISE 80 -6.75 73.25 ITM Max loss premium
2150 EXERCISE 100 -6.75 93.25 ITM Max prof infinite

Analysis: The market is bullish and I expects the inc

right to buy the shares at a strike price of 2050 by pay
market went up more than strike price I exercised the
and I gained profit.
In this case the maxium loss is premium that I paid bu

SHORT CALL

1-Jun TCS 1732.45

Option expiring on 28 june july 2050 strike
premium 6.75

End july ACTION G/L premium TOTAL

1950 DISCARD 0 6.75 6.75
1970 DISCARD 0 6.75 6.75
1990 DISCARD 0 6.75 6.75
2010 DISCARD 0 6.75 6.75
2030 DISCARD 0 6.75 6.75
2050 DISCARD 0 6.75 6.75
2070 EXERCISE AGAI -20 6.75 -13.25
2090 EXERCISE AGAI -40 6.75 -33.25
2110 EXERCISE AGAI -60 6.75 -53.25
2130 EXERCISE AGAI -80 6.75 -73.25
2150 EXERCISE AGAI -100 6.75 -93.25
 Max. loss infinite
Max. gain premium 6.75

Analysis: The market is bearish and I expects

the right to sell the security by taking the prem
strike price the deal will be discarded by write
with a profit of only premium. And when the p
being done against me and I occured huge los
In this case the maxium profit is premium that

COVERED CALL WRITING

1-Jun TCS 1732.45

Option expiring on 26 july strike 1725

call 88.65
put 61.45

end july price port value call payof prem total

1650 1650 0 88.65 1738.65
1670 1670 0 88.65 1758.65
1690 1690 0 88.65 1778.65
1710 1710 0 88.65 1798.65
1730 1730 0 88.65 1818.65
1750 1750 -25 88.65 1813.65
1770 1770 -45 88.65 1813.65
1790 1790 -65 88.65 1813.65
1810 1810 -85 88.65 1813.65
1830 1830 -105 88.65 1813.65
 TCS

LONG CALL
100

80

60

40

20

6.75 0
1950 1970 1990 2010 2030 2050 2070 2090 2110 2130 2150
-20

h and I expects the incline in the share price of TCS. So, I'm taking the
e price of 2050 by paying a premium of rupees 6.75. When the
ke price I exercised the deal and the situation is In the money for me
premium that I paid but maximum gain is infinte.

SHORT CALL
20

0
1950 1970 1990 2010 2030 2050 2070 2090 2110 2130 2150
-20

-40

-60

-80

-100
s bearish and I expects the decline in the share price of TCS. So, I'm giving someone
rity by taking the premium of 6.75. When the market had went down i.e. less than
be discarded by writer of the deal (to whom I gave the right to sell), so I end up
mium. And when the price went up i.e. more than the strike price the exercising was
nd I occured huge loss.
profit is premium that I'm taking but maximum loss is infinte.
 LONG PUT T
1-Jun TCS 1732.45
Option expiring on 28 junjuly 1550 strike
premium 11.4

End july ACTION G/L premium TOTAL

1450 EXERCISE 100 -11.4 88.6
1470 EXERCISE 80 -11.4 68.6
1490 EXERCISE 60 -11.4 48.6
1510 EXERCISE 40 -11.4 28.6
1530 EXERCISE 20 -11.4 8.6
1550 DISCARD 0 -11.4 -11.4
1570 DISCARD 0 -11.4 -11.4
1590 DISCARD 0 -11.4 -11.4
1610 DISCARD 0 -11.4 -11.4
1630 DISCARD 0 -11.4 -11.4 Max loss premium 6.75
1650 DISCARD 0 -11.4 -11.4 Max prof infinite

Analysis: The market is bearish so, I expects th

right to sell the shares at a strike price of 1550 b
market went down i.e. less than strike price I ex
me and I'll gain profit. When the market went u
that I paid.

In this case the maxium loss is premium that I p

SHORT PUT

1-Jun TCS 1732.45

Option expiring on 28 june 1550 strike
premium 11.4

End july ACTION G/L premium TOTAL

1450 ex. Against -100 11.4 -88.6
1470 ex. Against -80 11.4 -68.6
1490 ex. Against -60 11.4 -48.6
1510 ex. Against -40 11.4 -28.6
1530 ex. Against -20 11.4 -8.6
1550 ex. Against 0 11.4 11.4
1570 discarded 0 11.4 11.4
1590 discarded 0 11.4 11.4
1610 discarded 0 11.4 11.4 Max. loss INFINITE
1630 discarded 0 11.4 11.4 Max. prof PREMIUM 11.4
1650 discarded 0 11.4 11.4

Analysis: The market is bullish so, I expects an incline in

right to sell by taking a premium of rupees 11.4. When the
(writer of the deal) and I end up with the profit of only premium
against me and I occured huge loss.
In this case the maxium loss is infinite and the maxium gai

LONG STOCK

1-Jun TCS Spot 1732.45

END JULY PAYOFF

1630 -102.45 LONG STOC
1660 -72.45 250
1690 -42.45 200
1720 -12.45 150
1750 17.55 100
1780 47.55 50
1810 77.55 0
1840 107.55 1630 1660 1690 1720 1750 1780
-50
1870 137.55
-100
1900 167.55
-150
1930 197.55

BOND PAYOFF

1-Jun TCS Spot 1732.45

END JULY BOND PAYOFF

1630 50
1660 50 BON
60
1690 50
50

40

30
 BON
60

1720 50 50

1750 50 40
1780 50
30
1810 50
20
1840 50
1870 50 10
1900 50 0
1930 50 1630 1660 1690 1720 1750
 TCS

LONG PUT
100

80

60

40

20

0
1450 1470 1490 1510 1530 1550 1570 1590 1610 1630 1650
-20

market is bearish so, I expects the decline in the share price of TCS. So, I'm taking the
hares at a strike price of 1550 by paying a premium of rupees 11.4. When the
wn i.e. less than strike price I exercised the deal and the situation is In the money for
rofit. When the market went up I discarded the deal and occured a loss of premium

maxium loss is premium that I paid but maximum gain is infinte.

Chart Title
20

0
1450 1470 1490 1510 1530 1550 1570 1590 1610 1630 1650
-20

-40

-60

-80

-100
 -20

-40

-60

-80

-100

llish so, I expects an incline in the share price of TCS. So, I'm giving someone the
mium of rupees 11.4. When the market went up the deal was being discarded by other side
p with the profit of only premium. When the market went down the deal is exercised
ge loss.
is infinite and the maxium gain is premium that I'm taking

LONG STOCK

60 1690 1720 1750 1780 1810 1840 1870 1900 1930

BOND PAYOFF
 BOND PAYOFF

1660 1690 1720 1750 1780 1810 1840 1870 1900 1930
1630 1650
 TC
BULL SPREAD

Bull spread with calls

1-Jun TCS 1732.45 Buy in the money call

Option expiring on 28 july sell out of the money call

strike call put buy 1700

1675 117.8 41.2 sell 1750
1700 102.6 50.7
1725 88.65 61.45
1750 76.05 73.55
1775 64.75 87

end july call 1700 call 1750 premium total

1625 0 0 -26.55 -26.55
1650 0 0 -26.55 -26.55 1700/1750 1700/1775 1675/1725
1675 0 0 -26.55 -26.55 max. gain 23.45 37.15 20.85
1700 0 0 -26.55 -26.55 max. loss 26.55 37.85 29.15
1725 25 0 -26.55 -1.55
1750 50 0 -26.55 23.45
1775 75 -25 -26.55 23.45
1800 100 -50 -26.55 23.45 Max gain diff. in strike price- premium
1825 125 -75 -26.55 23.45 Max loss premium 26.55

Analysis: I'm a Option trader and currently the market is bullish. So, I e
asset. I'm a moderator risk taker and I want good profit. So, I write, buy I
call. I'm purchasing and writing an equal number of options on the same unde
date, however, the strike prices are different as 1750 and 1700.
In this case my maxium loss is premium but maximum profit is infinite. T

Bull spread with puts

buy out of money put

 sell in the money put

1-Jun TCS 1732.45

Option expiring on 28 july

strike call put

1675 117.8 41.2
1700 102.6 50.7
1725 88.65 61.45
1750 76.05 73.55
1775 64.75 87

end july put 1700 put 1750 premium total

1625 75 -125 22.85 -27.15 1700/1750 1700/1775 1675/1725
1650 50 -100 22.85 -27.15 max gain 22.85 36.3 20.25
1675 25 -75 22.85 -27.15 max loss 27.15 38.7 29.75
1700 0 -50 22.85 -27.15
1725 0 -25 22.85 -2.15
1750 0 0 22.85 22.85
1775 0 0 22.85 22.85 Max gain premium 22.85
1800 0 0 22.85 22.85 Max loss diff. between strike-premium
1825 0 0 22.85 22.85
Analysis: I'm a Option trader and currently the market is bulli
moderator risk taker and I want good profit. So, I write, buy In t
purchasing one put option at 1700 while simultaneously writing anot
these two resulted me a income from the premium received.
IN this case my maxium loss is infinite but maximum that I can g

BEAR SPREAD

Bear spread with calls

1-Jun TCS 1732.45 buy out of the money call

Option expiring on 28july sell in the money call

strike call put

1675 117.8 41.2
1700 102.6 50.7
1725 88.65 61.45
1750 76.05 73.55
 1775 64.75 87

end july call 1700 call 1750 prem total

1625 0 0 26.55 26.55
1650 0 0 26.55 26.55
1675 0 0 26.55 26.55 1700/1750 1700/1775 1675/1725
1700 0 0 26.55 26.55 max. gain 26.55 37.85 29.15
1725 -25 0 26.55 1.55 max. loss 23.45 37.15 20.85
1750 -50 0 26.55 -23.45
1775 -75 25 26.55 -23.45
1800 -100 50 26.55 -23.45
1825 -125 75 26.55 -23.45
Max profitpremium 26.55
Max loss diff. in strike-premium

Analysis: I'm a option trader and currently the market is bearish. S

moderator risk taker and I want good profit. So I'm purchasing call op
calls with the same expiration date, but at a lower strike price. The maxim
received in starting of the trade.
In this case my maxium loss is infinite but maximum that I can gain i

Bear Spread with puts

1-Jun TCS 1732.45 buy in the money put

Option expiring on 28july sell out of the money put

strike call put

1675 117.8 41.2
1700 102.6 50.7
1725 88.65 61.45
1750 76.05 73.55
1775 64.75 87

end july put 1700 put 1750 premium total

1625 -75 125 -22.85 27.15
1650 -50 100 -22.85 27.15
1675 -25 75 -22.85 27.15 1700/1750 1700/1775 1675/1725
1700 0 50 -22.85 27.15 max. gain 27.15 38.7 29.75
1725 0 25 -22.85 2.15 max. loss 22.85 36.3 20.25
1750 0 0 -22.85 -22.85
1775 0 0 -22.85 -22.85
1800 0 0 -22.85 -22.85
1825 0 0 -22.85 -22.85
Max profitdiff. in strikes-premium
Max loss premium 22.85

Analysis: I'm a Option trader and currently the market is bullish. So, I expects a in
risk taker and I want good profit. So, I write, buy In the money call and sell out the
price of 1750 also selling the same number of puts with the same expiration date at a 170
In this case my maxium loss is premium but maximum profit is infinite. Thanks to B
 TCS

BULL SPREAD WITH CALLS

30

20
1675/1750
10
33.25
41.75 0
1625 1650 1675 1700 1725 1750 1775 1800 1825
-10

-20

-30

market is bullish. So, I expects a incline in the price of underlying

profit. So, I write, buy In the money call and sell out the money
ptions on the same underlying security, with the same expiration
and 1700.
mum profit is infinite. Thanks to Bull spread with calls !!
 Chart Title
30

20

10
1675/1750
32.35 0
1625 1650 1675 1700 1725 1750 1775 1800 1825
42.65
-10

-20

-30

ntly the market is bullish. So, I expects a incline in the price of underlying asset. I'm a
ofit. So, I write, buy In the buy out of money put and sell in the money put. I'm
multaneously writing another put option at higher strike price of 1750. The combination of
remium received.
t maximum that I can gain is premium. Thanks to Bull spread with puts!!

Marekt is steady
but slightly bearish
do not want to take high risks
 Bear spread with calls
30

1675/1750 20
41.75 10
33.25
0
1625 1650 1675 1700 1725 1750 1775 1800 1825
-10

-20

-30

the market is bearish. So, I expects a decline in the price of underlying asset. I'm a
So I'm purchasing call options at a specific strike price while also selling the same number of
r strike price. The maximum profit that I can make using this strategy is equal to the premium

ximum that I can gain is premium. Thanks to Bull spread with puts!!

Marekt is steady
but slightly bearish
do not want to take high risks

Bear spread with puts

40
1675/1750
30
42.65
20
10
0
1625 1650 1675 1700 1725 1750 1775 1800 1825
-10
 Bear spread with puts
40
30
20
32.35
10
0
1625 1650 1675 1700 1725 1750 1775 1800 1825
-10
-20
-30

bullish. So, I expects a incline in the price of underlying asset. I'm a moderator
ney call and sell out the money call. I'm purchasing put options at a strike
e expiration date at a 1700.
t is infinite. Thanks to Bull spread with calls !!
 Butterfly Spread
Market is steady and we do not want to take big risk
1-Jun TCS 1732.45
Option expiring on 28 july

strike call put

1675 117.8 41.2
1700 102.6 50.7 Buy ITM call 1700
1725 88.65 61.45 Buy OTM call 1750
1750 76.05 73.55 Sell 2 numbers of at the money call
1775 64.75 87

BUTT
End july call 1700 call 1750 call 1725 premium total
30
1625 0 0 0 -1.35 -1.35
1650 0 0 0 -1.35 -1.35 25
1675 0 0 0 -1.35 -1.35 20
1700 0 0 0 -1.35 -1.35
15
1725 25 0 0 -1.35 23.65
1750 50 0 -50 -1.35 -1.35 10
1775 75 25 -100 -1.35 -1.35 5
1800 100 50 -150 -1.35 -1.35
0
1825 125 75 -200 -1.35 -1.35 1625 1650 1675 1700 1
1850 150 100 -250 -1.35 -1.35 -5

Max . Profit diff. in strike/2 -premium

Max. loss premium

Analysis: I'm a Option trader and currently the market is steady and I do
In this condition I'll use four option contracts with the same expiration i.e
1700, 1725 and 1750. I'm selling two option contracts at the strike price o
strike price of 1700 and buying another option contract at a higher strike

In this scenarion the maximum loss is premium and maxium profit is diffe

Box Spread

1-Jun TCS 1732.45 Combination of

Option expiring on 28 july Bull spread with calls
 strike call put AND
1675 117.8 41.2
1700 102.6 50.7 Bear spread with puts
1725 88.65 61.45
1750 76.05 73.55
1775 64.75 87 buy call 1700 sell call
buy put 1750 sell put
premium -49.4

End july call 1700 call 1750 put 1700 put 1750 premium Total
1625 0 0 -75 125 -49.4 0.6
1650 0 0 -50 100 -49.4 0.6
1675 0 0 -25 75 -49.4 0.6 Always profit
1700 0 0 0 50 -49.4 0.6
1725 25 0 0 25 -49.4 0.6
1750 50 0 0 0 -49.4 0.6
1775 75 -25 0 0 -49.4 0.6
1800 100 -50 0 0 -49.4 0.6
1825 125 -75 0 0 -49.4 0.6
1850 150 -100 0 0 -49.4 0.6

Analysis: I'm a Option trader and currently the market is steady

the combination of Bull spread with calls and Bear spread with pu
This strategy always gives a fixed profit to the trader without any
Spread Strategy!!
 TCS
take big risk

1725

BUTTERFLY SPREAD

50 1675 1700 1725 1750 1775 1800 1825 1850

1700/1775 1675/1750
24.05 27.55 54.05
0.95 9.95 -16.55

e market is steady and I don't want to take big risk.

th the same expiration i.e. end july but three different strike prices of
ntracts at the strike price of 1725, buying one option contract at a lower
contract at a higher strike price of 1750.

and maxium profit is difference of average strike prices and premium.

Buy in the money call

 sell out of the money put

buy in the money put

sell out of the money put

1700
1750

0.6

ently the market is steady and I don't want to take risk at all. This strategy is
ls and Bear spread with puts.
to the trader without any loss. So as me a profit of 0.6 always. Thanks to Box
 STRADDLE
LONG STRADDLE

1-Jun TCS 1732.45

Option expiring on 28 ju july

strike call put

1675 117.8 41.2
1700 102.6 50.7
1725 88.65 61.45
1750 76.05 73.55
1775 64.75 87

120
end jul call 1725 put 1725 prem total
100
1600 0 125 -27.2 97.8
80
1625 0 100 -27.2 72.8
60
1650 0 75 -27.2 47.8 Above 1752.2
40
1675 0 50 -27.2 22.8 Below 1697.8
1700 0 25 -27.2 -2.2 20

1725 0 0 -27.2 -27.2 0

1550 1600
1750 25 0 -27.2 -2.2 -20
1775 50 0 -27.2 22.8 -40
1800 75 0 -27.2 47.8
1825 100 0 -27.2 72.8
1825 100 0 -27.2 72.8

SHORT STRADDLE

1-Jun TCS 1732.45

Option expiring on 28 ju july

strike call put

1675 117.8 41.2
1700 102.6 50.7
1725 88.65 61.45
1750 76.05 73.55 SHORT STRAD
1775 64.75 87 160

140

120
end jul call 1725 put 1725 prem total
1600 0 -125 150.1 25.1 100
1625 0 -100 150.1 50.1 80

60

40
 120

100

80
1650 0 -75 150.1 75.1
60
1675 0 -50 150.1 100.1
1700 0 -25 150.1 125.1 40
1725 0 0 150.1 150.1 20
1750 -25 0 150.1 125.1
0
1775 -50 0 150.1 100.1 1600 1625 1650 1675 1700 1725 1
1800 -75 0 150.1 75.1
1825 -100 0 150.1 50.1
1850 -125 0 150.1 25.1

STRANGLE
LONG STRANGLE

1-Jun TCS 1732.45

Option expiring on 28 ju july

strike call put

1675 117.8 41.2
1700 102.6 50.7
1725 88.65 61.45
1750 76.05 73.55
1775 64.75 87

End July call 1750 put 1700 premium total 400

1500 0 200 150.1 350.1
350
1550 0 150 150.1 300.1
1600 0 100 150.1 250.1 300

1650 0 50 150.1 200.1 250

1700 0 0 150.1 150.1 200
1750 0 0 150.1 150.1
150
1800 50 0 150.1 200.1
1850 100 0 150.1 250.1 100

1900 150 0 150.1 300.1 50

1950 200 0 150.1 350.1 0
1500 1550 1600 1650

SHORT STRANGLE

1-Jun TCS 1732.45

Option expiring on 28 ju july
 strike call put
1675 117.8 41.2
1700 102.6 50.7
1725 88.65 61.45
1750 76.05 73.55
1775 64.75 87

End July call 1750 put 1700 premium total SHO

200
1500 0 -200 149.6 -50.4
1550 0 -150 149.6 -0.4 150
1600 0 -100 149.6 49.6
100
1650 0 -50 149.6 99.6
1700 0 0 149.6 149.6 50
1750 0 0 149.6 149.6
1800 -50 0 149.6 99.6 0
1500 1550 1600 1650
1850 -100 0 149.6 49.6
-50
1900 -150 0 149.6 -0.4
1950 -200 0 149.6 -50.4 -100

LOWER LIMIT

STOCK 1732.45 strike 1725

Lower limit of call prices

can not be lower than Stock price- PV of strike

PV of strike 1710.68

CALL PRICE cannot be lower tha1732.45-1710.68

21.77
 TCS

LONG STRADDLE
120
100
80
60
40
20
0
1550 1600 1650 1700 1750 1800 1850
-20
-40

SHORT STRADDLE
5 1650 1675 1700 1725 1750 1775 1800 1825 1850

STRANGLE

LONG STRANGLE
400

350

300

250

200

150

100

50

0
1500 1550 1600 1650 1700 1750 1800 1850 1900 1950
 SHORT STRANGLE

00 1550 1600 1650 1700 1750 1800 1850 1900 1950

rf 5%
expiry 2 months
 MIMIC
1-Jun TCS 1732.45 call 88.65
Option expiring on 28 july 1725 strike put 61.25

price end july call payof put pof premium total pof
1625 0 -100 -27.4 -127.4
1650 0 -75 -27.4 -102.4
1675 0 -50 -27.4 -77.4
1700 0 -25 -27.4 -52.4
1725 0 0 -27.4 -27.4 Mimic:
1750 25 0 -27.4 -2.4
1775 50 0 -27.4 22.6
1800 75 0 -27.4 47.6
1825 100 0 -27.4 72.6
1850 125 0 -27.4 97.6

SYNTHETIC
1-Jun TCS 1732.45 call 88.65
Option expiring on 28 july 1725 strike put 61.25
buys a call and sells a put
price end july call payof put pof bond pre. premium total pof
1625 0 -100 27.4 -27.4 -100
1650 0 -75 27.4 -27.4 -75
1675 0 -50 27.4 -27.4 -50
1700 0 -25 27.4 -27.4 -25 Synthetic: Initial investmen
1725 0 0 27.4 -27.4 0
1750 25 0 27.4 -27.4 25
1775 50 0 27.4 -27.4 50
1800 75 0 27.4 -27.4 75
1825 100 0 27.4 -27.4 100

PUT CALL PARITY

stock 1732.45 strike 1725 calls and puts

risky asset
safe asset

Final price 1700 1725 1750

risky asset 1700 1725 1750
safe asset 1725 1725 1725
 call 0 0 1700
put 1700 0 0
ALWAYS
RISKT ASSET +PUT equal SAFE ASSET + CALL
put+stock equal PV of strike + call

To find CALL premium

Today 1-Jun
Expiry 26-Jul Hero Motorco 1732.45

Strike price 1725 PE 61.25

Find the CALL PRICE if RF is 5%

pv of strike 1712.05

CALL equals put+stock - pv of strike

61.25+1732.455-1712.05

81.65 88.65 (as per market)

 TCS

you are trying to mimic another asset

Initial investment is different but final paymet is more or less similar

ll and sells a put

Synthetic: Initial investment and finl payment both are more or less similar
SAFE ASSET + CALL
PV of strike + call

PUT premium is given. We had to find the value of call

premium by taking risk free rate of 5%. The difference in
the call premium as per the market and what I got is
may be because the difference in risk free rate taken
and market volatility could be another factor as well.