Best Call Ratio Back Spread Option Strategy in HINDUNILVR

How to trade options?

Signup to get my curated emails that tell what options are and how I'm trading them to generate my monthly cheque!


Spread the love

Hey, I hope you are doing well. Today I’ll share a Call Ratio Back Spread Option Strategy in HINDUNILVR for July 2022 expiry.

In the world of options trading, you will find many different strategies that can be used to generate income from your portfolio. Many traders use a combination of these strategies in order to increase their chances of success.

One strategy that is extremely popular right now is the call ratio back spread option strategy. This strategy can be used as a complement to other strategies you are using and can help you improve your overall trading results. Let’s take a closer look:

Before we jump to our Call Ratio Back Spread Option Strategy in HINDUNILVR, let us find out what is a Call Ratio Back Spread Option Strategy?

Call Ratio Back Spread Option Strategy

The Call Ratio Back Spread Option Strategy is a directional strategy where you will have a limited risk on the downside and an unlimited profit on the upper side. The formation of this strategy is as follows:

  • Sell ATM Call option (2 lots)
  • Buy OTM Call Option (1 lot)

Payoff chart of Call Ratio Back Spread Option Strategy

Call Ratio Back Spread Option Strategy - payoff chart

Greeks behaviour in this strategy is as follows:

.
  • Delta = Positive
  • Theta = Negative
  • Vega = Positive

Based on the Greeks, it’s clear that this is a bullish strategy with theta working against you. So, only if you are a strong bullish, should you use this strategy.

Call Ratio Back Spread Option Strategy in HINDUNULVR

Before we jump to the strategy let me share why I choose this strategy.

HINDUNILVR Chart today

If you look at the HINDUNILVR chart, you can see that HINDUNILVR has given a good breakout from its important resistance level i.e. 2493.45 which is also a 61.8% retracement level. On Friday we have seem fresh buying in this counter. and expecting that it should hit its upside target of 2650 in the coming sessions.

That’s the reason I’m bullish in this counter and wanted to trade in a directional strategy with a bullish view.

Call Ratio Back Spread Option Strategy in HINDUNILVR

Call Ratio Back Spread Option Strategy in HINDUNILVR

I choose this strategy because it’s having a limited risk on the downside and unlimited profit on the upside.

Here one thing you need to keep in mind that maximum loss in this strategy is around ₹48000 if you hold this strategy till expiry.

So I will hold this strategy only if I get my desirable movement in a week only. So Maximum loss I’m keeping is around ₹10000 for the strategy.

Means?

I will square off if not getting any upside movement or MTM loss is around ₹10000. Keep follow your risk management rules.

If you have any query related to this strategy, can type in the comment box.

I hope my articles are helping to trade with these options strategies. Which strategy you are using to generate your monthly paycheck? Do let me know in the comment box.


DISCLAIMER: – we are not a SEBI research analyst. Views posted here only for educational purposes. There is no liability whatsoever for any loss arising from the use of this product or its contents. This product is not a recommendation to buy or sell, but rather a guideline to interpreting specified analysis methods.  This information should only be used by investors and traders who are aware of the risk inherent in securities trading.


Spread the love

Join our list of 10K+ Successful Traders!

Get my Weekly Tips on How To Get Ahead!


Sachin Sival is the founder and CEO of Replete Equities, an options trading company that specializes in delta hedging. A self-taught trader, Sachin has a passion for volatility trading and stock trading. Sachin loves to hone his skills by reading up on new strategies and techniques as well as taking part in industry events. In addition to being a successful entrepreneur, Sachin also takes pleasure in photography - as a hobby.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.