Most Popular Options Strategies To Bank On

Options trading is one of the most aggressive ways to participate in the equity markets. But while the potential looks ‘awesome’, traders often falter while selecting the most appropriate options trading strategies that can give the best risk-adjusted returns. Geyatee Deshpande highlights some of the most popular options strategies for both the bearish and bullish view on the underlying

- Geyatee Deshpande

Options traders make for an important community in the equity markets. The reason is that options trading has begin to increase in popularity judging by the volumes on options contracts, whether index options or stock options. In India, around 80 per cent of derivatives trading happens in the options market and the rest in futures. Options are attractive derivatives instruments because they are cost-efficient, have high-profit potential, are less risky, and most importantly, there are multiple options strategies available that can be used according to market moods and swings. Many participants find options trading lucrative as there are multiple strategies available to exploit the market conditions profitably.

In other words, there is an options strategy if you have a bullish view on the markets. For a bearish view, there are different strategies that can be exploited and if your view is that of consolidation in the markets there are different sets of options trading strategies that can be adopted. This flexibility and variety of options strategies available is one of the most important factors why derivatives traders are attracted to options trading. And while it is true that derivatives traders are attracted to options trading owing to the variety in strategies available, this very availability of multiple strategies in options trading is also one of the reasons why options traders do not make money consistently in the markets.