DSIJ Mindshare

The 2000 CE and PE together have a premium of Rs 28.55. This means that if the stock closes between Rs 1,976 - Rs 2033, the theta will melt like ice. In this condition, one can apply a short straddle by selling both 2000 strike CE and PE in this April series.   

What is a bull call spread strategy? A bull call spread strategy includes initiating one long call with a lower strike price and one short call with a higher strike price. Both call options have the same underlying stock as well as the same expiration date.

Many options traders do not look at Greeks, as very few resources are available to track them. It’s not usually preferred as it is difficult to understand them and build a proper strategy.  

‘Time is money’ is an age-old adage that can be precisely applied to options trading. Out of all Greek phrases, this is the most easily understandable, and anyone can easily calculate Theta (time value). At expiration, options have no time value. If one understands this time value theory, it is easy to build an expiration strategy. 

Dow Theory categorises three movements in the financial markets, which is known as the primary, secondary, and daily movements.