chapter 7

Derivative Option Strategies

Learning Objectives

After reading this chapter, you will be able to understand

  • different option strategies
  • how to cover risk exposure of firms
Chapter Outline

7.1 Introduction

7.2 Synthetic Position

7.3 Covered Position

7.4 Spread

7.5 Combo

7.6 Straddle

7.7 Strangle

7.8 Butterfly

7.9 Condor

7.10 Strips

7.11 Straps

7.12 Collar

7.13 Calendar Spread

THE SITUATION

A mutual fund has a ₹ 200 crore equity-based open-ended scheme. When the stock market is facing bearish conditions, what strategies will help the mutual fund to cover its risk exposure in equity markets? Should this strategy have a long-term orientation? Should it be designed in such a way that it avoids volatile movements in markets or expected ...

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