ABSTRACT:
Options offer elective systems for financial specialists to benefit from trading underlying securities. There are assortments of methodologies including diverse blends of options, underlying assets, and other derivatives. Fundamental Strategies includes purchasing calls, purchasing puts, selling covered calls and purchasing protective puts. There are points of interest to trading choices instead of underlying assets, for example, downside protection and leveraged returns, however there are additionally burdens like the necessity for upfront premium payment. Here in the report an endeavor is to make to build up the methodologies dispensing with those disadvantages through direct of nitty gritty investigation on Nifty Index. The premium expenses being pursued to be the major influencing factor of options market, an attempt is made to optimize the risk and return by developing the effective trading strategies for the option traders irrespective of market conditions with special reference to NIFTY Index. As a part of study suggestions are drawn for the investors to improve their trading strategies without undertaking great deal of risk. This paper analyses the use of different option trading strategies for optimizing risk and return in both bullish and bearish markets. A study on optimizing risk and return through developing effective index options trading strategies is an attempt to apply the theoretical knowledge’s application and exposure to practical world of derivative market.