14 New Ready-Made Strategies on Strategy Builder

Posted on by Anoop Singh

We are happy to announce that we have launched 14 new ready-made strategies on Strategy Builder!

These strategies are based on multiple user requests we have received from all of you. The newly launched strategies are:

  • Bullish: Long Calendar with Calls, Bull Condor, Bull Butterfly, Range Forward.
  • Bearish: Long Calendar with Puts, Bear Condor, Bear Butterfly, Risk Reversal.
  • Neutral: Double Plateau, Batman, Jade Lizard, Reverse Jade Lizard.
  • Others: Strip, Strap.

Let us look at each of these strategies in detail:

BULLISH

1. Long Calendar with calls:

This strategy can be used when you are moderately bullish about the market. This is currently available only for Nifty & Banknifty.

How is it generated?

We look for the strike nearest to 1% above the current spot for the expiry selected in the dropdown. This strike should be a multiple of 100 for Nifty and 500 for Bank Nifty. Sell that Call.

Buy the same strike Call for the Monthly expiry at least ten days away.

Example: Nifty is at 18618, 1% above = 18804, Nearest strike = 18800

Strategy = 18800 CE Sell Weekly and 18800 CE Buy Monthly.

The strategy looks like this:

2. Bull Condor:

This is a four-legged bullish strategy. It makes maximum profit when the stock moves up and expires between the strike prices of the two sold calls.

How is it generated?

The first Leg:- Buy Call – Calculate the price 1% above the spot. Round up or down to get the nearest strike. This is your first Buy Call strike.

For example, Nifty is 18000, 1% = 180 points. Round to 200 points, that is 4 strikes. We can call this strike_difference

Second leg:- Sell Call – 4 strikes (strike_difference) after leg 1

Third leg:- Sell Call – 4 strikes (strike_difference) after leg 2

Fourth leg:- Buy Call – 4 strikes (strike_difference) after leg 3

Example

  • Continuing with the same example mentioned above: NIFTY is 18618, 1% = 186 points. Round to 200 points, that is four strikes.
  • Your first leg will be to Buy the Call Option of the (Spot + strike_difference). In this case, it is 18800 CE Buy (18618+200).
  • Your second leg will be to Sell the Call Option, which is four strikes higher than Leg 1. In this case, it is 19000 CE Sell.
  • Your third leg will be to Sell the Call Option, which is four strikes higher than Leg 2. In this case, it is 19200 CE Sell.
  • Your fourth and final leg will be to Buy the Call Option, which is four strikes higher than Leg 3. In this case, it is 19400 CE Buy.

The strategy looks like this:

3. Bull Butterfly:

This is a three-legged bullish strategy. It makes maximum profit when the stock moves up and expires at the strike price of the sold call.

How is it generated?

First Leg:- Buy Call – Calculate the price 1% above the spot. For example, Nifty is 18000, 1% = 180 points. Round to 200 points, that is 4 strikes.

Round up or down to get the nearest strike. This is your first Buy Call strike.

Second leg:- Sell Call x 2 lots – 4 strikes (strike_difference) away from leg 1

Third leg:- Buy Call – 4 strikes (strike_difference) away from leg 2

Example

  • NIFTY is 18618, 1% = 186 points. Round to 200 points, that is four strikes. This is the strike_difference here.
  • Your first leg will be to Buy the Call Option of the above strike. In this case, it is 18800 CE Buy.
  • Your second leg will be to sell 2 Qty of the Call Option, which is four strikes higher than Leg 1. In this case, it is 19000 CE Sell.
  • Your third and final leg will be to Buy the Call Option, which is four strikes higher than Leg 2. In this case, it is 19200 CE Sell.

The Strategy looks like this:

4. Range Forward:

This is an almost zero-cost strategy. It is called zero cost because the premium you pay is mostly offset by the premium you receive. You are expecting the market to go up when you trade this.

How is it generated?

We buy a call with a strike nearest to 1% above the ATM.

Sell a put with a strike nearest to 1% below the ATM.

Example: NIFTY is 18618, 1% = 186 points. Round to 200 points. So, you need to Buy 18800 CE & Sell 18450 PE.

The strategy looks like this:

BEARISH

1. Long Calendar with Puts:

This strategy can be used when you are moderately bearish about the market. This is currently available only for Nifty & Bank Nifty.

How is it generated?

We find the strike nearest to 1% below the current spot for the expiry selected in the dropdown. This strike should be a multiple of 100 and 500 for Bank Nifty. Sell that Put.

Buy the same strike Put for the Monthy expiry at least ten days away.

Example: NIFTY at 18618, 1% below = 18431, Nearest strike = 18400

Strategy = 18400 Sell Weekly Put, 18400 Buy Monthly Put.

The strategy looks like this:

2. Bear Condor:

This is a four-legged bearish strategy. It makes maximum profit when the stock moves down and expires between the strike prices of the sold puts.

First Leg:- Buy Put – Calculate the price 1% below the spot. For example, Nifty is 18000, 1% = 180 points. Round to 200 points, that is 4 strikes.

Round up or down to get the nearest strike. This is your first Buy Put strike.

Second leg:- Sell Put – 4 strikes (strike_difference) below leg 1

Third leg:- Sell Put – 4 strikes (strike_difference) below leg 2

Fourth leg:- Buy Put – 4 strikes (strike_difference) below leg 3

Example:

  • NIFTY is 18618, 1% = 186 points. That is 18432 (18618-186), which makes the nearest strike 18450.
  • Your first leg will be to Buy the Put Option for the strike calculated above. In this case, it is 18450 PE Buy.
  • Your second leg will be to Sell the Put Option, which is four strikes below Leg 1. In this case, it is 18250 PE Sell.
  • Your third leg will be to Sell the Call Option, which is four strikes below Leg 2. In this case, it is 18050 PE Sell.
  • Your fourth and final leg will be to Buy the Put Option, which is four strikes below Leg 3. In this case, it is 17850 PE Buy.

The strategy looks like this:

3. Bear Butterfly:

This is a three-legged bearish strategy. It makes maximum profit when the stock moves down and expires at the strike price of the sold put.

How is it generated?

First Leg:- Buy Put – Calculate the price 1% below the spot. Round up or down to get the nearest strike. This is your first Buy Put strike.

Second leg:- Sell Put X 2 lots – 4 strikes (strike_difference) below leg 1

Third leg:- Buy Put – 4 strikes (strike_difference) below leg 2

Example

  • NIFTY is 18618, 1% = 186 points. That is 18430, which makes the nearest strike 18450.
  • Your first leg will be to Buy the Put Option for the strike calculated above. In this case, it is 18450 PE Buy.
  • Your second leg will be to sell 2 Qty of the Put Option, which is four strikes below Leg 1. In this case, it is 18250 PE Sell.
  • Your third and final leg will be to Buy the Put Option, which is four strikes below Leg 2. In this case, it is 18050 PE Buy.

The strategy looks like this:

4. Risk Reversal:

This is an almost zero-cost strategy. It is called zero cost because the premium you pay is mostly offset by the premium you receive. You are expecting the market to go down when you trade this.

You can use this for stocks ten days prior to expiry.

How is it generated?

Sell a call with a strike nearest to 1% above the ATM.

Buy a put with a strike nearest to 1% below the ATM.

Example: NIFTY is 18618, 1% = 186 points. Round to 200 points. So, you need to Sell 18800 CE & Buy 18450 PE.

The strategy looks like this:

NEUTRAL

1. Double Plateau:

The Double Plateau strategy is a combination of Bull Condor & Bear Condor. It can be used if you think the market will move up or down moderately.

The strategy looks something like this:

2. Batman Strategy:

The Batman Strategy combines a Call Ratio spread and a Put Ratio spread. It is a neutral strategy to be deployed if you think the market will be rangebound.

Call Ratio Spread

  • Find the strike nearest to 1% above the current spot for the expiry selected in the dropdown. This strike should be a multiple of 100 for NIFTY. No restriction on BANKNIFTY. Buy 1 CE of that.
  • Find the next strike above this. SELL 2 CE of that.
  • For example, If Nifty is at 18618, 1% = 186 points. When rounded off, the nearest strike above the spot is 18800. So, BUY 18800 CE x 1 & SELL 18850 CE x 2. This part of the strategy looks like this.

Put Ratio Spread

  • Find the strike nearest to 1% below the current spot for the expiry selected in the dropdown. This strike should be a multiple of 100 for NIFTY. No restriction on BANKNIFTY. Buy 1 PE of that.
  • Find the next strike below this. Sell 2 PE of that.
  • For example, If Nifty is at 18618, 1% = 186 points. When rounded off, the nearest strike below the spot is 18400. So, BUY 18400 PE x 1 & SELL 18350 PE x 2. This part of the strategy looks like this.

When combined, the strategy looks like Batman, hence the name 🙂

3. Jade Lizard:

This is a neutral to bullish strategy. It makes money if the market stays where it is or goes up a little. The strike should be a multiple of 100 for NIFTY. No restriction on BANKNIFTY.

How is it generated?

Sell a Put + Bear call Spread.

Sell a Put 1% below and a call 2% above the spot for the chosen expiry. This strike should be a multiple of 100 for NIFTY. No restriction on BANKNIFTY.

Buy the nearest call 0.75% above the sold call strike in the same expiry.

For example, if the spot is 18618, then you need to sell a 18400 PE (18618-186) and a 19000 CE (18618+372). You also need to buy 19150 CE (19000 +140)

The strategy looks like this:

4. Reverse Jade Lizard:

This is a neutral to bearish strategy. It makes money if the market stays where it is or goes down a little.

How is it generated?

Sell a call + Bull Put Spread.

Sell a Call 1% above and a Put 2% below the spot for the chosen expiry. This strike should be a multiple of 100 for NIFTY. No restriction on BANKNIFTY.

Buy the nearest put 0.75% below the sold put strike in the same expiry.

For example, if the spot is 18618, then you need to sell a 18800 CE (18618+186) and a 18200 CE (18618 -372). You also need to buy 18050 CE (18200 -140)

The strategy looks like this:

OTHERS

1. Strip:

In this strategy, you are expecting a big down move or a big up move. You also expect the down move to be more likely than the up move.

How is it generated?

Buy 2 ATM puts, Buy 1 ATM call.

The strategy looks like this:

2. Strap:

In this strategy, you are expecting a big down move or a big up move. You also expect the up move is more likely than the down move.

How is it generated?

  • Buy 2 ATM Calls, Buy 1 ATM put.

The strategy looks like this:

You can try out all these strategies from the Strategy Builder. Click below to try it now!

Do let us know your feedback and suggestions! We are always eager to listen to your feedback.

3 thoughts on “14 New Ready-Made Strategies on Strategy Builder”

  1. Bastin Varghese
    December 1, 2022 at 12:10 pm

    Many Thanks. Really informative.

    Reply
  2. Santosh Ghosh
    December 1, 2022 at 6:06 pm

    According to me its fabulous, something new and unique. I am sure it will become popular very soon.
    It’s worth your effort.

    Reply
  3. Jayalakshmi S
    December 2, 2022 at 9:24 am

    Very nice, congratulations. Appreciate the efforts Abid & the team taking to continuously innovate the platform and disrupt the way the industry operates. #Verifiedbysensibull & adding new strategies makes you stand ahead of other option trading platform.

    Best wishes, keep innovating.
    Cheers Jai

    Reply

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