Long Put
Buy a Put when Market is Bearish,Risk is Limited
and Reward is Unlimited. Increase in volatility helps
position, time decay is only hurt the position
Example:
Now Nifty@6345
Buy Nifty14FEB6100PE@30
If Nifty is BEARISH due to RBI rate hike and negative global cues
Nifty touched 6100 in Feb Series your profit would be
strike price plus premium paid
Profit is 6345-6100 = 245 + 30 = 275 x 50 = 13750
Risk is premium paid that is 30 x 50 = 1500
YOU CAN APPLY THIS OPTIONS STRATEGY ON STOCK OPTIONS ALSO