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Call Ratio Back Spread Option Trading Strategy | Share Market Free Course - YouTube
Channel: Pushkar Raj Thakur: Business Coach
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So hello everyone, welcome back to your channel.
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Well, today we are going to learn the Call
Ratio Back Spread Strategy.
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Well, you must be guessing the name of this
strategy is very complicated.
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But when you understand this strategy, then
you are going to have a lot of fun because
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when this strategy is used.
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I'm gonna tell you and by using this strategy,
you will also make a lot of money, so you
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will use it if you are learning it.
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If you are learning anything, then you will
understand it when you apply it practically.
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So now you see when we will use this strategy.
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First of all, we are learning those strategies
which will be useful for us to have a bullish view
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Our view of the market is bullish, we are
feeling that the market will go up, so we
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will use these strategies.
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You can use that strategy when my view is
bullish, but if the market does not go according
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to our view.
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We were feeling that the market would go up
but if the market goes down, if the market
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will be bearish, even then it will give you
Profit.
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So if it is bullish, then there is unlimited
profit there, any amount of profit can come
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if the market goes up.
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And if the market will fall, even then there
is profit but there is limited profit there.
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And you can lose only at one time, that market
does not move, Market will sideways or any
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small upward movement comes, where it is slightly
Bullish.
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If your view of the market is slightly Bullish,
then you will not use this strategy.
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You will use this strategy when you feel that
the market will bounce from here.
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Maybe for a long time you are feeling that
the market has fallen from here and you are
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feeling that the market will rise from here
and profit will come.
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Even if you turn out to be wrong, Markets
fall even after that.
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Even then you will earn money, but if the
market stays there and or if it rises a little,
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then you may get a loss in these two scenarios,
but this loss will be limited.
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Profits can be unlimited.
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Now you must be feeling that sir, you have
told this much, then you should also explain
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Now see, we are talking about calls here,
so here we are going to make a ratio in call options
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Now what does ratio means, ratio means like
1:2, it means that I sold one and I bought
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two, it is my ratio, the ratio can be 1:3
and ratio can be 1:4 or it can be 2:4.
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So these all are ratios.
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Now what we are going to do in the call Ratio
back Spread Strategy, we are going to make
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our strategy in the Ratio of 1:2, in which
we will sell the one option.
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We will sell the one call option, we sell
when we feel that the market is going to go down.
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But sir, now you just said that the market
will go up then, understand that we have been
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told when we have to sell.
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We have to sell when we feel that the market
will go down because who will buy the call
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option from us, he will buy because he is
feeling that the market will go up and if
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we sell then we will make a profit when the
market falls.
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Now this fall will act as a hedge for us because
we said that when the market falls, we will
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get limited profits because we have sold and
what happened if we bought the call.
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We buy calls when we think the market will
go up and we were thinking bullish, so we
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are buying two options here and which one
they would be, Now let's understand this.
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Here is what we are selling is at the money
options to make strategy and we will buy two
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out of the money options, now two means two
lots, or one lot.
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You can make ratios accordingly.
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This means you know that the lot of Nifty
is ₹ 50 for example, then you have sold
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50 lots here and you have bought 100, 50*2.
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And multiply whatever the price is, for example,
the premium is for ₹ 100, so here you are
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going to receive ₹ 5000 because you have
sold and your margin requirement will be more.
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And Suppose here we have a premium of ₹ 50
for the out of the money option, then it will
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go out of our pocket.
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I have given the example, then it can be more
or less.
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Now I show you this once on my computer screen,
then you will understand more and you will
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get more clarity, so now you have many options
for strategy builders.
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Now we are doing it on sensible, I told you
what I use.
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So you can log in very easily on Sensible
and whatever you are going to see on my screen,
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you are going to see on your screen too then
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So here already when you see here you click
then you will go to the strategy builder and
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as soon as you will go to strategy builder
and you will go to readymade strategies and
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you will from here call ratio Back Spread.
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Now this Back Spread is different.
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Don't get confused here, we are talking about
Call Ratio Back Spread, Call Ratio Spread
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Strategy is different here we are talking
about back Spread and we will learn Call Ratio
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Spread separately, we will talk about Call
Ratio Spread in this playlist, that what is
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it and what are its advantages and disadvantages.
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We will understand that too, then when you
will make a call ratio back Spread.
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We have talked that Nifty is moving here at
17100 so the money option is 17100, so we
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will sell its call option, at ₹130 we sold
it.
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So this ₹130 will be our Maximum profit
if the market falls from here.
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If it falls, it will happen that it is ₹ 130,
it will become zero, for those people who
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have bought call options from you, those people
have bought because they think the market
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will move from here.
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But if the market falls, then you will make
a profit.
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Second, you will make a profit when the market
rises, then look here for it.
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There was one lot here, I told you about the
Ratio, then the ratio is 1:2.
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Here you purchased the two lots, so here you
gave a premium, here the price is 44.85, so
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you have given it from your pocket.
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If the market falls, it will be zero.
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If it is zero then you will have a loss and
here you are selling two lots then this is
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your maximum loss and here is your profit,
so you are understanding here that if the
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market falls from here, then, how will the
profit be made, now you can do 132-88 here,
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then the profit will come here around ₹43,
so 43*50, So here you will get a profit of
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around ₹ 2000.
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If I look around here, then the calculation
is right, then no matter how much the market
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will fall, here you are looking at ₹ 2000,
that your profit will come, then no matter
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how much the market falls, even if it comes
at 15500, but almost all-around 2000, you
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will get profit.
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Now here I understand I said maximum profit
unlimited, so if the market rises from here,
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we are expecting our view here that the market
would grow.
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Here I am expecting from 17000 that the market
goes to 17500 or 17600 or if it goes to 18000,
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then if the market goes up assume it has come
to 18000, we show here that suppose almost
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we feel that Market came to 18000, So I will
make a profit of ₹28000 whereas my maximum
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loss as you see is the maximum loss around
is ₹7800.
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Now you feel that when will be the loss, I
said that you will be at loss only in two
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situations, that if the market does not move,
it remains sideways or there is a slight upward
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movement, then now we are seeing that the
market is around 17100 and our Profit is around 17100
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But if you see that
the market is increasing but it does not rise
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too much, there is a movement of 100-200 points,
so here till the expiry, we can select the
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date according to us that how long we are
expecting, then it will show you of different
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days, so if we talk about the expiry, then
you will have a loss of 5500 if the market
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comes to 17,250.
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But if we talk about today, on the day we
are recording this video, then today I will
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be in profit.
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So let's talk about expiry, it will be easy
to learn.
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So on expiry, you see that you can see the
maximum loss here of almost 7800.
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But if the market will move after it, here
a two breakeven are given, your breakeven
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is of 17457, so you are expecting a rally
of at least 300 point's minimum, only then
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you will use this strategy.
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So it is your breakeven, so if the market
increases by 500 points or 1000 points, then
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you are going to make unlimited profits or
if the market falls, then we are making profit
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then you use this strategy when your view
for the Market is clear and you can make money
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with this strategy.
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Because if you will see that if you have time
in the expiry, then you are going to earn
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profit by using this strategy most of the
time.
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But again you have to test it, so the fund
needed is already written for you that your
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requirement will be almost 23,900.
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Your Maximum loss can be 7800 and profit can
be unlimited and the probability of profit
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is 68% here.
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So all these things are clear in front of
you.
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Now if any strategy you are making then we
have to test it, and how many times I have
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told you, we have to test at least 100 times
and then you see your P&L statement, then
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how many times you got profit or loss.
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Suppose you have a loss for 20 times and you
got profit for 80 times, so you are going
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to make a lot of profits.
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How did you like the video, tell me in the
comments, if you have a question, then definitely ask
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Now here we were learning strategies regarding
if our view for the market is bullish, now
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from the next video, if your view is that
the market will fall, then which strategy
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to use, we are going to learn that.
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So, if you don't want to miss the next videos,
then If you are watching videos on Facebook
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follow and if you are watching on YouTube
then subscribe and click on the bell icon
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so that you won't miss the notification.
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Share, because people trade in new options
and they do not know about the strategies
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and people spend a lot of money to learn these
Strategies, so you are getting to learn for
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free and enjoying a lot.
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I hope you are enjoying it step by step.
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If you want to join the courses of the stock
market, then you can call on this number which
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is coming on the screen.
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We have professional trainer courses.
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You can join that too.
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Lastly, if you do not have a demat account
yet, there are links to leading brokers in
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the description and the comment box.
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You can go and open your demat account.
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There is a link to the sensible in the description
and comment box, you can create your Strategies
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on the sensible by login on it.
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So I hope you enjoyed this video, I will see
you in the next video till the time you share
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this video and go self-made
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