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Bear Call Spread Option Trading Strategy | Make Money from Share Market - YouTube
Channel: Pushkar Raj Thakur: Business Coach
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Well by now you have learned a lot about Bullish
Option Strategies.
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From today you are going to learn bearish
Option Strategies.
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Well the strategies, when your view is such
that the market will now go down from here,
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then which options strategies can we make.
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One by one we are going to cover these Strategies
Step by step in every video.
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Today the strategy we are going to talk about
is bear call spread.
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Now bear means that we are feeling that the
market will go down and Call means we are
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about to make a spread in the Call option.
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Spread means that we will buy and we will
sell well.
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Why buy and sell?
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By now you understand that we have already
defined how much maximum profit we will get
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and how much we will get maximum loss because
if you will trade in naked options then it
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depends that if you are buying then you can
make an unlimited profit, but you can lose
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all your money, so here when you are making
a strategy, you are defining that how much
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your profit and loss will be.
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Now, when you make a bear call spread strategy,
you make a bear call spread strategy when
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your view for the market is slightly bearish,
now slightly bearish means that you are not
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expecting that market will break too much.
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If you feel that the market will break too
much then you will make other strategies which
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you will learn in the next videos.
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But when your view is that the market will
break a little and will break slightly, then
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you are going to trade by making Bear Call
Spread, now what has to be done in this?
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Now I will take you directly to my computer,
so I will show you exactly what you have to do
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Till now we were using sensibull then you
can come on sensible, you will click on strategy
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builder, after that you will click on strategy
builder, then there is an option of readymade
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strategies, so here your view is Bearish.
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Today we are talking about Bear Call Spread.
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Then you can see Bear Call Spread here, so
in the Bear Call Spread, we said that you
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are going to buy and sell call options.
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Now pay attention, when we talked about Bull
Call Spread, then there is no difference between
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Bull Call Spread and Bear Call Spread, only
Bear Call Spread is opposite of Bull Call spread
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so if you will click on Bull Call
Spread
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then you buy At the Money and you sell Out
of the money, but when we are learning Bear
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Call Spread, we already made Bear Call Spread,
then we will talk about it.
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Now the Nifty is at almost 17175, then the
near ATM option is 17150, then we have to
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sell the At the Money option.
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So we receive a premium when we sell, so here
you will get a premium, now the premium is
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going on at ₹115, so you will receive ₹115,
and as time will pass, you will get benefits
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because of Theta decay.
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So if you will sell options, now when we sell
the call options, we sell the call Options,
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when we feel that market will fall, now if
we are expecting that Market will fall then
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we can sell this option here and here we bought
also, now we are buying call options.
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Then which call option we are buying, Out
of the Money Options, OTM options.
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So here OTM options are for 17350, its premium
is almost ₹36, So we bought it.
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By buying it, we are hedging our position,
so here if we didn't buy it, then we would
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have maximum profit here at 5760, but the
maximum loss could have been unlimited, so
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here we can lose any amount if the market
went up here, we sold it because we thought
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that the market would fall and if the market
went up, if suppose market comes at 18000
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then we will have a loss of 37000 rupees and
in selling we have requirement of funds of
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98000 approximately.
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But as you will make a spread, here your fund's
are needed only 29000, here your profit is
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reduced to 3675 because the OTM will be minus
here which you have purchased.
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So here, let's calculate it, the price is
at ₹ 106, so you are going to receive this
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on the maximum expiry date, from here you
can change your target also, that on which
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target date you are expecting.
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Suppose you are expecting it on expiry, then
we will do it here on expiry, then expiry graph will ome here.
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So see here, the price is at ₹106 which
you will get and here ₹33 will go from your
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pocket, then almost you are going to earn
₹ 73.
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If you multiply it by 50 then the figure of
approximately ₹3600 will come in front of
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you, so we can also calculate directly from
here.
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Here is your breakeven, now it has changed
because the Nifty has increased here.
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So At the money here is at 17200, we are going
to do this in the call options then 17200
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is At the money and 17400 is Out of the money.
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We are expecting that the Nifty will fall
here and will come to 17000 so if it falls
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from here, then we will make a profit.
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Now see here how we will get profit, breakeven
is around 17200, and if it increases by 74
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points even then I will not get a loss, after
that my loss will start.
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And this is what we are talking about on expiry
and here our probability of profit is 59%.
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But you have to correct the view of the market
first because what are you expecting from
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here if the market will fall or rise.
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Here if your view is not clear, only then
you will get lost, if your view is clear,
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you are going to make a profit, here your
maximum loss in this strategy is defined which
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is around 6200 or 6300.
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The risk to reward ratio is 0.59 and you also
get to know the funds needed clearly.
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Now no matter how much the market falls, your
profit is limited.
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Here you are getting a profit of around 3700,
now if the market comes to 16290 or if it
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comes to 15950, no matter how much the market
falls, here your profit is limited.
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And your loss is also limited, that no matter
how much the market rises, you already know the loss
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So what is the benefit of using these strategies?
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If I know and my view is correct then here
I know the Risk to Reward ratio and you can
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also see that chances of getting profit are
3700, and my loss will be 6200.
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And when you talk about the Risk to Reward
ratio then it means that profit can be more
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and loss can be less.
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But when you make a strategy, then you trade
according to the view, here the Risk to Reward
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ratio is not so good, but in most of the cases
when your view is correct by using options
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strategies, even if you earn less profit,
your chances of earning that profit are very high
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The probability of profit is high, so only
the view that should be correct, if your view
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is correct then you will earn profit by using
options strategies, then today you have learned
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bear call spread, in this, you have to sell
the At the money options and you have to buy
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the Out of the money options, by this our
spread has become, by which our profit and
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loss is already defined.
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That is it, if the view is correct then you
will earn money and if the view is not correct
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then you will make a loss.
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But if you will use these strategies, I have
told you, that you have to use them 100 times,
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even if you do paper trading and even if you
trade in real, but when we know that our loss
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will be limited.
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And when you will regularly correct your view,
then you will see that maybe you have profit
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and loss in the ratio of 70:30 then 30% is
your loss and your profit is 70%, and maybe
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You got profit 60% times but you get loss
40% times.
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Now if it happens then according to this strategy,
suppose you used this strategy every time
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then you can see that loss was more and profit
was less then if it will be 60:40, it will
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be a loss, but it will be 60:40 when your
view is not good.
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So you have to correct your view first, because
if you are considering the Risk to Reward
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ratio then we are understanding that this
strategy is not so good according to the Risk
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to Reward ratio, but this strategy is good
when we are expecting that the Market will
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break a little.
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Alright and it is in front of you that you
can get out at any time, we don't need to be
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out when we have a maximum loss if we are
feeling that the market is not going according
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to us, then we can get out earlier, so that
was about Bear Call Spread, in the next video
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we will learn another Bearish Option strategies,
so if you won't miss that video, then if you
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are watching this video on Facebook follow
it and if you are watching it on YouTube then
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subscribe it and I
will see you in the next video and if you
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have any questions than you can ask me.
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We have shown you how to build strategies
on sensibull, its link is also in the description
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and comments box if you have no demat account
then you can open it, there are also links
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in the description and the comments box.
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We have made a playlist of all these strategies,
so you can see the playlist in the name of
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options strategies there is also a link in
the I button fact at the end of the video
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you can full playlist, so you can watch every
video so that you can learn, so you have questions
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then ask in comments, and like this video
to give your love, I will see you in the next
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video till the time you go self-made
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