What Trades to take if you are Bullish

You might have heard the experts say “Trade with a stop loss”, “Define your target profits” etc. When you trade stocks, it is quite difficult to set the profit targets & the stop loss simultaneously.

Options trading solves that!

If your research says go bullish, then we can deploy a strategy called Bullish Debit Spread. It automatically handles the max win and max loss.

Let us take the example of HDFC Bank. It is currently trading at Rs1470. As per this strategy, we buy a 1470 CALL and simultaneously sell a 1480 CALL.

The risk payoff chart looks like:-

The maximum profit = 2420

The maximum loss = 3080

Breakeven price = 1475.6

Deploying this strategy will give you clear visibility of what your max loss will be. The time duration of this strategy is 25th April, meaning you have close to 23 days within which HDFC Bank has to go above Rs1475 to generate profits.

You can deploy this strategy on any stock that has its “Futures & Options” segment activated.

The decision to go long on HDFC Bank should be the outcome of your research. There is no way an option strategy will make money if your research findings are wrong.

I am a registered financial advisor & would be happy to assist with your queries or doubts.