A trading strategy, which is being followed by many traders lately, is the ‘collar’, whereby a trader buys a put option (that allows him to sell at a pre-agreed price) of a security, and sells a call option for the same.
“One such strategy is to buy puts on the Nifty and sell calls on the individual stocks. This could work out well, provided the trader holds the underlying shares for the securities on which he is writing call options,” says Vikas Khemani, executive vice-president and co-head institutional equities at Edelweiss Capital.
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