Advanced Option Trading Strategies

Hedging and Portfolio Protection Strategies

Options are not just for speculation; they are powerful tools for hedging existing stock portfolios. Hedging means protecting against potential losses due to adverse price moves.

Popular Hedging Techniques:

Protective Put: Buy a put option against long stock holdings to limit downside.

Collar Strategy: Hold stock, sell a call, and buy a put — ideal when you expect limited movement.

Index Options for Portfolio Hedge: Traders holding multiple stocks often hedge using Nifty or Bank Nifty puts instead of individual stock options.