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How to use Options for Hedging?

 Imagine if you were holders of the shares of Reliance industries limited(RIL) and you have a bullish view on the share price of same over the long term. However, there is some current news that are doing rounds in the market and which are likely to have a negative impact on the share price of RIL over the short term.

How so can you use your existing shares to hedge your losses? We will try and answer this question here. In this post, we’ll cover how does one use options to hedge his existing positions. However, before we look into the Options hedging strategy, let us understand in brief the concept of Options trading and Hedging.

  1. Covered Call &
  2. Married Put

Usually, the strategies are designed with the help of a minimum of two option positions running simultaneously. But these two strategies are used when one is looking to hedge the existing position

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