Strategy 1, COVERED CALL.....

What is a 'Covered Call':---

A covered call is an options strategy in which investor holds a long position in underlying asset and sells call options on that same asset to increase income from the asset. This strategy useful when short term market view is neutral and holding asset long.

Let us discuss example:---

Mr. A is holding shares of TCS since IPO. He doesn't want to sell shares but he is expecting market is not moving vertically. TCS current rate is 2830 rs as on March 15. So he can short call option of 2900 strike for premium of 25rs expiry 28 march.

Situation:

1) Stock as on 28 march it can be below 2900

2) Stock as on 28 march it can be above 2900

If on expiry date TCS close at or below 2900, Mr. A will be getting 25*250 (lot size) = 6250 rs

If an expiry date TCS close at 2925 or above Mr. A will bear loss above 2925 up to close price of TCS. let say TCS came at 3000 close, Then Mr. A will be loss of 75 Rs. But he will gain in underlying asset of TCS shares he hold since issue.

This Strategy is useful for person who hold underlying stock in bulk quantity or few stock having down size limited scope.

One of our survey says if any person who apply this strategy in Low Beta stock like NTPC, POWER GRID, ITC etc can earn call premium.

Charts of this strategy looks like.....

Ref:  Investopedia