DERIVATIVE MODELLING OF OPTIONS TRADING WITH SPECIAL REFERENCE TO VERTICAL SPREADS STRATEGY

Abstract

Options trading are a route for shrewd financial specialists to use resources and control a portion of the risks related with profiting from trading stocks. Basically every financial specialist knows about the expression, "Purchase low and sell high." But in options, it's conceivable to benefit whether stocks are going up, down, or sideways. You can utilize options to cut misfortunes, ensure gains, and control huge pieces of stock with a moderately little cash outlay. Then again, options procedures can be entangled and risky. Not exclusively may you lose your whole investment, a few strategy may open you to hypothetically boundless misfortunes. So before you trade options, it's essential to consider the impacts that factors like suggested instability and time decay will have on your strategy.  This research will help you answer those tough situations with easy data models which clarify essential concepts and guide us on how to run a particular strategy called options spreads involve in call and put classifications with bullish and bearish market conditions

Keywords: Modeling of a derivative, Options trading, options Strategy, Options spread, Vertical Spreads, Bullish and Bearish spreads