IGNOU MAM 61 2026 - Describe any five advanced options trading strategies used in commodit

Question

Describe any five advanced options trading strategies used in commodity markets. Explain the purpose, structure, and practical application of each strategy.

27 Feb 2026

Answer :

Word Count : 648

Advanced options trading strategies are crucial for maximizing returns, managing risk, and enhancing flexibility in commodity markets. These strategies cater to different market conditions, allowing traders to take positions based on their market outlook, risk tolerance, and investment goals. 1. Covered Call The covered call strategy involves holding a long position in a commodity while simultaneously selling a call option on the same commodity. The goal is to earn premium income from the sale of the call option while holding the commodity to benefit from potential price appreciation. This strategy is typically used when a trader expects a moderate price increase or neutral movement. The risk is limited to the downside of the commodity holding, but the upside potential is capped by the strike price of the call option sold. It’s particularly effective when volatility is low and the trader wants to generate

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