Who is an index trader? What is index trading, how is it made and does it work?



Index Trader trades with a group of stocks which make up the measurement of the value of a section of the stock market known as Index. It is calculated from the prices of selected stocks. This whole process is called Index trading.

It is done using many strategies with Index options. Some of them are:

Buying a call or put on the index
  • When the level of the index goes up then an investor buys a call option outright.
  • When the index goes down, an investor buys the put option.

Buying bull call spreads and bear put spreads:
  • Buy a call option at a lower strike price.
  • Sell a call option at a higher price.

Hedge the portfolios as a form of insurance.


These are some popular techniques for index trading. Its effectiveness is determined by the way it is used. If it is used effectively only then it will work. If you still have the confusion then you can always consult with the good advisory firm such as bazaartrading, 100mcxtips and many more.

(Source: https://www.quora.com/Who-is-an-index-trader-What-is-index-trading-how-is-it-made-and-does-it-work )


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