weird query

H

hvl

New Member
#1
#1
I stopped trading as I lost lot of money. I was researching on long straddle or strangle (buying a call and put option at or around the same strike price and expiry date) so that I will not lose more than 5000 to 10000 per trade. I was just looking for such a pair on nse india. Suddenly I glanced that there are buyers for nifty 5000 call option 2374.50. Unless there is war, the question of falling to 5000 should not arise. I guess it will be zero on the contract expiry day as it will be really impossible to have a buyer for anything above that. Why can't people sell it now as there will be a cool profit of 1 lakh plus? I am sure I am missing something here but could not make out what it is. Can someone spend sometime on this and let me know what is wrong with this idea? Thanks in advance.
 
nirav_j

nirav_j

Well-Known Member
#3
#3
hvl said:
I stopped trading as I lost lot of money. I was researching on long straddle or strangle (buying a call and put option at or around the same strike price and expiry date) so that I will not lose more than 5000 to 10000 per trade. I was just looking for such a pair on nse india. Suddenly I glanced that there are buyers for nifty 5000 call option 2374.50. Unless there is war, the question of falling to 5000 should not arise. I guess it will be zero on the contract expiry day as it will be really impossible to have a buyer for anything above that. Why can't people sell it now as there will be a cool profit of 1 lakh plus? I am sure I am missing something here but could not make out what it is. Can someone spend sometime on this and let me know what is wrong with this idea? Thanks in advance.
Click to expand...
5000CE @ 2374.5 = 7374.5. NS closed at 7367 as on fri.

On expiry, It will not expire at zero, but at the level of Niftys closing on expiry.

So no cool profit of 1 Lakh plus ;)

Its only the OTM options, which expire at zero. Not deep ITM options like 5000 CE.
 
Smart_trade

Smart_trade

Moderator
#4
#4
hvl said:
I stopped trading as I lost lot of money. I was researching on long straddle or strangle (buying a call and put option at or around the same strike price and expiry date) so that I will not lose more than 5000 to 10000 per trade. I was just looking for such a pair on nse india. Suddenly I glanced that there are buyers for nifty 5000 call option 2374.50. Unless there is war, the question of falling to 5000 should not arise. I guess it will be zero on the contract expiry day as it will be really impossible to have a buyer for anything above that. Why can't people sell it now as there will be a cool profit of 1 lakh plus? I am sure I am missing something here but could not make out what it is. Can someone spend sometime on this and let me know what is wrong with this idea? Thanks in advance.
Click to expand...
Take a pen and paper and calculate the profit/loss at various expiration price levels. That is the best way to learn.

Smart_trade
 
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