Budget 2010 - 26Feb Option Trading strategy

[Raj133]

Hi,

Could anybody tell me what trading strategy i can use in 26thFeb2010 to get more profit in Nifty option.

This will very helpful for all the option trader, please share your experience.

Thanks

 

[Raj133]

i am planning to buy one call and one put in near strike price on 26thFeb10 morning, could you please comment.

 

[trader.trends]

i am planning to buy one call and one put in near strike price on 26thFeb10 morning, could you please comment.

Generally speaking such long straddle should work if the market makes a big movement after the budget announcement. But 26 Feb will be the first day of the new option series of March 25. Hence the options will be at the costliest. Expect them to be around 140-150 each. This means your total outlay would be near about 280-300/-. You may have to be very nimble to close the losing position as soon as the market makes the movement in reaction to the budget. If the market makes wild gyrations in both the directions then you are in trouble or if the mkt does not react much also you will be making no money.

This becomes pure gamble. If you are a small investor, stay away. Or take position after the market makes the move in one direction.

 

[munnabhai208]

what would be the effect of lifting the stimulous ?Which are the sectors going to affect badly?

 

[oguru]

what about a Ladder on Both sides ?

Bear Put Ladder :

sell 4800 PE
Buy 4700 PE
Buy 4600 PE

+

Bull Call Ladder :

Sell 4700 CE
Buy 4800 CE
Buy 4900 CE

Analysis :

Index Stays with out any Movement : 4700 CE sold and 4800 PE sold will give profit

Index Moves positive towards 5000 : 4800 PE sold, 4900 CE long will give profit. 4700 CE sold + 4800 CE long will act as a spread, so loss is limited.

Index Moves negative towards 4500 : 4700 CE, Buy 4600 PE long will give profit. 4800 PE sold + Buy 4700 PE long will act as a spread, so loss is limited.

I welcome more analysis please

 

[umeshg]

Last year we saw a fall of 258.55 points to 4,135.70 on Nifty. Wonder how many had a 4300PE at that time and how much would have been the upside?

Source: India Inc. disappointed with Mukherjee's budget for 2009-10 - Oneindia News http://bit.ly/bv2I7V

The Sensex, which started coming down soon after the announcement of budgetary proposals, dipped below the 14,000-point level before closing 869.65 points down at 14,043.40, surpassing the hefty fall of 749 points on January 7.

 

[Raj133]

i have analysized last few years data, based on that after budget (~1.00pm on budget date) the market was falling around 150 to 200 points on that same day and it will continue in next 3 to 5 trading dates after that new uptrend or downtrend starting and market will keep on moving on that trend next 1 month.

please comment.

 

[rkkarnani]

Do remember that the market is closed on 27th, 28th Feb and 1st March after Budget on 26th!! Just reminding!!!

 

[DWeeP]

what about a Ladder on Both sides ?

Index Stays with out any Movement : 4700 CE sold and 4800 PE sold will give profit

Index Moves positive towards 5000 : 4800 PE sold, 4900 CE long will give profit. 4700 CE sold + 4800 CE long will act as a spread, so loss is limited.

Index Moves negative towards 4500 : 4700 CE, Buy 4600 PE long will give profit. 4800 PE sold + Buy 4700 PE long will act as a spread, so loss is limited.

I welcome more analysis please

Good Strategy but i think market to have wide movement.
History suggests so.

Hence i recommend Buy Call 5300 @ 40 (CMP) and Buy Put 4600 @ 76 (both 25 mar expiry)

Risk is limited.

On second thoughts, market is closed for 2 days after budget, that gives market time to understand budget and there are no knee-jerk reactions, hence i m a bit skeptical.

 

[syamtnair]

on 26th february,buy the call and put immediately at below rs 30.....if there is a big crash or rally,your maximum loss is 30 but gain is unlimited...book profit as soon the the big move is over as ofcourse those will be otm options and will be eaten later like hell...