Options Trading Strategies

[Sunil]

2. Long Straddle + Put

Buy Put 4000 @ 178 (1 lot)
Buy Call 4000 @ 176 (1 lot)
Sell Put 3800 @ 104 (1 lot)

Total cost of above = 12500

Max loss at nifty 4000 = 12500
At or below 3800, loss limited to Rs 2500

Breakeven at nifty 4250

Above 4250, profit rises proportionaltely
at 4300 = 2500
at 4400 = 7500
at 4500 = 12500
and so on

 

[Sunil]

now, with slightly bearish view,

Put Backspread

Sell Put 4200 @ 289 (1 lot)
Buy Put 4000 @ 178 (2 lots)

Total cost = 3350

Max Loss = 13350, if NIFTY settles at 4000 on expiry day
At or Beyond 4200, loss will be limited to initial cost ie 3350

Breakeven = nifty 3733
below 3733, profit increases proportionately
at 3700 = 1650
at 3600 = 6650
and so on

 

[Sunil]

coming back to 3800 - 4000 - 4200
neutral strategies:

Long Iron Butterfly
Sell Put 3800 @ 104
Buy Put 4000 @ 178
Buy Call 4000 @ 176
Sell Call 4200 @ 92

Total cost = Rs 7900 (all 1 lots)


AT OR BELOW 3800, PROFIT IS LIMITED TO 2100

AT 3900 OR 4100, LOSS = 2900
AT 4000, LOSS IS MAX & LIMITED TO 7900

AT OR ABOVE 4200, PROFIT IS LIMITED TO 2100

 

[Sunil]

Dear tsunil4u,

What is this repeatative stuff which we can all read from books. Why don't you provide us the valid link from where you are copy pasting this here.

Please tell us some profitable strategy which will keep us giving profits continuously using options instead Have read these many times on sites but no body tells that how they earn constantly using these.

--Anil

somebody jumped the gun, even before I could finish listing the strategies. Wish one could find everything (chart + simple, laymen's explanation) in one, single website for copy+paste

 

[niftychance]

2. Long Straddle + Put

Buy Put 4000 @ 178 (1 lot)
Buy Call 4000 @ 176 (1 lot)
Sell Put 3800 @ 104 (1 lot)

Total cost of above = 12500

Max loss at nifty 4000 = 12500
At or below 3800, loss limited to Rs 2500

Breakeven at nifty 4250

Above 4250, profit rises proportionaltely
at 4300 = 2500
at 4400 = 7500
at 4500 = 12500
and so on

Hello Sir

Nice initiative, I do not know much about options, so please excuse me if my questions look silly...

In the above strat, we loose if nifty closes below 4250, that is what happens if we just buy a call of 4250 ...

In the above as you say the loss is 12500 max @ 4000, and 2500 min below 3800 (I don't know the calculations just used your figures), the quote for call for 4250 is around 72, lets say Rs. 3600/-

What is the advantage of buying / selling 3 lots of call and puts, over simplly buying a call of 4250 sp ... ?

Thanks for the indulgence ...

 

[Sunil]

here one can find all nifty options prices in an orderly manner (of course, besides out own trading terminal)

http://www.moneyoga.com/option.aspx?s=NIFTY

 

[Sunil]

Hello Sir

Nice initiative, I do not know much about options, so please excuse me if my questions look silly...

In the above strat, we loose if nifty closes below 4250, that is what happens if we just buy a call of 4250 ...

In the above as you say the loss is 12500 max @ 4000, and 2500 min below 3800 (I don't know the calculations just used your figures), the quote for call for 4250 is around 72, lets say Rs. 3600/-

What is the advantage of buying / selling 3 lots of call and puts, over simplly buying a call of 4250 sp ... ?

Thanks for the indulgence ...

this is where I wanted to discuss with others how to combine various strategies so that our loss is limited, but profit is unlimited...

i have just presented illustrations using real values of nifty.
combining such strategies for being in profit on both sides is what I am looking forward to.

these option strategies are of very passive in nature - may not be suitable for active traders, who have the next week's view in mind...
I have also given one "neutral strategy"

Buying 4250 call @ 75 needs a close of 4325 to breakeven....
a similiar closing in the strategy mentioned would result in profit of 2500+

obviously, if it closes at 4000, then loss is greater than the vanilla call option

There are more strategies where one can combine futures + options...

 

[Sunil]

i am on initial stage of an EXCEL file, where all such strategies are listed....
one will just have to enter the relevant strike prices along with their premiums...
this will give an idea of the resulting profit/loss in each scenario

 

[rkkarnani]

i am on initial stage of an EXCEL file, where all such strategies are listed....
one will just have to enter the relevant strike prices along with their premiums...
this will give an idea of the resulting profit/loss in each scenario

It would simply be excellent!!! Awaiting it!! Though not much versed with the strategies!!! Know only the basics!!!

 

[orderflow13]

Good going Sunil , much needed thread for sure, as our nifty part 2 is now a days full with interesting option strategies ,but one cant find those posts if he is hitting key words 'option for nifty' in search section, now they will get a proper link, when i was new to traderji, i posted in writing option thread, but that thread wasnt regularly updated, hope we will keep it active and post different ideas along with senior members like satda ( with his so special excel posts ), only minor problem is we have to jump quite a lot for different threads ..lol but that effort is minuscule when one looking for big gains.
Alex