Ranbaxy -- opportunity

[bandlab2]

Hi AW10,

This is most likely to happen. After aug 16, investors start sending stocks to open offer, floating stock in market goes down, then operators ill start manipulating spot price. futures will not be in sync with spot as spot my correct by expiry date.

they will take spot to 550-600 levels by 22nd, then bring it back to 500 by aug 28th (expiry). again same thing repeats between aug 29th thru sept 04th

so best strategy is to buy in spot between now and aug 16th (only 2 trading days). sell off during the spike. another strategy is to buy sep 500 or 540 calls. be ready to lose all money. if lucky, you may get a wind fall

 

[rkgoyal_98]

Hello,

U have made really good point. on that.
One thing is already happening that is sept future is moving down more than spot and sept call is keeping pace with spot so that no one can exercise just to make easy money. Now your point that price may move up from 16th to 22 is not that clear. why should operators take price up, they can also move it in other direction also with less float in market. since offering is to be made till 16th cutoff for trade should be 2 days less as shares take 2 days to reach demat account.
so we must explore this isshe further
regards

 

[Smart_trade]

Exchange does know that who are seller of options. On getting the request of excercise, it randomly picks up the seller and assign it. To the best of my knowledge, it is random assignment until unless they use any internal logic to find out the best person to be assigned.

Happy Trading.

You are right.Stock options are assigned on Random Number generation basis.A few of options sold by me have been assigned so I know !!!

Best Wishes,

 

[bandlab2]

Hello,

U have made really good point. on that.
One thing is already happening that is sept future is moving down more than spot and sept call is keeping pace with spot so that no one can exercise just to make easy money. Now your point that price may move up from 16th to 22 is not that clear. why should operators take price up, they can also move it in other direction also with less float in market. since offering is to be made till 16th cutoff for trade should be 2 days less as shares take 2 days to reach demat account.
so we must explore this isshe further
regards

who is buing the calls at 109 ? traders or investors ? most investors are thinking its easy money to sell at 109 when future is at 400. traders are buying with a view to dump later. also buying 1 lot reqires 90000 rs. its a hge money for most investors...... for just 1 call

 

[rkgoyal_98]

Hello,


I am assuming that everyone will offer full quota and if we look at spot price around 500 then after adjustment price should be 362.50. so according to this price gap may increase to 138 in sep futures and spot while spot remaining at around 500/-. If see the Ranbaxy chart we find that since year 2006 340/- had been acting as very strong support and also current up move started from 340. so taking that view we may say market discounted offer price of 737/- while moving up. So price will be settling anywhere between 350-400. Futures price is adjusting in advance while call/put prices will remain tagged to spot for in the money call/puts.

kindly forward further views on this
regards

 

[jason1]

Dear Rkgoyal,

I am interested in shorting DLF and ICICI bank in the futures and options market at their current share prices and cover DLF at Rs 410/- and ICICI Bank at Rs 600/-. Please advise me the procedure to do so since I am totally new to futures and options market.

Thanks and regards,

Jason

Hello,


I am assuming that everyone will offer full quota and if we look at spot price around 500 then after adjustment price should be 362.50. so according to this price gap may increase to 138 in sep futures and spot while spot remaining at around 500/-. If see the Ranbaxy chart we find that since year 2006 340/- had been acting as very strong support and also current up move started from 340. so taking that view we may say market discounted offer price of 737/- while moving up. So price will be settling anywhere between 350-400. Futures price is adjusting in advance while call/put prices will remain tagged to spot for in the money call/puts.

kindly forward further views on this
regards

 

[tanewbie]

Nicely explained by KRC

how dangerous is the so called Arbitrage

 

[pasha]

Interesting read.
Edit: Does anyone know how a buyer is assigned a seller?
A post from Traderji
http://www.traderji.com/options/4878-newbies-question-options.html#post28187

 

[bandlab2]

Interesting read.
Edit: Does anyone know how a buyer is assigned a seller?
A post from Traderji
http://www.traderji.com/options/4878-newbies-question-options.html#post28187

sellers are picke on random basis by the exchange. this is done after the market is closed

in ranbaxy examle, if OI is less then the number of sellers is less so cahnces of you getting picked is high.. always keep a tab on OI

 

[abhi_j]

ranbaxy spot is 502, sep future is 396, sep 400 call is 102, put is 36

buy 1 lot of sep future, sell 1 sep 400 call , buy 1 sep 400 put

if the price on settlement is anywthere from 0 to infinity, your net gain is 65 rs which is 52000 rs

if price is at 400, you get 100 from call, lose 35 from put. net gain 65

if price is at 500, you get 100 from future, lose 35 from put, net gain 65

if price is at 600, you get 200 from future, lose 100 from call, lose 35 from put. net gain 65 rs

if price is at 300, you lose 100 from fture, gain 100 from call, gain 65 from put. net gain 65 rs

margin requirements : need margin for 1 lot future, 1 lot call. which is around 50% of 1 lot = 2 lakh rupees. stocks or cash
m2m : most brokers wont adust m2m on options. but they do on futures on daily basis. so if price goes below 400, you need to keep m2m for that. you need to keep for atleast 65 rs (safe side) which will cover till 335 rs spot. but yo got 65 rs from call/put. so keep this money for this purpose. if spot goes above 400, then your fture will generate mpney for you to cover trigger on call

overall, not much risk in strategy, margin, m2m

any suggestions ? what happens if call/put is exersized ?

Hello even a couple of things can be done for example buy future september 365 sell call 105 sell put 380/ 137 and buy call 500 15.5 now if for eg if call is exercised at 550 u will loose 45 rs right but u have 500 call where u will earn 35 rs and even u can get the better rate than 400 call as it will be exercised whereas u can square it in market u will even earn in the put u have sold and for protection we can buy a put of 350 also so to make it totally hedged there is even a chance that future can fetch u some money if it moves for eg if it goes to 380 etc and if nothing of this happens and ranbaxy goes down still its good for us
please give me views friends