Safe nifty future with option hedging

[drsambu123]

Dear friends.

basis of my strategy == Bullish view at December with limited upside.
Buying far(june) nifty future contract( with roll over at the time of expiry.
Option hedging for this strategy.
5500 CE december sell(450) + buying 5000 pe(Rs100) december at current market price.

Expected outcomes.
Scenario 1
Closing at or above 6000( december) = total points gain NF 400
Call +450
put -100
total profit/loss in call 0
NF gain +4000 , put -100
Total gain 300 points

Senario 2
Closing at 5500
NF -100
Call +450
Put -100

Total points gain 250

Scenario 3

Closing at and below anywhere4900
NF -700
Call +450
Put +100

Total maximum loss 150 possible

Ideally u should hold positions till december expiry... Dont change ur view ofte

Maximum gain around 16000
Maximum loss 7500
Pl senior traders put your valuable inputs

 

[DanPickUp]

Dear Drsambu123

Thanks for your post. Good effort to start such a thread.

I guess most do not know about what you talk as this level is already a very high level, specially if done in real live markets.

As you may know me a bit and the way I am: Let me ask through questions some hints:

Now what is YOUR question?

My questions are as following: Did you make this special kind of roll over before by your self? Roll overs like that are usually done at expiry day with small volumes. So how did you make your orders for it and as you had to make decisions on chart levels, what impact had they to your short time decisions?

Next question: Having a bullish view at this time for December 2013, as we have now April 2013, is in my view a bit early. Don't you think so? Question is asked with out any valuation of what so ever to what you posted.

DanPickUp

 

[internet_fanbboy]

That's a good observation.

I am not sure if any retail brokers allow for far-off month Option Trading. (I know ShareKhan doesn't)

 

[timepass]

That's a good observation.

I am not sure if any retail brokers allow for far-off month Option Trading. (I know ShareKhan doesn't)

I think that futures are available for the next 3 months and options for 3 months + quarterly for next 2-3 years. You can trade options till December 2017.

 

[DanPickUp]

I think that futures are available for the next 3 months and options for 3 months + quarterly for next 2-3 years. You can trade options till December 2017.

Fine:

But here ends your definite knowledge when it comes to more advanced option strategy trading as your market not offers it.

Good trading / DanPickUp

 

[viharpatel]

Dear friends.

basis of my strategy == Bullish view at December with limited upside.
Buying far(june) nifty future contract( with roll over at the time of expiry.
Option hedging for this strategy.
5500 CE december sell(450) + buying 5000 pe(Rs100) december at current market price.

Expected outcomes.
Scenario 1
Closing at or above 6000( december) = total points gain NF 400
Call +450
put -100
total profit/loss in call 0
NF gain +4000 , put -100
Total gain 300 points

Senario 2
Closing at 5500
NF -100
Call +450
Put -100

Total points gain 250

Scenario 3

Closing at and below anywhere4900
NF -700
Call +450
Put +100

Total maximum loss 150 possible

Ideally u should hold positions till december expiry... Dont change ur view ofte

Maximum gain around 16000
Maximum loss 7500
Pl senior traders put your valuable inputs

My view as novice.

till December may be 3 times roll over( if consider far month contract) did the nifty future premium effect this strategy's profit loss?

 

[knarendra]

Also, calculate Interest rate for your money.

 

[timepass]

Fine:

But here ends your definite knowledge when it comes to more advanced option strategy trading as your market not offers it.

Good trading / DanPickUp

Dan, my trading knowledge of options is presently confined to scalping for 10-12 ticks . Maybe when I grow up, I will do better

 

[drsambu123]

Dear Drsambu123

Thanks for your post. Good effort to start such a thread.

I guess most do not know about what you talk as this level is already a very high level, specially if done in real live markets.

As you may know me a bit and the way I am: Let me ask through questions some hints:

Now what is YOUR question?

My questions are as following: Did you make this special kind of roll over before by your self? Roll overs like that are usually done at expiry day with small volumes. So how did you make your orders for it and as you had to make decisions on chart levels, what impact had they to your short time decisions?

Next question: Having a bullish view at this time for December 2013, as we have now April 2013, is in my view a bit early. Don't you think so? Question is asked with out any valuation of what so ever to what you posted.

DanPickUp

I have not done this yet. juz planning to do. though volume is small at the time of expiry, in nifty still u can roll over with +/- 10 points.(hopefully)

Yes i agree with u. its still yearly to predict december bullish view.So many events are there like early election, opinion poll etc. may be if we do this stategy after 3-4% correction from current level we have better profitability.

 

[drsambu123]

Also, calculate Interest rate for your money.

yes interest rate for 8 months will affect the profitability.we cannot ignore that..