I dont know how option prices are calculated, but it appears that on stocks with higher volatility, if I hedge on either side of share price, I am more likely to gain, than to loose. Is that correct?
Today, I bought balrampur chini july 26 option, when the share was around 73.
75-rs-call @ 3.80,
and when seeing the stock goes below 73, to 72 I got scared and I bought
70-rs-put @ 2.65.
I thought I hedged it, with a loss.
My idea was that the stock, given that it was up about 9% at that time, should either move up or down 4% next day. So I wanted to check the status only next day.
Then I started my regular work. (I am not an active trader). In the evening when I took a peek, i was getting about 50 paise profit from squaring off both positions. I did just that, esp b;cos I wanted to make sure I avoid brokerage in ICICI by squaring off on same day.
Today, I bought balrampur chini july 26 option, when the share was around 73.
75-rs-call @ 3.80,
and when seeing the stock goes below 73, to 72 I got scared and I bought
70-rs-put @ 2.65.
I thought I hedged it, with a loss.
My idea was that the stock, given that it was up about 9% at that time, should either move up or down 4% next day. So I wanted to check the status only next day.
Then I started my regular work. (I am not an active trader). In the evening when I took a peek, i was getting about 50 paise profit from squaring off both positions. I did just that, esp b;cos I wanted to make sure I avoid brokerage in ICICI by squaring off on same day.