F & O use to buy and sell a share

shahdabshaikh · #21 28th August 2006, 03:44 AM

Quote:

Originally Posted by vince

Hi Shahdab,

Your outflow on the put is 5200

If ranbaxy closes at 396 on expiry you make 7*400(shares) + 4*400(put) = 4400

So you still lose 800.

I have said it earlier the lower the risk the lower the reward and there is no holy grail, if there is any it is discipline and trade management.

Trade well

Thanks VINCE !

I think i will be in profit after ranbaxy cross 402
And my TGT till expiry is 427. God knows where it will go.
Anyway Thanks for your precious advice.

My next query regarding DELTA.

How to calculate it? and
How to neutral it?

Have a nice Day...

vince · #22 28th August 2006, 06:58 AM

You can calculate delta using any b/s option calculator. Your broker should provide one with the trading platform. All you have to do is feed in the required fields , there should be no problem there.

One futures contract will always have a delta of 1 or 100 deltas, and an atm option contract generally has a delta of 0.5.

Delta neutralizing has to be done periodically and is not a one time process.
For eg. the trade on ranbaxy the shares would carry a delta of +100 and that of the the 400put option at 400 would be -50. So your delta is +50. To neutralise this you would have to buy another 400 put.

There is no fixed way to neutralize delta and there are various ways in which this can be done depending on your perspective.

You could go thru the thread on delta neutral strategy in this segment , it could help you to understand things better.

shahdabshaikh · #23 28th August 2006, 07:35 PM

Thank you VINCE for your Support...

My next query regarding Writing puts and calls of same strike price

as for example

if i sell reliance call SP 1110 @ 25.00
and also sell reliance put SP 1110 @ 11.00

Will it be profitable as only three days left for expiry.

Waiting for your reply.

SHAHDAB SHAIKH

shahdabshaikh · #24 1st September 2006, 02:56 AM

I have made profit of 6300.00 in my last strategy of writing put and call of same srike price at the same time.....

reliance 1110.00 call cover @ 15.00
reliance 1110.00 put cover @ 0.00

Good Luck to All members...

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