profits frm options writing..

S

sharestrader

Member
#1
#1
Hi..
im giving case study writing both CE and PE of same stike price..
aim is to get profit frm diminishing time value ( in form of premium recvd)
attaching here excel sheet of Nifty 4100 stike price CE/PE of Feb series..whn mkt @4137
4100 CE write @108( upside 4208 )
4100 PE write @71 ( downside 4029)
if market expires in between ths range profit is very good...

This can go terribly wrong if mkt corrects too much (like ths mnth)..or go up to 4300 ..so Stop loss placement is very imp...
Logically to get 108 pts i can risk 30-40 pts so my upside SL would b 4250(4208+40) n downside SL would b 4010( 4029-20)..

Kindly go throu Excel attached herewith..
Experts plz guide ..n comments are requested.. n betr ways to place SL..

Sharestrader
 
V

vince

Active Member
#2
#2
sharestrader said:
Hi..
im giving case study writing both CE and PE of same stike price..
aim is to get profit frm diminishing time value ( in form of premium recvd)
attaching here excel sheet of Nifty 4100 stike price CE/PE of Feb series..whn mkt @4137
4100 CE write @108( upside 4208 )
4100 PE write @71 ( downside 4029)
if market expires in between ths range profit is very good...

This can go terribly wrong if mkt corrects too much (like ths mnth)..or go up to 4300 ..so Stop loss placement is very imp...
Logically to get 108 pts i can risk 30-40 pts so my upside SL would b 4250(4208+40) n downside SL would b 4010( 4029-20)..

Kindly go throu Excel attached herewith..
Experts plz guide ..n comments are requested.. n betr ways to place SL..

Sharestrader
Click to expand...
I think that you have begun on the wrong foot.

Since you are writing a straddle and the net premium recd would be 108+71=179,

your upside risk would begin at 4100+ 179=4279

Your downside risk begins at 4100-179=3921

Take it from there.

I hope that helps.
 
S

sharestrader

Member
#3
#3
Dear Vince,
thanx..u r rt... im calculating risks on individual legs to cover loss making legs at earliest..i.e.to reduce big losses...

can u correct..

sharestrader
 
V

vince

Active Member
#4
#4
I place my stops on the supports/ resistances on the underlying and not on a fixed percentage or rupee amount.

Another way would be to use a volatility based stop.

Take your pick.
 
S

sharestrader

Member
#7
#7
Dear Vince , thnx for ur reply..its very difficult to understand though..
l request u to start posts on options wth examples for newcomers in options(not asking for tips)..it would b gr8 help...as per ur convenience..

can u?
regards

sharestrader
 
S

sreperu

Active Member
#8
#8
sharestrader said:
Dear Vince , thnx for ur reply..its very difficult to understand though..
l request u to start posts on options wth examples for newcomers in options(not asking for tips)..it would b gr8 help...as per ur convenience..

can u?
regards

sharestrader
Click to expand...
Hi,
As SharesTrader mentioned in the above mail, we get more insight of the Options by the real world examples. Examples are appreciated more!

Regards!
sreeny
 
V

vince

Active Member
#9
#9
What I would suggest is that you guys post a proposed trade along with the chart and strategy here.

I will most certainly post my views on it , and you would also get valuable feedback from other seniors here.

It would also serve the purpose of honing your analytical and chart reading skills.
 
S

sharestrader

Member
#10
#10
hi...i wil take example here..seniors plz guide..

as per my analysis Satyam support was near 410..trgt 430-440 n accordingly Staym touchd low of 405 (208/2/07)..at tht time i would like to take CA..wht stike price shd i go for? 410 or 420...n at the same time i would also like to take care of losses if satyam slides below 410.......
can anyone suggest wht i shd hav done....

coz once i had bitter experience in trading RIL option..i had CA..according to my analysis it went up..bt unfortunately on the next day of expiry..so im cautious...abt time limit..

plz guide..

sharestrader
 
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