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#1
24th February 2005, 05:28 PM
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will straddle of nifty option in budget period be suitable?
Dear Traderji,
Will straddle strategy for nifty option in budget period give good returns? please post your valuable comments. Thanking you. 
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#2
24th February 2005, 09:20 PM
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Re: will straddle of nifty option in budget period be suitable?
Option straddle is a strategy which uses both a put and call option.
The trader who buys a straddle (buys a put and a call) will make money no matter which way the market moves - provided that the size of the movement is sufficient to cover the cost of the two premiums paid. Buyers of straddles are therefore hoping for large price movements to occur while sellers of straddles (sellers of a put and a call) are hoping for prices to remain largely unchanged.
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#3
25th February 2005, 10:06 AM
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Re: will straddle of nifty option in budget period be suitable?
To take advantage of any big moves post the budget one can BUY a Nifty Option Straddle.
Buy a NIFTY 31MAR2005 CE 2100.00 currently trading at 44.15 Buy a NIFTY 31MAR2005 PE 2000.00 currently trading at 36.85 Assuming you bough one contract of each your total outgo would be Rs. (44.15+36.85) X 200 = Rs. 16,200.00 If the market does make a BIG move post budget in the upward direction (bullish), you will break even at 2181.00 and start making profits above 2181.00 Alternatively if the market makes a BIG moves post budget in the downward direction (bearish), you will break even at 1919.00 and start making profits below 1919.00 As the Nifty is currently at 2050.00, you therefore need a move of at least 131.00 Nifty points in either direction to start making any profits. If you expect the Nifty to move by over 131.00 Nifty points in either direction after the announcement of the budget and before 31st March 2005 then go ahead and make this straddle trade. Any comments or questions, please go ahead and post them here.
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#6
27th February 2005, 08:15 PM
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Re: will straddle of nifty option in budget period be suitable?
Interesting discussion!
I have used a similiar strategy on the Nifty. The NIFTY 31MAR2005 CE 2100.00 is trading at 42.30 and The NIFTY 31MAR2005 PE 2000.00 is trading at 40.80 SO one can get them both for 83.10 Anybody else can give some inputs??
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#7
27th February 2005, 11:13 PM
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Re: will straddle of nifty option in budget period be suitable?
Is it advisable to buy a 2050 CE and write a 2100CE and / or buy a 2050 PE and write 2000 PE, so that the investment is minimal and we will be able to catch a small move up to 50 pts on either sides above which this will not work. I do not know how profitable this would be, expecting the experts to write on this.
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#8
28th February 2005, 10:47 AM
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Re: will straddle of nifty option in budget period be suitable?
Quote:
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