option strategy

billloo2000 · #1 8th November 2007, 03:24 AM

dear brothers
If you want best Option trading strategy you will get in http://billloo2000.blogspot.com/ best for monthly strategy.

rkkarnani · #2 8th November 2007, 08:20 AM

Hello Billoo, this what you have posted on your blog, and I think the figures given may not be correct :

Quote:

If you sell (short) ATM Call & ATM Put of TTML (10450) , RNRL (7150) , IFCI (7875).

If you sell (short) any Call or Put you need FUTURE margin in your trading account.
If you own FUTURE of any stock or index you can sell Call without margin,if you have already short FUTURE of stock or index there is no need of extra margin to sell Put of that stock.

TTML = short ATM Call 42.50 in Rs. 4.50 x lot (10450) = 47025
TTML = short ATM Put 42.50 in Rs. 3.50 x lot (10450) = 36575

you have got Rs.83600 in your account.
The risk of this strategy is if stock moves below Rs.35 or moves higher then Rs.50 you have to use hedging.

If stock not moving below 35 or higher then 50 you will get Rs.83600 in your account.

brokerage is not calculated in this.

you can use same Strategy with RNRL and IFCI also.

You say that if TTML stays between 35 and 50 we gain the entire amount of Rs.83600/- as profit.
Suppose the TTML closes at 49/50!!!
I retain the entire amount of the PUT sold by me : 3.50*10450=36575
BUT In the Call shorted I loose : 7*10450=73150
So all i retain is 83600 minus 73150

Similarly if TTML closes at say 35.50
We retain the entire amount of Call sold but loose 7*10450 in the PUT shorted.

Regards
R K Karnani

billloo2000 · #3 8th November 2007, 07:44 PM

Quote:

Originally Posted by rkkarnani

Hello Billoo, this what you have posted on your blog, and I think the figures given may not be correct :

You say that if TTML stays between 35 and 50 we gain the entire amount of Rs.83600/- as profit.
Suppose the TTML closes at 49/50!!!
I retain the entire amount of the PUT sold by me : 3.50*10450=36575
BUT In the Call shorted I loose : 7*10450=73150
So all i retain is 83600 minus 73150

Similarly if TTML closes at say 35.50
We retain the entire amount of Call sold but loose 7*10450 in the PUT shorted.

Regards
R K Karnani

dear
I have used another WORD in this position is called HEDGING
so use futures for this type of position for HEDGING
ok DEAR

rkkarnani · #4 8th November 2007, 08:55 PM

Quote:

Originally Posted by billloo2000

dear
I have used another WORD in this position is called HEDGING
so use futures for this type of position for HEDGING
ok DEAR

What about this line that you have used :

If stock not moving below 35 or higher then 50 you will get Rs.83600 in your account.

U hv advised Hedging only when the stock moves beyond the range of 35 and 50....Okay Dear!!!!
Any comments????

billloo2000 · #5 8th November 2007, 09:16 PM

Dear
Please tell me what do you think about nifty Call SP 6000 at Rs.80?

Thankyou

rkkarnani · #6 9th November 2007, 07:20 AM

Quote:

Originally Posted by billloo2000

Dear
Please tell me what do you think about nifty Call SP 6000 at Rs.80?

Thankyou

My thinking wont help,I am not at all good at technicals, though I strongly feel it can give atleast 20% returns.... exit around ~100/- and be happy!!!

Adheer · #7 24th November 2007, 01:42 PM

The risk of this strategy is if stock moves below Rs.35 or moves higher then Rs.50 you have to use hedging.

It is not as easy as it seems.

How do hedge against the up-move and the down-move the same time ?
If you hedge against the stock moving above 50, you end up with the risk of losing money if the stock goes down. Vice-versa to hedge against the stock moving downwards.

When option writers lose, they end up losing big-time.

rkkarnani · #8 24th November 2007, 07:56 PM

Quote:

Originally Posted by faltub

6000 call trading at 12.6. This is what I assumed and why I call option a Trap.

F

Hi, In this particular case 6000 Nifty call bought at 80 on 8th or 9th November gave an opportunity to exit at as high as 150/-!!!!!!!! on 14th or 15 th November. IMHO : Its not the options that is a TRAP.... but maybe our trading strategy or greed or indiscipline may lead us into a trap!!!
Regards

ayurakshapad · #9 24th November 2007, 08:13 PM

Quote:

Originally Posted by faltub

RKK,

I know it gave chance to exit at 150, but question is not for one option.

Just check the call price movement on24- 25th Oct 2007, u can easly find that Oct contract were moving fast whearas the movement in Nov contracts was too slow. What was the problem ? Did the the greeks of Oct contracts were greater than Nov Contracts ?

F

Dear in nov. market is too slow in forward direction. although it gave proper indication to fall.
may be this is the reason fr moving slow movement in nov.
although wat i experience in addition of theory sentiments of player also plays an imp.role to decide the price of option rates.

ayurakshapad · #10 24th November 2007, 08:43 PM

Quote:

Originally Posted by faltub

Dear, read it again what I posted .....

"Just check the call price movement on24- 25th Oct 2007, u can easly find that Oct contract were moving fast whearas the movement in Nov contracts was too slow. What was the problem ? Did the the greeks of Oct contracts were greater than Nov Contracts ?"

I didn't write "in Nov", I written only on 24-25th Oct 2007"

F

ya,
soory fr that