option strategy

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.

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

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

Thankyou

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

F

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, 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

No sorry no thanks between friends. I also did same mistake when I posted one graph without checking date and started screeming .......... as human being we all make mistakes.

F