Nifty Option's trading.... Earn regardless of where the market goes !!

arnav_rulz · #1 25th August 2008, 02:09 AM

Hey all if starting this new thread where i would post Nifty buy/sell call/puts strategies where we would try and earn regardless of where the market goes !!

I had a similar thread in Equities section, but i realized that this section will be much more appropriate than that one.

I hope it goes well

PRINCIPALS We Will try to Follow....

**Looking @ high amount of margin required ... WE will Try our Best to NEVER Increase our open Positions beyond a limit ... (i.e our amount @ risk so that our margin doesn't increase because we have to be realistic ..

We will try and never have More than 6 open positions @ 1nce... From next time ill make a diff strategy and try to reduce more positions ....

*Right now i am trading in multiples of 100 & 200 just for the purpose of easier calculations... You could even trade in multiples 50 & 100 but try and keep the options brought & sold in the same proportion of the strategy given...

If We become bearish on the market... we would alter our strategy....
**But that doesnt mean we would start to short because thatz not the Purpose of the thread !! We Dont Do Any positional Trades !! We let the market go where ever it want to goooooo !!

arnav_rulz · #2 25th August 2008, 11:03 AM

*For the month of September...

Buy 100 4600 Put @ 285
Sell 200 4300 Put @ 135(i.e you get 135*2=270)

Buy 100 4100 Put @ 75
Sell 200 3900 Put @ 37(37*2 = 75 approx)

Total Investment = 1500 Rs

Also Sell 200 4600 Calls @ 65
& Sell 200 4200 Puts @ 100

Total Received = 33,000

Net Received = 30,000

leo_3455 · #3 25th August 2008, 11:15 AM

Arnav:

For every lot (50) of sell in Nifty options, about 35,000 is blocked by my broker. It may vary from broker to broker.

You sell 800, i.e. 16 lots. The margin required will be about 5,60,000. Plus extra money is required to buy the options, 36,000. We should have nearly 6,00,000 in our account.

I assume we are going to hold this for 1 month until expiry and the maximum profit received is Rs. 15,000 - 2000 (brokerage for 20 lots 20 x 2 x 50) = 13,000 (correct me if I am wrong).

With 6,00,000 in our account, we get 13,000 profit.

This strategy will be only good for people like me, who will not be able to make more than 10,000 with 6 lacs in account.

Hope you can confirm my calculations for the benefit of the members.

arnav_rulz · #4 25th August 2008, 11:29 AM

Quote:

Originally Posted by leo_3455

Arnav:

For every lot (50) of sell in Nifty options, about 35,000 is blocked by my broker. It may vary from broker to broker.

You sell 800, i.e. 16 lots. The margin required will be about 5,60,000. Plus extra money is required to buy the options, 36,000. We should have nearly 6,00,000 in our account.

I assume we are going to hold this for 1 month until expiry and the maximum profit received is Rs. 15,000 - 2000 (brokerage for 20 lots 20 x 2 x 50) = 13,000 (correct me if I am wrong).

With 6,00,000 in our account, we get 13,000 profit.

This strategy will be only good for people like me, who will not be able to make more than 10,000 with 6 lacs in account.

Hope you can confirm my calculations for the benefit of the members.

Well 1st of all you dont have to pay margin on 800 Options sold, but 600 options sold because 200 of your options are covered ....

Also the MaX profit received is not 15-20k but 60,000 , Although my aim is to earn about 15-20k only.(*calculation mistake)

Also i wont be holding this till expiry and would start squaring off positions after 10 days of Sept have passed.

*But regardless of the above mentioned i will agree with you about the amount of margin given, But as i forgot to mention (which i should have ...) that :-

1)you dont have to give cash as your margin, you could give your long term stocks maybe ?(caz this is mostly a hedge strategy to earn something regular while you remain a long term investor in this market)

2)and yeah i will try and post some other strategies too... FOR traders where margin required will be less...

Hope you get my point, and correct me if im wrong or ask me if you have any doubt..

arnav_rulz · #5 25th August 2008, 11:43 AM

For Intraday & BTST

Buy 200 4400 Call (Aug) @ 45
Sell 300 4500 Call (Aug) @ 15

leo_3455 · #6 25th August 2008, 11:48 AM

Arnav:

"Well 1st of all you dont have to pay margin on 800 Options sold, but 600 options sold because 200 of your options are covered ..."

Ok, if we sell 200 options and buy 200 options, margin will be not be blocked for any lot?

My broker does not allow this, though it will be a very nice thing. And realistically only the "amount at risk" should be blocked, irrespective of the lots sold and bought.

Does your broker allow this or you know any broker that only blocks margin for the "risk amount"?

Thanks for replying.

arnav_rulz · #7 25th August 2008, 11:54 AM

Quote:

Originally Posted by leo_3455

Arnav:

"Well 1st of all you dont have to pay margin on 800 Options sold, but 600 options sold because 200 of your options are covered ..."

Ok, if we sell 200 options and buy 200 options, margin will be not be blocked for any lot?

My broker does not allow this, though it will be a very nice thing. And realistically only the "amount at risk" should be blocked, irrespective of the lots sold and bought.

Does your broker allow this or you know any broker that only blocks margin for the "risk amount"?

Thanks for replying.

Ahh see i dont know about brokers and stuff, but you see in NSE regulation is that like let me give you an example :-

1)Buy Nifty(lot) @ say 4400 and sell 4400 Call -> then you have to give margin on NSE lot + only 3% margin on the call sold.

2)Similarly 1 Put brought @ 4600 and 2 sold @ 4200, We have to give margin for 1 of the 4200 Put + 3% margin on the other 4200 Put sold.

I dont know about how your broker charges, but this is the rule according to NSE...

ranj_2k · #8 25th August 2008, 11:58 AM

Dear Arnav,
Please inform the total margin money required for the above option positions. Whether the above positions to be hold till expiry or to be squarred up as and when get the profit.

arnav_rulz · #9 25th August 2008, 12:16 PM

Quote:

Originally Posted by ranj_2k

Dear Arnav,
Please inform the total margin money required for the above option positions. Whether the above positions to be hold till expiry or to be squarred up as and when get the profit.

Above ? as in the Aug 1n's ?

For Aug Option's Margin required = margin charged by your broker for 100 Nifty + 6% more.

If you have sell margin you could decrease the option's position in the same ratio...

Aug's Calls are for intraday basis or maybe holdup till expiry, depending on market.

Plan is to square off 4400 call and keep 4500 (sold) if market goes down...(get out at 0 profit 0 loss...)
OR
Square off both 4400 & 4500 calls if market goes up... (get a good gain

)

arnav_rulz · #10 25th August 2008, 01:07 PM

Quote:

Originally Posted by arnav_rulz

For Intraday & BTST

Buy 200 4400 Call (Aug) @ 45
Sell 300 4500 Call (Aug) @ 15

Our Total investment = 45*2 - 15*3 = Rs 4500

Till the time 4400 Call trades @ 22.5 we are safe....

When 4400 call trades @ 22.5 , sell the 200 calls brought n keep the 4500 call sold till expiry... (Highly unlikely that 4500 will be crossed if nifty goes down so much)

Still Risk Averse ppl can square off 4500 call ie buy the 300 4500 calls with a low loss of 2000 bucks or so...

The Following 7 Users Say Thank You to arnav_rulz For This Useful Post:
alex_laxya (29th September 2008), HEM (26th September 2008), nagendra_gb (25th August 2008), P.SUHAS T&I (27th September 2008), praveen taneja (25th August 2008), ranj_2k (25th August 2008), tulika (25th August 2008)

The Following User Says Thank You to arnav_rulz For This Useful Post:
ranj_2k (25th August 2008)