SELL CALL Options

I purchased Nifty Call 4500 and covered it by selling Nifty Call 4550 immediately to minimise the loss.. Please advice when do i get the profit.. when do square off these two transactions??

You get profit/loss only when you close both positions. I don't know how much u paid for these position, but maximum value of this spread is possible when market closes above 4550 by expiry. If market remains above 4550, it will have value < 50.
So depending on your purchase price, you can calcualate the paper profit/loss.

If market goes below 4500, this position will start loosing value. Max loss will be at expiry when u still have open position and taken no action till then. Max that u will loose is the net premium that u have paid (i.e. Paid for 4500 call MINUS recieved for 4550 call).

This is called Bullish Call Spread position.. so please read about it to get more details.

Happy Trading.

Thanks for your response.. I tried this to check this concept.

Details of my transactions

Transaction 1 -> Buy NIFTY 4500 Call (1 Lot) @ 189 Rs.
Transaction 2 -> Sell NIFTY 4550 Call (1 Lot) @ 150 Rs.

What happens in both these scenarios Profit/Loss
1. When NIFTY goes up to 4600?
2. When NIFTY goes down to 4400?


Can i square off these transaction e.g. Square of Transaction 2 when market is down and Square of when it is going up to maximise the profits?

when nifty crosses 4550 ->
max profit = {4550 - 4500} - {189 - 150} = 11(also don't forget to subtract brokerage cost)
What happens in both these scenarios Profit/Loss
1. When NIFTY goes up to 4600?
A: profit as shown above...
2. When NIFTY goes down to 4400?
A: max loss of cost of spread ie...189-150=39...

Can u plz read about CALL SPREAD strategy. That will answer many of your doubts.

How will u know when mkt is going up or down ? If you are sure, then nobody stops u from breaking this position and closing each leg seperately.
The impact will be, as soon as one leg is closed, other leg will not remain covered anymore hence it is open to unlimited risk. That means you will be converting a limited risk trade to unlimited risk trade, Something that I personally don't like to do.

Happy Trading

Thanks again.. So if market crosses 4550 (any time before June expiry date) I can square off both these two transactions immediately at LTP.

e.g. when Nifty is 4550

4500 Call LTP is 210 - Square off at LTP will be 210 - 189 = + 21*50
4550 Call LTP is 180 - Square off at LTP will be 180 - 150 = - 30 *50

will this be 1050 - 1500 = - 450 (will this be factored into my loss?)

So is it going to be 50 * 11 = 550 Rs minus all the commissions.