Doubt on square off

#1
Hello All trader guru, i need your help on square off my nifty position.My query is that,

1.Date 18 Apr bought 1 lot May 27 Nifty 5300 call @88 Rs when Nifty was trading at 5180.
2.On date 23 Apr 2010 May 27 5300 call @ 126. and nifty is now at 5304
so can I square off this position and make 126-88 = 38
38*50 = 1900 profit. ?
or shall i need to wait for break even point to square off position?

my second question is :
3.Lets say,Nifty is trading @5304 If I bought nifty 5400 call @ 50 at morning
and after 2 hours Nifty is trading at 5350 and now May Nifty 5400 call is @ 70,So can i square off this position and make 20 Rs. profit per each?

4.Any special should be taken while square off position?
 

trader.trends

Well-Known Member
#2
You can square your position any time you like. If you feel you have sufficient profits or if your loss limit is reached you can square positions. If you feel the mkt is still going to go up you can exit partly and put the balance with stops at entry level. So that you take some profits off the table and do not lose if the mkt reverses suddenly.
 

nac

Well-Known Member
#3
I have never tried option before. But that's not gonna stop me to answer your query.

You have bought 1 lot of nifty CE 5300 @ 88, you can cover it whenever you want/need to. And now its trading @ 126 you can book the profit now. I don't think Rs. 38 will eat your profit under expenses and I am sure you are far above the break even point. Even if your broker charge you Rs.100 each side, you can take home more than 1600/-

If you wanna buy Nifty CE 5400 @ 50 and you can sell it @ 70. Nobody is gonna stop you to cover your position. You can cover your position before expiry.

There is nothing special while you are squaring off your position. And one thing I would like to add. You got a clear picture in your mind but when you are typing it here, you are missing many words which leads us to guess those words. It happens all the time to everyone, now you can edit your post and make it correct. It will be easy for others to understand your query clearly. And they would write back precisely.
 

nac

Well-Known Member
#4
You can square your position any time you like. If you feel you have sufficient profits or if your loss limit is reached you can square positions. If you feel the mkt is still going to go up you can exit partly and put the balance with stops at entry level. So that you take some profits off the table and do not lose if the mkt reverses suddenly.
Can you please explain how to cover part of his position? or else he's gonna get confused a lot. :confused:

Don't take it as I am making funny comment. Its just for the sake of his understanding. I feel, its better you to write it rather than anyone else.
 

trader.trends

Well-Known Member
#5
Can you please explain how to cover part of his position? or else he's gonna get confused a lot. :confused:

Don't take it as I am making funny comment. Its just for the sake of his understanding. I feel, its better you to write it rather than anyone else.
nac

Covering part position means exiting partly. If you have bought 4 lots of options and you are 30 points in profit exit two lots to take profits off the table. The other two lots you hold with stops at entry if you believe the mkt is going to go further in your direction. If it goes up further say 60 points from entry you bring your stops to 30 points. This way even if the mkt reverses, you don't lose anything. As many of us have discovered we will feel pretty foolish when we let a winning trade turn into a loser.

You can enter a trade almost anywhere you wish. The exits decide your profit/loss not your entry. Most people take a lot of time, energy and thought to decide an entry and not as much resources on exits. Taking part profits is a good strategy when you enter multiple lots.
 

nac

Well-Known Member
#6
nac

Covering part position means exiting partly. If you have bought 4 lots of options and you are 30 points in profit exit two lots to take profits off the table. The other two lots you hold with stops at entry if you believe the mkt is going to go further in your direction. If it goes up further say 60 points from entry you bring your stops to 30 points. This way even if the mkt reverses, you don't lose anything. As many of us have discovered we will feel pretty foolish when we let a winning trade turn into a loser.

You can enter a trade almost anywhere you wish. The exits decide your profit/loss not your entry. Most people take a lot of time, energy and thought to decide an entry and not as much resources on exits. Taking part profits is a good strategy when you enter multiple lots.
Yeah, I understand. But our friend is holding one lot nifty that was the reason I asked you to. Sorry, If I annoyed you. I guess, I did... I am sorry.
 

trader.trends

Well-Known Member
#7
Yeah, I understand. But our friend is holding one lot nifty that was the reason I asked you to. Sorry, If I annoyed you. I guess, I did... I am sorry.
Nac

No, You did not annoy me. My answer was more generic in nature and not about one particular trade. I wanted to highlight the strategy of exiting in parts to take some profits so that he would be befitted in the future trades.. No need for the remorse.:)
 
#10
I might be asking silly question again but want to learn about option..I have question again as...
Suppose I bought Nifty 27 May Nifty 5300 put @95 Rs.. when Nifty is trading at 5330.and after lets say 2 days nifty might be trading at 5275 and option price for it is now 125,so can I square off this put position and make profit as (125-95= 30)?I just confused by American style and European style written puts strategy,so plz guide me on this?:confused:
 

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