My first Trade Executed: Advise

Hi

I have traded options for first time,please advise

I traded from icicdirect

1 lot--50--NIFTY
strike price:5600
premimum: 270
Investment: 13500

Break Even point: 5330 - brokerage

Today's 5600 put is going at 300 premimum

Am I in profit if I square off ?

What is the max profit I can make if I hold and market goes down.

I think my max loss is limited to 13500, please correct if I am wrong.

Experts please advise what could be max profit and loss.

Also, if I market goes up and premimum comes to 200, Can I square off then my loss will be 70*50=3500 , Is this correct ?

Thanks
Cool_kk

Hi KK ,
you are right if you square off those now you will get (305-270)*50 - premium .
Your max loss is limited to 13500 . You can square off them whenever you want before they expire (last Thursday July 2010).
Max Proft could be 5296*50 or 1736%
Max loss = 13500 .

I am sure you would have done your home work before you have started option trading. Because they will start decaying as time pass.
Important level of Nifty to watch , support 5260 (below this can go to 5100) and res at 5360.

good luck.

Thanks a ton

One last question:
Right now I am in profit or loss

As per this formula , I am in loss:

(305-270)*50 - premium .

35*50-13500

1750-13500= -ve value

Also Max profit 5296*50 or 1736%

I don't understand profit in numbers.. Can you explain ?
I guess if market goes down I will be in profit But is there a level after
which I can say this is MAX i can make.

Thanks

Also

Icicidirect portfolio details show this


Contract --OPT-NIFTY-29-Jul-2010-5600-PE
Trade Flow---BUY
Open Position---
Qty --50
Value--13,520.00
LTP -----305.00
Charges --112.51
Profit/Loss ---
Unrealized--> 15250 (positive)
Realized---> -13632.51 (Negative)

Can anyone explains me..

Thanks a ton

One last question:
Right now I am in profit or loss

As per this formula , I am in loss:

(305-270)*50 - premium .

35*50-13500

1750-13500= -ve value

Also Max profit 5296*50 or 1736%

I don't understand profit in numbers.. Can you explain ?
I guess if market goes down I will be in profit But is there a level after
which I can say this is MAX i can make.

Thanks

KK cool,

you are already in profit..

profit =(current price of option- you paid for option)* number ( 50 in one lot )
=(317-270)*50 =2350
NEt profit = 2350-charge(~165)(for one lot)= 2185

is it fine

Thanks

Is it good to keep the option till expire or clear it before is best .

KK , my advise would be for you to go thorugh some good resource on Option to understand how they are evaluated . Option will have 2 value 1: INtrinsic value and 2: Time value . 2nd time value start decaying with time and much faster near expiry . Normally it would be a good practice to set a target to book some profit and keep doing that on regular basis . YOu don't know the market , it might wipe all your profit in one go.