Nifty Options query for newbie

#1
Hi guys, this is my first post here. I have been reading a bit trying to gain knowledge on the markets.

Yesterday, I short sold a nifty jan 4700 call for rs 144.5 . I got about 7200 as premium. Can someone tell me when would I enter into a loss with this option depending upon the nifty movement. I just shorted 1 lot. Also, till what level of the nifty would I be in profit ( able to keep my premium ). Iam assuming i will be in no loss as long as nifty does not cross 4844.5 (4700 +144.5 premium ). Is that correct?

Also, is it possible that I can buy a call of the same nifty jan 4700 call ( its trading around 130 today) . Is it possible? In such a case, would I be in profit ( shorted at 144.5, bought at 130 ) or would my call buy and call short be treated as two separate entities?

Waiting for a reply to my query.

Regards,
Zahed
 
#2
Hi guys, this is my first post here. I have been reading a bit trying to gain knowledge on the markets.

Yesterday, I short sold a nifty jan 4700 call for rs 144.5 . I got about 7200 as premium. Can someone tell me when would I enter into a loss with this option depending upon the nifty movement. I just shorted 1 lot. Also, till what level of the nifty would I be in profit ( able to keep my premium ). Iam assuming i will be in no loss as long as nifty does not cross 4844.5 (4700 +144.5 premium ). Is that correct?

Also, is it possible that I can buy a call of the same nifty jan 4700 call ( its trading around 130 today) . Is it possible?
In such a case, would I be in profit ( shorted at 144.5, bought at 130 ) or would my call buy and call short be treated as two separate entities?

Waiting for a reply to my query.

Regards,
Zahed
Sure, that is called covering a short position. The JAN 4700CE is sold yesterday for 144.50 is now trading at 130. If you buy that Call back now, you will realize a 14,5 profit and you empty your portfolio.

You will be in no loss as long as nifty does not cross 4844.5 anyway, I would start worring if NIFTY rallies above 4700 :rolleyes:
 
#3
Sure, that is called covering a short position. The JAN 4700CE is sold yesterday for 144.50 is now trading at 130. If you buy that Call back now, you will realize a 14,5 profit and you empty your portfolio.

You will be in no loss as long as nifty does not cross 4844.5 anyway, I would start worring if NIFTY rallies above 4700 :rolleyes:
theartofweb: thanks for the reply. Is it possible that I can cover my short position anytime till the expiry of the Jan 4700 call? Or does it need to be done within a specified number of days from the date of shorting? Can I buy back a jan 4700 call after 10days at whatever the premium is?

Similarly. I bought a hindalco jan 120 call for Rs 6.2premium. Can I sell it anytime till the date of expiry without any problems, booking a profit or loss based on the prevailing premium on the day I sell the same ( lets say i sell it in 2days at 7rs premium). Is that possible?

I hope iam not asking stupid questions. Iam new to options and iam still learning. Iam sure no question asked to learn would be stupid, right :)
 

LivetoTrade

Well-Known Member
#4
theartofweb: thanks for the reply. Is it possible that I can cover my short position anytime till the expiry of the Jan 4700 call? Or does it need to be done within a specified number of days from the date of shorting? Can I buy back a jan 4700 call after 10days at whatever the premium is?

Similarly. I bought a hindalco jan 120 call for Rs 6.2premium. Can I sell it anytime till the date of expiry without any problems, booking a profit or loss based on the prevailing premium on the day I sell the same ( lets say i sell it in 2days at 7rs premium). Is that possible?

I hope iam not asking stupid questions. Iam new to options and iam still learning. Iam sure no question asked to learn would be stupid, right :)
Yes, you can cover both anytime before the market closing hours on last Thursday of Jan 2012.
 
#5
Yes, you can cover both anytime before the market closing hours on last Thursday of Jan 2012.
Thanks for the reply. The 4700 call premium went down upto 78 something but with the rally today it is around 167 now. Went ahead and bought 5lots of 4700 call at 148. Hope the rally continues atleast for the next 2-3days.
 

LivetoTrade

Well-Known Member
#6
Thanks for the reply. The 4700 call premium went down upto 78 something but with the rally today it is around 167 now. Went ahead and bought 5lots of 4700 call at 148. Hope the rally continues atleast for the next 2-3days.
zahed, keep a regular tab on the following threads -

http://www.traderji.com/derivatives/42863-nifty-50-future-trends.html

http://www.traderji.com/futures/53485-nifty-entry-exit-target-levels-median-line-charts.html

http://www.traderji.com/forex/48152-some-my-forecasts.html

http://www.traderji.com/equities/65065-timing-markets.html
 

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