Option Observation

In this thread, I write some of the Nifty Option Observation.Traderji viewers also pl.write in this thread, about their obsevation.

Today Nifty Nov 5900 PE - Rs: 270/- But, also

Dec 5900 PE - Rs: 272/- .

I think sell Nov PE and Buying Dec PE is very good bet. pl.i need youe suggestion.

Good observation.

By the way: That would be a classical "Calendar Spread" implemented at once and not by leg in.

Plus points: If market now stays in a certain range and volatility does not rise, the trade has a good probability of profit ( Could be as high as 75%) The range will be around Standard deviation one, as the different of the two option prices is very small. So keep watching those break even points.

Minus points: Only thing you really have to think over: Very, very small spread of 2 Rs. If you do not know how to trade actively this calendar spread, you have to wait a long time to make those little 2 Rs your profit.

Even than: Good observation and please move on with your observations.

Good trading

DanPickUp

As on 30.10.2012 EOD data,

NIfty Cash: 5598.
Nifty Nov : 5526
Nifty Dec : 5559
Nifty Jan : 5684.

Nifty Nov CE-5600 : Rs:101/- PE: 76/-

Dec CE-5600 : Rs:160/- PE: 103/-


The Diff . between CE is 160- 101 = 59. But,
the Diff. between PE is 103- 76 = 27.


What is the reason? How can we profit from it? Any body pl.explain it.

Profit of probability is around 20 to 25%.

Nope, would not do that in the constellation you show here as a whole trade.

No way.

Next one

NIfty Cash: 5598.
Nifty Nov : 5526
Nifty Dec : 5559
Nifty Jan : 5684.

Thanks sir. My question is ,

The Nifty- Nov is always equal to Nifty- cash in Derivative closing Day.
The Nifty- Dec is always equal to Nifty- cash in Derivative closing Day.

But, The Diff . between Cash and Nov-Future is 28 points.
But, The Diff . between Cash and Dec-Future is 61 points.

By Arbitrage trading, we buy Cash nifty and sell Nov- Nifty future.Anyway,
Up or Downboth are equal in Derivative closing day.
But, not possible to buy Cash nifty. So, we buy Call/put options .

My point of view , the Nifty Future is always equal in nifty cash in derivative closing day.
So, how can we profit the 28 points/61 points diff. ?

pl.explain it.

Good observation and good question

Would say that it is an Indian Future traders moment to answer that question.

I personal will answer questions about options, but not about any future arbitrage/hedging business.

Good trading

DanPickUp

Very valid question knarendra.
But let me tell you , you can buy Nifty in cash also and that is through nifty bees.
Yes if you buy in cash and sell the future you are sure to make that 28 points in one month. But then , what is your ROI ???
A bank FD will give better returns !

regards.

Excellent Opportunity. The time value of Nov will decay sooner than Dec. Hence Dec will be higher giving you returns considering the price of both are almost the same.
You should close it before the Nov expiry, as you will be on your own after Nov expiry!

Thanks sir.
How to buy Nifty bees ? It is possible to buy Nifty bees Call/Put options to get better ROI?
I need your detailed answer.

Now another oppertunity.

Today Nifty Nov 6000 PE - Rs: 235/- But, also

Dec 6000 PE - Rs: 235/- .