Confusion about strategy with options oracle

Dear Traderji fellows,

I am new in stock market.

I am reading one daily news paper from couple of years and regular reader of Market Strategy articles which were publishing on every Monday. This month onwards I am following their strategies in options oracle software v.1.6.

As per their strategy posted in media on this month and author comments are posted. I am in little confusion that as per author comments readers are gained approximately 9000. (at closing prices of 16-11-12)

Todays market closing time (19-11-12) this strategy showing 18000 profit as per below graph:

see image001.png

But if we squared up these positions on closing prices of 19/11/12 then it will be looks like:

see image002.png

Checked with position and our net gain is only 5200/- (see in picture on strategy summary table current return=5200). This is confirming the following graph as changed in Today mode:

see image003.png

I am very thankful to any body if clear my following doubts for the above strategy:

1. What is the real profit 18000 or 5200?

2. How much amount would be required to place this type of strategy in real market.

Thanks and Regards

Aravind

No sense for such stupid people. Deleted

Dan,
In india all analysts in media are JOKERS.....

Dear Sir,

What he posted article with HDIL Option strategy on 05/11/12 and expiration date is 29/11/12 as below:

one lot short put with strike 105 @ 7.50
one lot short call with strike 105 @ 3.00
one lot Long put with strike 100 @ 4.00
one lot Long call with strike 110 @ 1.50

he says trader will maximum gain of Rs.20,000/- and risk is zero.

could you please analyze the accuracy / result of the strategy.

Thanks

There is no zero risk strategy .....if risk is zero ..then profit is also zero.

people sometimes use strategies to make sure that risk is limited even the market is tanked.

(read thinkorswim option strategy lessons ..you'll find many limited risk strategies)

I'd say trade CE/PE and use a SL to limit your risk....you are good to go.

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Sorry used the wrong button. No post.

You have got Rs.5 with the above strategy. At 105, there is nothing to be paid. You have to pay a max of Rs.5 if it is >= 110 or <=100. Of course, you will have to pay commissions, STT & other levies with which you can hardly be in the money (pun intended).

This looks like a credit spread on both sides.

Buy 110CE
Sell 105CE

Sell 105PE
Buy 100PE

the rates on which the spread was initiated gave a final credit of rs.5.00.

So far, time decay has worked in favor of this spread.

However, if the stock had moved across either of the spread, things would have been different:
Stock above 110 or below 100 = Rs.5 loss;

Probably the aim was to bank on little or no movement of the stock & make use of time decay.

EOD, had the stock moved, there would have been expenses on account of brokerage + taxes.

PS: oops ! just saw THETRADER's post and realized that i was repeating what he had already summed up.

Dear All,

Thank you for your replies with clear explanation on my query. This type of replies will help freshers like me. Already i told you all as i am a new to stocks and never traded/ invested money in market. I searched and want to know for low risk and low/minimum gains in market. I don't want/expect to get huge money and also loss. I am searching for safe/ minimum gains even returns or low after considering brokerage and taxes.

I think as you say time decay will work for this strategy under neutral condition. This strategy showing performance as below:


05/11/12 9/11/12 23/11/12
stock price on 100.00 104.50 103.55
--------------------------------------------------------------------------------------------
one lot short put with strike 105 @ 7.50 3.00 2.55
one lot short call with strike 105 @ 3.00 2.45 0.95
one lot Long put with strike 100 @ 4.00 1.05 0.50
one lot Long call with strike 110 @ 1.50 0.70 0.30
--------------------------------------------------------------------------------------------

on 19/11/12 net gain showing 5,200/- and on 23/11/12 net gain showing 9,200/-

And please let me know how much investment needed for this type of strategy!

Thanks

Aravind