Advanced Nifty Option Strategies

[DanPickUp]

Strategy given in the link is collar with slight modification. Collar is used when one is conservatively bullish.
Lower level put is purchased in order to prevent loss from downside. But as suggested in the modified strategy , if you are buying two puts , you are going to incur more money and in case market moves up , it has potential of making small loss.

Net net it may not give great ROI which any option trader is looking for.

I 'll give live example with calculation if somebody is interested.

Yes, please move on with your posting.

DanPickUp

 

[singlap]

Rates as per todays closing

Buy nifty fut @ 5889
sell 5900 call @ 48
buy 5800 put @ 2 X 22=44

So net credit from options = 48-44 = 4
Also , we have paid a premium of around Rs 33 in buying nifty future which will have adverse time decay effect.

If series expire at 5850
We get Rs 4 from options with loss of 39 from nifty. Net loss = 35

If series expire at 5800
we get rs 4 from options with loss of rs 89 from nifty. Net loss = 85

if series expire at 5700
we get 78 X 2= 156+48=204 from options and loose 189 from future. Net gain= 15.

if series expire at 5900
we get Rs 4 from options plus a gain of 11 rs from nifty. Net gain = 15.

so from 5700 to 5900 , net gain is hardly Rs 15 X 50 = 750 on investment of almost Rs 40000 with a risk of loss to the tune of rs 85 X 50= 4250.

In case market substantially moves above 5900 , profit is again capped due to sold call.

 

[DanPickUp]

Hi

The above strategy which was mentioned by dear Vssoma suits high volatile trendy markets and has to be converted into a long call or put synthetic straddle in range bound markets.

Good luck and good trading

DanPickUp