Hi guys,
I'm trying to understand a strategy that revolves around writing puts and calls on Nifty for a 3 month period at various strikes..
Here is what I would like to do and want to get some input on what the major issues with this strategy would be:
Let's use the example of NIFTY at 8600 and construct the following example:
1) Write 8800 CE and 8400 PE July Expiry
2) Write 9000 CE and 8200 PE August Expiry
3) Write 9100 CE and 8100 PE September Expiry
Overall my hope would be to gain the premium and close out position at expiry, but of course would be OK with selling position if value increases.
One question I have is around mark to market losses or gains, do I need to do anything with those?
Another question is around square off and brokerage fees - if I get to expiry and positions are worthless, do I still pay brokerage fee on square off? Reason I am asking is, I believe if I buy back the position I would pay the brokerage fees and want to understand if the square off has the same impact. I'm thinking of taking relatively small positions (no more than 50 lots) so I think the brokerage fees can be significant relative to total and if I pay twice versus once it impacts my analysis.
I'm trying to understand a strategy that revolves around writing puts and calls on Nifty for a 3 month period at various strikes..
Here is what I would like to do and want to get some input on what the major issues with this strategy would be:
Let's use the example of NIFTY at 8600 and construct the following example:
1) Write 8800 CE and 8400 PE July Expiry
2) Write 9000 CE and 8200 PE August Expiry
3) Write 9100 CE and 8100 PE September Expiry
Overall my hope would be to gain the premium and close out position at expiry, but of course would be OK with selling position if value increases.
One question I have is around mark to market losses or gains, do I need to do anything with those?
Another question is around square off and brokerage fees - if I get to expiry and positions are worthless, do I still pay brokerage fee on square off? Reason I am asking is, I believe if I buy back the position I would pay the brokerage fees and want to understand if the square off has the same impact. I'm thinking of taking relatively small positions (no more than 50 lots) so I think the brokerage fees can be significant relative to total and if I pay twice versus once it impacts my analysis.