Income from portfolio

[comm4300]

Hello Friends:

Over period of time, i have accumulated some shares [only nifty 50 stocks] in my demat and these are now worth 2,25,000 [cost 205,000]. This accumulation is an ongoing process.

Broker : Zerodha
Demat : ILFS
Pledging of shares allowed.

PLAN:
i wish to use these shares in my Demat a/c for covered call or index option writing to generate income.

covered call cannot be written because none of my individual stock holding are anywhere near the STOCK option lot size.

writing far OTM INDEX calls/puts to generate income looks feasable.

REASON FOR THIS PLAN:
there can always be a bad news and markets can crack. Hence, generate cash regularly from holding and bring down the cost component.

Kindly advice/share your thoughts/practice.

regards,

 

[DanPickUp]

Dear Comm4300

If you use any index options against your shares, do that only with a little amount of options as the underlying is not the same.

In the past, when I was working in the asset management, we did that only on the same underlying/share and never mixed it up.

Decision is in your hand, just be sure that the underlying is not trendy. If you have a covered call, then any crash is welcome. If you write covered puts, then you have to avoid negative news.

Good trading

DanPickUp

 

[Anarchist]

Hello Friends:

Over period of time, i have accumulated some shares [only nifty 50 stocks] in my demat and these are now worth 2,25,000 [cost 205,000]. This accumulation is an ongoing process.

Broker : Zerodha
Demat : ILFS
Pledging of shares allowed.

PLAN:
i wish to use these shares in my Demat a/c for covered call or index option writing to generate income.


covered call cannot be written because none of my individual stock holding are anywhere near the STOCK option lot size.

writing far OTM INDEX calls/puts to generate income looks feasable.

REASON FOR THIS PLAN:
there can always be a bad news and markets can crack. Hence, generate cash regularly from holding and bring down the cost component.

Kindly advice/share your thoughts/practice.

regards,

Better u convert your holdings to niftybees and write calls against it. If u need to hedge further u could write puts if your holdings are not sufficient to cover 1 lot.

 

[comm4300]

Better u convert your holdings to niftybees and write calls against it. If u need to hedge further u could write puts if your holdings are not sufficient to cover 1 lot.

a very good advice. Seriously thinking about it. Thanks.

:thumb:

 

[onlinegtrash]

a very good advice. Seriously thinking about it. Thanks.

:thumb:

try to draw the chart of
holding Niftybees + selling calls = selling puts

Wait a minute...isn't it simply same as writing puts without any hedge

when price drops below the strike you get fixed call premium but NB will be in loss
so a downward slopping line left of the strike

think when price raises above the strike, sold calls will be in loss cancelling profits from NB
so a flat line when price raises above strike.

downward slopping line before strike + flat line after strike = selling puts!
you are not hedging anything sir, when price drops you are still screwed!
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I have not tried (as it requires big acc) but heard a lot about iron condors for regular income...
as in markets every strategy will fail at some point of time!