Increase in premiums of both CALL and PUTS in Infosys

anup

Well-Known Member
#11
INFY options IV is around 60 now..its almost 2 weeks to go and expect IV to increase further. The option prices may go very high due to high IV.
Is it good idea to sell deep OTM Calls and Puts together and take the benefit of drop in IV after the result?? :thumb:
I would suggest the same but in different manner, Why dont we take debit spread (buying option) and close the debit spread just before the result day (very important to close before the result day)... Take credit spread(selling option)at 3.25 Pm beofre the result day and hold it till the result is announced

The reason why i am suggesting is the IV (Implied volatility ) of Infy option would go as high as 90 to 100 before the result day and after the announcement the IV would come down to 30 to 35
 
#12
I would suggest the same but in different manner, Why dont we take debit spread (buying option) and close the debit spread just before the result day (very important to close before the result day)... Take credit spread(selling option)at 3.25 Pm beofre the result day and hold it till the result is announced

The reason why i am suggesting is the IV (Implied volatility ) of Infy option would go as high as 90 to 100 before the result day and after the announcement the IV would come down to 30 to 35
Anup bhai, credit spread means we should buy both CE and PE, If yes the risk is unlimited..pls clarify
 

anup

Well-Known Member
#13
Anup bhai, credit spread means we should buy both CE and PE, If yes the risk is unlimited..pls clarify
appajib Sir.. debit spread means buying both call and put for example you can buy infy call 3300 and put 2600 for combined premium of 115 and the volatilty of infy is currently at 60 normal implied volatility of infy is around 30 to 35.. But just look at 3.25 pm on the day before result implied volatility
(IV) would be arrond 90 to 95.. As the IV is increased your call and put would have definately increased.. and your combined premium may be around 135 to 140 (just a rough guess).. Close ur debit spread at 3.25 before the result day and buy credit spread i.e, sell the CE and PE. The next day after market opens volatility would be returned to 30 to 35 thus decreasing the value of the option.

These are the patterns which i have observed from last 4 results. If you have more queries please post..
 

ananths

Well-Known Member
#14
appajib Sir.. debit spread means buying both call and put for example you can buy infy call 3300 and put 2600 for combined premium of 115 and the volatilty of infy is currently at 60 normal implied volatility of infy is around 30 to 35.. But just look at 3.25 pm on the day before result implied volatility
(IV) would be arrond 90 to 95.. As the IV is increased your call and put would have definately increased.. and your combined premium may be around 135 to 140 (just a rough guess).. Close ur debit spread at 3.25 before the result day and buy credit spread i.e, sell the CE and PE. The next day after market opens volatility would be returned to 30 to 35 thus decreasing the value of the option.

These are the patterns which i have observed from last 4 results. If you have more queries please post..
yes. agree with you..this is the best way to trade it. One day before the result would be better for Credit spread. Now we can go for Debit spread if you want to take risk. I will wait and watch now until IV reaches its peak.
Have you traded in last 4 times as you mentioned above? what was the result?
 

anup

Well-Known Member
#15
yes. agree with you..this is the best way to trade it. One day before the result would be better for Credit spread. Now we can go for Debit spread if you want to take risk. I will wait and watch now until IV reaches its peak.
Have you traded in last 4 times as you mentioned above? what was the result?
@ appajib : the king of pair trading anath is here. Please ask question to him


:clap::clap:
 

anup

Well-Known Member
#16
yes. agree with you..this is the best way to trade it. One day before the result would be better for Credit spread. Now we can go for Debit spread if you want to take risk. I will wait and watch now until IV reaches its peak.
Have you traded in last 4 times as you mentioned above? what was the result?
Ananth Sir, Unfortunately i have not traded.. But did the paper trading (oops!! i dont have paper trading data), It behaved as per what i have explained
 
#17
yes. agree with you..this is the best way to trade it. One day before the result would be better for Credit spread. Now we can go for Debit spread if you want to take risk. I will wait and watch now until IV reaches its peak.
Have you traded in last 4 times as you mentioned above? what was the result?
Thanks for ur kind reply...
I haven't traded INFY in last 4 times..
My doubt is if I go with credit spread before result day when INFY 3500 CE is at 70 and 2600 PE at 60...if result is positive (stock increased by 15 to 20%)2600 PE my reach to 2 or 3 and 3500 CE may reach 150 to 200...then how can I avoid my risk...
 

healthraj

Well-Known Member
#18
To Trade in INFY before and after the Result the only thing you have to Watch is the Implied Volatility. The Historic Volt of INFY is around 30%. Last couple of times, since there is a lot of interest in the INFY results with the Retails traders, normally the VOLT goes up. Last time the IV went UPTO around 90% just before the result. I tracked INFY for the last result. See the below link. The VOLT went up to around 90, the day before the result. And on the day of the result the VOLT dropped to 30 and both the PE and CE prices dropped. So if you want to trade INFY watch the IV. On the day of the result if you get IV of around 60+, then it is a SELL. Even if INFY moves 20% and if the VOLT drops from 90 to 30 you will not get anything from the Options. I have traded so many times and lost in INFY and TCS without understanding this VOLT game.


http://www.traderji.com/advanced-tr...0-trade-nifty-futures-bac-207.html#post829379

http://www.traderji.com/advanced-tr...0-trade-nifty-futures-bac-208.html#post829436

http://www.traderji.com/advanced-tr...0-trade-nifty-futures-bac-214.html#post830806
 

anup

Well-Known Member
#19
The god of options has arrived in this thread... Over to Raj, for any queries regarding options....
@ Appaji : please visit Rajs thread on options. You will come to know everything...I have learnt a lot from him...Thanks Raj bhai


To Trade in INFY before and after the Result the only thing you have to Watch is the Implied Volatility. The Historic Volt of INFY is around 30%. Last couple of times, since there is a lot of interest in the INFY results with the Retails traders, normally the VOLT goes up. Last time the IV went UPTO around 90% just before the result. I tracked INFY for the last result. See the below link. The VOLT went up to around 90, the day before the result. And on the day of the result the VOLT dropped to 30 and both the PE and CE prices dropped. So if you want to trade INFY watch the IV. On the day of the result if you get IV of around 60+, then it is a SELL. Even if INFY moves 20% and if the VOLT drops from 90 to 30 you will not get anything from the Options. I have traded so many times and lost in INFY and TCS without understanding this VOLT game.


http://www.traderji.com/advanced-tr...0-trade-nifty-futures-bac-207.html#post829379

http://www.traderji.com/advanced-tr...0-trade-nifty-futures-bac-208.html#post829436

http://www.traderji.com/advanced-tr...0-trade-nifty-futures-bac-214.html#post830806
 

healthraj

Well-Known Member
#20
The god of options has arrived in this thread... Over to Raj, for any queries regarding options....
@ Appaji : please visit Rajs thread on options. You will come to know everything...I have learnt a lot from him...Thanks Raj bhai
Anup is just kidding with words like god... I am also just learning. But the INFY observation was superb. So I am waiting for 10-Oct-13, to replicate my Jul-13 story on INFY.
 

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