Low Risk Options Trading Strategy - Option Spreads

[vssoma]

dear
in my view, if nifty is bullish today( it's already AM). at opening if want to initiate any one of two trades like below mentioned way. what is the difference at MTM.( if both trades r correct)and which one is profitable.

1). buy july 5200 CE @ 156 and sell july 5400 CE @50.85

2) buy july 5200 PE @ 89.70 and sell july 5400 PE @ 180.35

both trades are initiated in the view of bullish.
please, comment on this.
thank you,

 

[AW10]

Thanks AW10 for awsome explanation.
I was getting worried as my first trade and thinking of selling it off.

Please correct me if I am wrong.

I guess in calculation I need to subtract 13500+112=13612 which is my purchase value. (270*50,112 brokerage)

so it should be 17500-13612= 3888 profit..

Thanks

You will also have brokerage / stt etc at the final settlement.. cause your option is ITM and it will be excercised.. So consider that also in calculation.

Happy Trading

 

[cool_kk]

You will also have brokerage / stt etc at the final settlement.. cause your option is ITM and it will be excercised.. So consider that also in calculation.

Happy Trading

Thanks Aw10,

I am out of my first option trade yesterday.

Investment at Risk: 13500 only 1put @ 5600@270
Sold @341

Profit: 3250 rs (aprox after brokerage and all)

I could have make more profit, If I have put limit on order, I did both market orders.
I could have hold more But I decided to exit as my view is so many pepole are pushing the market to 5300 again and again. So I exited.

I am looking for new trade, market not looking attractive @ this time so I will wait & watch some more time. Unpredictable..

Thanks all who helped to carry my first trade.

 

[DanPickUp]

dear
in my view, if nifty is bullish today( it's already AM). at opening if want to initiate any one of two trades like below mentioned way. what is the difference at MTM.( if both trades r correct)and which one is profitable.

1). buy july 5200 CE @ 156 and sell july 5400 CE @50.85

2) buy july 5200 PE @ 89.70 and sell july 5400 PE @ 180.35

both trades are initiated in the view of bullish.
please, comment on this.
thank you,

Hi vssoma

If you are bullish, trade only one kind of credit spread.

Take some more options on one credit spread and trade it.

There is no sense of trading a put credit spread and a call credit spread at the same time the way you explain it here.

Did you make paper trades with your ideas ?

If not, you have to do it today.

Take the same idea and implement it to the market conditions we have today in any market in the world.

Watch if for one week or more and come back and if you like, give a comment on your fail or success.

Do it with one credit spread and if successful count it with some more options. Be realistic and do it with what you learned in other threads. ( You know what I mean ) MM and RRR.

Take care and if you have more questions, ask !

We are here.

Take care

DanPickUp

 

[sumitdasjoshi]

HELLO aw10 and dan i have a question for aw 10 if i want to buy a stock option in the money but i want to buy it for august so is it safe to buy stock option in indian market. and what should i look if i am buying a stock option plz i never bought stock option so having dficulty here and one more question if i am bearish on some stock i dont wana lock my money with my broker so i am looking for a spread which only contain buy if it is put or call dont matter which stratgy to go with.

 

[AW10]

Sumit, Stock options are not liquid enough in our market. So if you go to buy them, most of the time the person who is selling u is going to quote a price that is very poor for you.
Basically he is waiting for some Bakra. He knows it well that nobody else is interested in trading those series, so no one will outbid him.. many a time, u will find wide difference in bid and ask price (that is also if you are lucky to see someone ready to sell there).

So my advice will be to stay away from stock option. last thing u want in trading is to get stuck with yr position and not able to cut yr loss or book yr profit.

happy trading.
ps - chk out the option chain of some stock options yrself on nse site to believe it..

 

[cool_kk]

Deleted
Thanks

 

[sumitdasjoshi]

so how i can make profit when i see the stock price will go sharply below end of a month or 2 . becouse we can sell the stock for more than 1 day.

 

[optionguru]

so how i can make profit when i see the stock price will go sharply below end of a month or 2 . becouse we can sell the stock for more than 1 day.

Sorry i might be jumping wrong guns here , but if you need to profit from short positions you can sell future ..

Now the issue is with hedge ratios as future will be in lots for e.g. 1000 but you just need to short say 385 stocks , there might be be some brokers who could be willing to do stock lending by charging some premium .

If anyone happens to know such broker kindly share it ..

Cheers

 

[AW10]

Sumit, as mentioned by optionguru. only liquid instrument is futures.
Else if u ready to take additional risk that comes with low liquidity,then use options.

Personally, i don't trade stock options just for low liquidity.