Low Risk Options Trading Strategy - Option Spreads
- Thread starter AW10
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Re : the ratio spread trade.....
As decided ( and posted earlier) I have sold my 40 nifty ( 2 nots of mininifty) at 5285 today...this has given me a profit of Rs 3200 ( reducing Rs 200 for round trip brokerage and charges) and now my ratio spread is a free ride....
I will try to buy some nifty around 5200 again...
I donot plan to disturb the ratio spread yet....
Smart_trade
As decided ( and posted earlier) I have sold my 40 nifty ( 2 nots of mininifty) at 5285 today...this has given me a profit of Rs 3200 ( reducing Rs 200 for round trip brokerage and charges) and now my ratio spread is a free ride....
I will try to buy some nifty around 5200 again...
I donot plan to disturb the ratio spread yet....
Smart_trade
ST Da.. As I understand, you have already made your ratio spread risk free. i.e. 20 points of initial investment is already recovered from last 40 MNF long.
So now even if Jan expiry is on 5400, you are not loosing anything on Ratio spread.
Then why is this another adjustment ? Isn't it an independent trade of Long 40 MNF ?
Or am I missing something ?
Happy Trading
So now even if Jan expiry is on 5400, you are not loosing anything on Ratio spread.
Then why is this another adjustment ? Isn't it an independent trade of Long 40 MNF ?
Or am I missing something ?
Happy Trading
Yes AW10...I have already recovered my cost of this spread and made a small profit. So I am not going to loose on this trade but in case the market reverses from here and goes to 5300 and above I will loose all paper profits...I am trying to lock in some of it...and if the mkt tanks ,my futurers will loose but I will gain on 5300 put long position I have...I am safe till 4900 which I dont expect in Jan expiry. Now if the market goes to 5300 and above,I will have some profit protected as futures will make money....
One can also do this trade and ferget till it comes to a threatening level of below 5000, as the Reward /Risk is very good in this trade but I consider this futures trade as a tool to lock some profits and trying to squeeze out some more from the trade if it reverses...if it closes around 5200 ..great,I am happy to have made a bit more than 100 points. Below 5150 ,futures are out and then the profit will come from options.... I am considering 5100-5300 as a range to hold till expiry.
Best wishes,
Smart_trade
One can also do this trade and ferget till it comes to a threatening level of below 5000, as the Reward /Risk is very good in this trade but I consider this futures trade as a tool to lock some profits and trying to squeeze out some more from the trade if it reverses...if it closes around 5200 ..great,I am happy to have made a bit more than 100 points. Below 5150 ,futures are out and then the profit will come from options.... I am considering 5100-5300 as a range to hold till expiry.
Best wishes,
Smart_trade
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If I squareoff both the legs of this backpsread,I am making 50 points or Rs 5000 profits. But I feel that the potential in this trade is over 100 points.
One way of locking some profits is roll down from 5300 put to 5200 put...ie sell 5300 put and buy 5200 put but roll down eats into profits unless the trade is deep in the money...
But while trying to lock-in some profits I donot want to jeoperdise my profitability in case mkt tanks....that is why 40 MNF....otherwise 100 Nifty futures will lock in 100 points but if the market goes below 5100 it will seriously affect profitability as 100 MNF bought will bleed the trade....with 40 I am comfortable.....
Smart_trade
One way of locking some profits is roll down from 5300 put to 5200 put...ie sell 5300 put and buy 5200 put but roll down eats into profits unless the trade is deep in the money...
But while trying to lock-in some profits I donot want to jeoperdise my profitability in case mkt tanks....that is why 40 MNF....otherwise 100 Nifty futures will lock in 100 points but if the market goes below 5100 it will seriously affect profitability as 100 MNF bought will bleed the trade....with 40 I am comfortable.....
Smart_trade
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