Low Risk Options Trading Strategy - Option Spreads

[AW10]

If I have understood Abhi's reply correctly, then his broker is charging 25 to 30k for a spread position which is same as margin required for Naked Short Option Position.

If the margin is required on real risk, then we shdn't be paying more then 5 to 10k for protected spread where max loss is just 5k. Yes, if we break the spread and squareoff the Long leg then obviously broker can give a margin call.

Happy Trading

 

[rkkarnani]

Something about Margines, I saw on NSE site, here is the link :

http://www.nseindia.com/content/nsccl/nsccl_fospanparameters.htm

 

[AW10]

Thanks RKK for the link to NSE site where margin calculation rules are given.
For Index option - it is 3% of notional value where notional value is short option position * prev days close.
i.e. it is like a naked short option position.

Though there is mention of Net Option Value which is difference of Short and Long leg, but nothing about that is given in margin calculation.

It does talk about seperate rules for Calender spread position, but not sure if that is true for Calender spreads created using options or not. I don't use Calender spread hence not sure about it.

Anyway, need to confirm it from somewhere.

Happy Trading

 

[Smart_trade]

I have done a ratio spread in Nifty Jan options today as under :

Bought 5300 put 1 lot at 111=50

Sold 5100 puts 2 lots st 45.50

Risk = 20.5 points,max reward 200 points....but I havt to monitor and take action if nifty goes below 4900....I will try to post my corrective actions if taken....

Best wishes,

Smart_trade

 

[DanPickUp]

Hy Smart trade

Is it possible for you to post an analyze picture from that trade. It is surely interesting for other traders to see, how a " Ratio back spread " in Nifty on an analyze picture looks. I use OpVue and I do not trade the nifty, otherwise I would do it.

Regards and good trading

DanPickUp

 

[AW10]

Deleted.. as Sunil has answered my foolish doubt..

 

[DanPickUp]

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[Sunil]

I have done a ratio spread in Nifty Jan options today as under :

Bought 5300 put 1 lot at 111=50

Sold 5100 puts 2 lots st 45.50

Risk = 20.5 points,max reward 200 points....but I havt to monitor and take action if nifty goes below 4900....I will try to post my corrective actions if taken....

Best wishes,

Smart_trade

nice one ST :thumb:

for benefit of others:
Total cost of strategy (with the qty mentioned) is Rs 1025/-
Max profit of Rs 8975/- happens if Nifty spot settles at 5100 on expiry day.
Anything above 5300, loss is limited to the initial cost Rs 1025/-
Loss keeps on increasing below 4900

I guess ST is looking to close the positions before expiry...

the figures of profit and loss are gross (without taking brokerage & others costs into account)

 

[metushar]

Hello Sunil sir,

Long time...i m visiting TJ...

Can you tell me where you got this diagram done ?

 

[Sunil]

Hello Sunil sir,

Long time...i m visiting TJ...

Can you tell me where you got this diagram done ?

excel...

had it handy for my own options strategies