need help in option(fno)!

[amit_shriv]

Hello Amit,

Using your technique, suppose I were to start a fresh trade tomorrow.
I would be selling 5 Puts SP 3650 and 5 Calls SP 3700 and pocket the premium for all 10 options contracts. After that I will set 2 stop loss orders

1. to sell nifty futures at 3650 and
2. to buy nifty futures at 3700.

Is this what we have to do to initiate the trade?

Can you also please tell me what are the margin requirements?

Regards
Sanjay

Hi Sanjay,
I will only sell 5 calls SP 3700 when the market is near 3680 and pocket the premium.
The I will set a stop loss order to buy nifty futures at 3700.

margin req. is for Nifty is 10% of th contract value.
Total margin needed for the whole trade when you in position of Nifty Future is
370000 /-

regards
Amit

 

[SGM]

Hello Amit,

Thanks for the quick response.

You have said that you will be taking a trade only on one side, in this case selling calls @ SP 3700. Is it because you think that markets are topping and cannot go very far from here on the up side? or some other reasons for not selling Puts @ SP 3650 as it will double your profits, with the same efforts, as anyway you will have to defend only 1 side at a time.

Regards
Sanjay

 

[amit_shriv]

Hello Amit,

Thanks for the quick response.

You have said that you will be taking a trade only on one side, in this case selling calls @ SP 3700. Is it because you think that markets are topping and cannot go very far from here on the up side? or some other reasons for not selling Puts @ SP 3650 as it will double your profits, with the same efforts, as anyway you will have to defend only 1 side at a time.

Regards
Sanjay

Hi sanjay,
I any case you have to defend one side. Be it my style or the way you are telling. When I sell Call at 3700 when market is around 3680-3690 is because to collect maximum premium. When I sell call I don't know whether the market will fall from here or will continue to go upwards. I don't take Put in this case bacause then the margin req. will be more. I implement this startegy to trade in live market with real cash so I have to take care of the margin req.

regards
Amit

 

[SGM]

Hello Amit,

Thanks for your reply and your patience with my questions.

I agree that you should continue using your style as it is giving you good profits.

Also nice of you to point out that you implement this startegy to trade in live market with real cash. I am sure all of us here on the forum are in it for Real Cash and not just for theoretical discussions.

As for the margins, my point is that margin required for trading with 10 lots of calls with a possible stop loss of 10 NFs will work out to 7 L, but a similar premium can be earned by selling 5 lots each of Calls, Puts and in this case for hedging we have to use only 5 lots of NFs either short or long as the case may be. Even if your broker does not take less margin for a hedged position the margin works out to around 5L, out of which you already have around 75-80K as premium, so works out to around your figure of 3.7 L

So my point is this way we have a better risk reward ratio and almost same margin.

Thanks and Regards
Sanjay

 

[amit_shriv]

Hello Amit,

Thanks for your reply and your patience with my questions.

I agree that you should continue using your style as it is giving you good profits.

Also nice of you to point out that you implement this startegy to trade in live market with real cash. I am sure all of us here on the forum are in it for Real Cash and not just for theoretical discussions.

As for the margins, my point is that margin required for trading with 10 lots of calls with a possible stop loss of 10 NFs will work out to 7 L, but a similar premium can be earned by selling 5 lots each of Calls, Puts and in this case for hedging we have to use only 5 lots of NFs either short or long as the case may be. Even if your broker does not take less margin for a hedged position the margin works out to around 5L, out of which you already have around 75-80K as premium, so works out to around your figure of 3.7 L

So my point is this way we have a better risk reward ratio and almost same margin.

Thanks and Regards
Sanjay

Hi Sanjay,
Ya I agree with you as well. May be first I will just paper trade and see how it goes


regards
Amit

 

[ellisprem]

Dear Friends. I Need Ur Advice, I Bought Relience Petrol Option Call May25 Strike Price 9o At The Premium Of 5.90 Now Its 2.50. It Will Rise Near May 25 Or Not.i Think I Bought It At High Premium? Im Egar To Hear From Anyof U-----------thanks In Advance--v.premkumar.

 

[vince]

Hi ellisprem,

Since rpl has just listed it is impossible to comment technically. But to repair the trade that has already gone against you, you could sell a 95 call trading at around 2. That should reduce your loss if rpl does not go up. If it does square off the entire position at breakeven / profit .
If it does not go up or moves down let the position expire.

 

[ellisprem]

Thank U Vince.

 

[narayan78]

Hi ellisprem,

Since rpl has just listed it is impossible to comment technically. But to repair the trade that has already gone against you, you could sell a 95 call trading at around 2. That should reduce your loss if rpl does not go up. If it does square off the entire position at breakeven / profit .
If it does not go up or moves down let the position expire.

hi vince,

would u clear my doubt!
we pay premium to buy call option, and for the writing call option we will be receiving premium. but the relationship manager at the broker house says i have to keep a margin in my trading account. (for nifty like 35000Rs approx). is it true for writing options we have to keep margin money !

thank u very much,
narayan.

 

[pravin]

hi vince,

would u clear my doubt!
we pay premium to buy call option, and for the writing call option we will be receiving premium. but the relationship manager at the broker house says i have to keep a margin in my trading account. (for nifty like 35000Rs approx). is it true for writing options we have to keep margin money !

thank u very much,
narayan.

I think more than 35000 /- will require for writing option due to high volatility .