NIFTY Options Trading by RAJ
- Thread starter healthraj
- Start date
- Tags nifty options chain raj oat
I hope this is the right place to put my query.
Say , i have a bearish view on nifty and i wanna go short at 7550 for target of 7000 by expiry.
So, what option strategy can be best for me ?
Sell 7500 call and buy 7700 put ? It will be like creating a synthetic naked short like shorting future but with some premium in the kitty.
If i am right , i get to keep the premium on the call and if iam wrong i will lose less than that in futures.
Say , i have a bearish view on nifty and i wanna go short at 7550 for target of 7000 by expiry.
So, what option strategy can be best for me ?
Sell 7500 call and buy 7700 put ? It will be like creating a synthetic naked short like shorting future but with some premium in the kitty.
If i am right , i get to keep the premium on the call and if iam wrong i will lose less than that in futures.
I hope this is the right place to put my query.
Say , i have a bearish view on nifty and i wanna go short at 7550 for target of 7000 by expiry.
So, what option strategy can be best for me ?
Sell 7500 call and buy 7700 put ? It will be like creating a synthetic naked short like shorting future but with some premium in the kitty.
If i am right , i get to keep the premium on the call and if iam wrong i will lose less than that in futures.
Say , i have a bearish view on nifty and i wanna go short at 7550 for target of 7000 by expiry.
So, what option strategy can be best for me ?
Sell 7500 call and buy 7700 put ? It will be like creating a synthetic naked short like shorting future but with some premium in the kitty.
If i am right , i get to keep the premium on the call and if iam wrong i will lose less than that in futures.
Where options are concerned, my knowledge is limited to the fact that I don't know enough so I should keep away. Danpickup (now Somatung) is the expert here on these matters.
But prima facie, this strategy seems unidirectional, both the legs are basically selling the underlying (nifty). I guess it would be a hedge if you were to sell 7500 call and buy 7600/7550 call or something like that.
Suppose you are wrong, and nifty moves to 7700 by the series end, then you will not only lose the premium in 7700PE but have a serious loss in 7500CE.
At 7550 when i plan to do the trade, i will sell 7500 call around 135-139 .
So, if Nifty closes at 7700 , i lose only 60-65 points on call.
Where the loss will be great is in the put . It will expire worthless. About 180-190 down the hole. So, in net say 190+60 = 250 points loss if it expires at 7700.
Now what if it expires at 7000, my 190 put will get sold 700 i.e. 500 points there plus 135 on the call. It nets 635 . That's the potential profit.
One of my friends advised me to buy a 7800 call at 18 or 7700 call at 33 or whatever the prevailing price is at that point in time.
Now the question is if it has to expire at 7700 only , i will lose the call money also.
Now what if the expiry is at 7500 or below , there i make some good money.Suppose it expires at 7500 , i keep the call premium and make some 20 points on the put.So, at 7500 expiry , my profit is 150-160.
At 7700 expiry my loss is around 250.
Here the main question is about the direction of the market. Now i think the direction will be down .Now what is the best option strategy for me to lose the minimum and reap the maximum.
Lets say what i plan to do is foolhardy like selling 7500 call and buying 7700 put.So, keeping my bias in mind what would be the best strategy for me.
buy a simple OTM put and sit tight . That's why i came here to the guys who understand options well for advice.
Looking at the monthly range of Nifty , it has been around 400-600 points.
We are already at the top of the range at around 650 points. Now unless something drastic happens , we find a trillion barrel of crude under somewhere or suddenly all the defaulters have change of heart and pay back all their dues to the banks in general.
China has been downgraded by Moodys to negative . Their exports are down by 25%. that's the official figure . Only GOD knows the real figure. I believe it was a furious typical bear market rally on back of short covering. The futures are back to premium indicates short covering is over. The entire previous week the way market traded looks like distribution to me.
So, if Nifty closes at 7700 , i lose only 60-65 points on call.
Where the loss will be great is in the put . It will expire worthless. About 180-190 down the hole. So, in net say 190+60 = 250 points loss if it expires at 7700.
Now what if it expires at 7000, my 190 put will get sold 700 i.e. 500 points there plus 135 on the call. It nets 635 . That's the potential profit.
One of my friends advised me to buy a 7800 call at 18 or 7700 call at 33 or whatever the prevailing price is at that point in time.
Now the question is if it has to expire at 7700 only , i will lose the call money also.
Now what if the expiry is at 7500 or below , there i make some good money.Suppose it expires at 7500 , i keep the call premium and make some 20 points on the put.So, at 7500 expiry , my profit is 150-160.
At 7700 expiry my loss is around 250.
Here the main question is about the direction of the market. Now i think the direction will be down .Now what is the best option strategy for me to lose the minimum and reap the maximum.
Lets say what i plan to do is foolhardy like selling 7500 call and buying 7700 put.So, keeping my bias in mind what would be the best strategy for me.
buy a simple OTM put and sit tight . That's why i came here to the guys who understand options well for advice.
Looking at the monthly range of Nifty , it has been around 400-600 points.
We are already at the top of the range at around 650 points. Now unless something drastic happens , we find a trillion barrel of crude under somewhere or suddenly all the defaulters have change of heart and pay back all their dues to the banks in general.
China has been downgraded by Moodys to negative . Their exports are down by 25%. that's the official figure . Only GOD knows the real figure. I believe it was a furious typical bear market rally on back of short covering. The futures are back to premium indicates short covering is over. The entire previous week the way market traded looks like distribution to me.
@WafeSurfer
The best strategy is the one YOU personally understand in dept and in every details (Money management, risk management, adjustment rules on break even levels, change in implied volatility, adding legs, reducing legs, entry levels, stop loss rules, exit management and so on).
Now if you are bearish and greedy as you post, but not sure what you want to do and how to control the risk by what you want to do, then buy puts with a stop loss according to your risk appetite and thats it.
The best strategy is the one YOU personally understand in dept and in every details (Money management, risk management, adjustment rules on break even levels, change in implied volatility, adding legs, reducing legs, entry levels, stop loss rules, exit management and so on).
Now if you are bearish and greedy as you post, but not sure what you want to do and how to control the risk by what you want to do, then buy puts with a stop loss according to your risk appetite and thats it.
At 7550 when i plan to do the trade, i will sell 7500 call around 135-139 .
So, if Nifty closes at 7700 , i lose only 60-65 points on call.
Where the loss will be great is in the put . It will expire worthless. About 180-190 down the hole. So, in net say 190+60 = 250 points loss if it expires at 7700.
Now what if it expires at 7000, my 190 put will get sold 700 i.e. 500 points there plus 135 on the call. It nets 635 . That's the potential profit.
One of my friends advised me to buy a 7800 call at 18 or 7700 call at 33 or whatever the prevailing price is at that point in time.
Now the question is if it has to expire at 7700 only , i will lose the call money also.
Now what if the expiry is at 7500 or below , there i make some good money.Suppose it expires at 7500 , i keep the call premium and make some 20 points on the put.So, at 7500 expiry , my profit is 150-160.
At 7700 expiry my loss is around 250.
Here the main question is about the direction of the market. Now i think the direction will be down .Now what is the best option strategy for me to lose the minimum and reap the maximum.
Lets say what i plan to do is foolhardy like selling 7500 call and buying 7700 put.So, keeping my bias in mind what would be the best strategy for me.
buy a simple OTM put and sit tight . That's why i came here to the guys who understand options well for advice.
Looking at the monthly range of Nifty , it has been around 400-600 points.
We are already at the top of the range at around 650 points. Now unless something drastic happens , we find a trillion barrel of crude under somewhere or suddenly all the defaulters have change of heart and pay back all their dues to the banks in general.
China has been downgraded by Moodys to negative . Their exports are down by 25%. that's the official figure . Only GOD knows the real figure. I believe it was a furious typical bear market rally on back of short covering. The futures are back to premium indicates short covering is over. The entire previous week the way market traded looks like distribution to me.
So, if Nifty closes at 7700 , i lose only 60-65 points on call.
Where the loss will be great is in the put . It will expire worthless. About 180-190 down the hole. So, in net say 190+60 = 250 points loss if it expires at 7700.
Now what if it expires at 7000, my 190 put will get sold 700 i.e. 500 points there plus 135 on the call. It nets 635 . That's the potential profit.
One of my friends advised me to buy a 7800 call at 18 or 7700 call at 33 or whatever the prevailing price is at that point in time.
Now the question is if it has to expire at 7700 only , i will lose the call money also.
Now what if the expiry is at 7500 or below , there i make some good money.Suppose it expires at 7500 , i keep the call premium and make some 20 points on the put.So, at 7500 expiry , my profit is 150-160.
At 7700 expiry my loss is around 250.
Here the main question is about the direction of the market. Now i think the direction will be down .Now what is the best option strategy for me to lose the minimum and reap the maximum.
Lets say what i plan to do is foolhardy like selling 7500 call and buying 7700 put.So, keeping my bias in mind what would be the best strategy for me.
buy a simple OTM put and sit tight . That's why i came here to the guys who understand options well for advice.
Looking at the monthly range of Nifty , it has been around 400-600 points.
We are already at the top of the range at around 650 points. Now unless something drastic happens , we find a trillion barrel of crude under somewhere or suddenly all the defaulters have change of heart and pay back all their dues to the banks in general.
China has been downgraded by Moodys to negative . Their exports are down by 25%. that's the official figure . Only GOD knows the real figure. I believe it was a furious typical bear market rally on back of short covering. The futures are back to premium indicates short covering is over. The entire previous week the way market traded looks like distribution to me.
Looks like you have carried out a detailed analysis regarding your risk return possibilities. Please also consider the following facts:
Markets are irrational and it should always be assumed that whatever you are expecting might not happen.
At the end of the day you are going for a high risk unlimited profit unlimited loss strategy.
The strategy outlined has no hedge.
It is true that nifty Call MAX OI is @7500 so there is a chance of downward movement.
There are lots of shorts still and if they are covered then OI would change over night.
If you check NIFTY is actually following the global indices and is trying to catch up. No one is sure what will happen in the FED & BOJ meets (both before expiry)
The strategy outlined have no stop loss / target. These are MUST!!!!
I would prefer a bear call / put spread to get some hedge. It would not satisfy your greed though
In the end, just dont count on market expiring below 7500 based on your gut feeling. I have been down that road a number of times and every time market has taught me a tough lesson
Best of luck with your trade....
Souma
Hi all,
I have a doubt in this strategy.. What if OI is showing Bearish signal and CHOI is showing Bullish signal. Came across that kind of scenario today. As Intraday is showing Bullish and Positional is showing Bearish, how come we analyse the market trend.
7800-8000
Need your valuable suggestion.
Thanks.
I have a doubt in this strategy.. What if OI is showing Bearish signal and CHOI is showing Bullish signal. Came across that kind of scenario today. As Intraday is showing Bullish and Positional is showing Bearish, how come we analyse the market trend.
7800-8000
Need your valuable suggestion.
Thanks.
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