Option strategy before the budget

[kkeskar92]

Lets start a new thread for possible option stategies before union budget on friday.

Tell us about your bullish/bearish bias and the option stategy to support that bias.

I have a bearish bias on the market but feel that the market will just rise to 5000 after budget and then contiue its fall to 4500 or below that.
I am planning a bull put spread at 4800-4700 level and a bear call spread at 4900-5000 level and collect the credit by selling 4800 put and 4900 call and at the same time manage the upside and downside risk by buying out of money 5000 call and 4700 put. Markets are choppy and trading around 4850, exactly in the middle of option spreads. Net credit will be around Rs 80 for combined spread as per todays closing price per lot of Nifty....so Rs 4000 per lot.

Once the budget is out, then a directional strategy like either a bear put or a bull call spread.

Now tell us about your bias and possible strategy.

 

[nayarock]

Hi kkeskar92,

I am new to Options. I was thinking of Long Strangle, because market may show large movement (either way) in march and also Strangle is Cheaper.

 

[rkkarnani]

I had already sold 4900 Call and 4700 Put collecting a total of Rs.249.00!!
I am safe till 4450 to 5150!!!
I expect the market to bounce UP on budget : My reason is that max people I have talked to are expecting the market to go down and usually mkt does the opposite of the majority!!!

 

[abigbull]

I had already sold 4900 Call and 4700 Put collecting a total of Rs.249.00!!
I am safe till 4450 to 5150!!!
I expect the market to bounce UP on budget : My reason is that max people I have talked to are expecting the market to go down and usually mkt does the opposite of the majority!!!

Hello fellow traders .
Can u pls help with the exact Put / call bought or sold to know the positions . i do not understand fully the strangle and the spreads as a jargon words .

 

[BrokerJi]

Hello fellow traders .
Can u pls help with the exact Put / call bought or sold to know the positions . i do not understand fully the strangle and the spreads as a jargon words .

Sorry Boss, but I wonder if you are thinking of trading without these basics.
Btw all this can be easily understood by minor googling. :thumb:
Regards,
BJ

 

[PitBull]

Long strangle here.
Bought 4700 PE and 5000 CE just before close. I am expecting a significant move tomorrow.

 

[abigbull]

Long strangle here.
Bought 4700 PE and 5000 CE just before close. I am expecting a significant move tomorrow.

But here in this long strangle when will we earn any profits if the market is above 5000 . or the market is below 4700 .. Is this correct .
Also does it mean that if the range is in between 4700 <==> 5000 i do not earn anything inside a day or two .when the volatility is the max .

 

[abigbull]

Hello AW10 & Linkon

I am a new to option trading and just made one trade during the Budget day and would like to know ur thoughts on it .

4700 PUT Buy at Rs 80 10.50 am Nifty at 4886
4900 CALL Buy at Rs 140 10.50 am Nifty at 4886

Now when the market started to rise at around 4965 my CALL was priced at 155
and PUT at 40 so got 50% loss in my PUT value and only 15 pt increase when my call was ITM .

and finally when the day ended the value of my positions are as follows .
BUY call 4900 at 140
Buy Put 4700 at 40 .
so i am in loss ? Is this the correct way of options working and also would like to know if my approach was right for this Budget day ?

 

[PitBull]

I had the same issue, abigbull. The 4700 PE reduced drastically while the 5000CE did not increase by much. The premiums paid were very high and reduced by a large amount once the market took direction.
I am currently holding both and looking to Tuesday for direction.
The put will most likely expire worthless but the call should be ITM, unless globally there is bad news.