Options Hedging Strategy - Advice requested.

#1
Jan-19 SPOT - 10866

SHORT PE- 10850 @ 157.00 ITM
SHORT CE - 10850 @ 225.00 OTM
TOTAL = 382.00

LOWER BREAKEVEN -10468
UPPER BREAKEVEN -11218

THEN BUY
10500 PE @ 67
11200 CE @ 65

CREDIT - 382
DEBIT - 132

BALANCE AT EXPIRY -250

PLEASE COMMENT
 

kingkrunal

Well-Known Member
#3
Jan-19 SPOT - 10866

SHORT PE- 10850 @ 157.00 ITM
SHORT CE - 10850 @ 225.00 OTM
TOTAL = 382.00

LOWER BREAKEVEN -10468
UPPER BREAKEVEN -11218

THEN BUY
10500 PE @ 67
11200 CE @ 65

CREDIT - 382
DEBIT - 132

BALANCE AT EXPIRY -250

PLEASE COMMENT
i wish if this is so simple..

the breakeven points are after buying options -- which will tie up max loss... but it is not sureshot profit..
play around here https://upstox.com/tools-and-calculators/option-strategy-builder/
 

pannet1

Well-Known Member
#8
ha guatama,

its so heartening to see mahakavi in your profile pic. its only that which inspired me to post this.

for simplicity let us break this down to two parts. the PE credit spread and the CE credit spread. lets consider PE and you can apply the same concept to CE as well

theoretically. your short PE 10850 when the month expires at your upper PE strike 10500 can loose 350 points (10850-10500)
since you already collected 157 points you can loose only 193 points (350-157) .. but you already expended 67 points by buying 10500 PE, so you could loose a maximum of 260 points. (193+67)

however you already got a credit of 160 points from CEs and you will retain that too, so you only stand to loose 100 points (260-160). hope this helps.
 
#10
Jan-19 SPOT - 10886 LTP

SHORT PE- 10850 @ 157.00 ITM - LTP 100.85
SHORT CE - 10850 @ 225.00 OTM LTP - 173
SOLD = 382.00
LTP = 173.85


THEN BUY
10500 PE @ 67 LTP 27
11200 CE @ 65 LTP 26

SOLD 132
LTP 53
 

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