Options trade...why.... and what if...!

[linkon7]

Trade :


Nifty Aug futures bot at 5360
nifty aug 5400 put bot at 49

Nifty spot was at 5348 when this trade was initiated...! Almost 80% of my options allocation was put on this trade....!

What are my "what if" scenario...? what is my max loss...? max gain... ? what should be my action points...?

 

[DanPickUp]

Trade :


Nifty Aug futures bot at 5360
nifty aug 5400 put bot at 49

Nifty spot was at 5348 when this trade was initiated...! Almost 80% of my options allocation was put on this trade....!

What are my "what if" scenario...? what is my max loss...? max gain... ? what should be my action points...?

Dear Linkon

Good to see you start a thread with examples from your market.

Strategy is interesting and needs to be watched, as you must have a bigger amount of puts in the game.

12 point loss in the future. Now you hedged with the puts which are slightly in the money. So if market drops, your not specified amount of puts should make quick profit which could be bigger as your actual and adding loss in the future position. Stop loss, target and exit strategies are not defined or at least not explained by you in your post.

All the figures and numbers can be seen on any option software which take the data in account from nifty future and the 5400 put option.

Hope some body has it and will post it as I not activated data input from India market in my software.

Good trading

DanPickUp

 

[linkon7]

futures are trading at at 12 point premium...

series expire this thursday....

 

[summasumma]

Trade :


Nifty Aug futures bot at 5360
nifty aug 5400 put bot at 49

Nifty spot was at 5348 when this trade was initiated...! Almost 80% of my options allocation was put on this trade....!

What are my "what if" scenario...? what is my max loss...? max gain... ? what should be my action points...?

what if:
1. nifty close @ 5200
Nifty Aug Fut = 160 points loss.
Nifty 5400 put = 151 points profit.
Overall = 9 points LOSS

2. nifty close @ 5300
Nifty Aug Fut = 60 points loss.
Nifty 5400 put = 51 points profit
Overall = 9 points LOSS

3. nifty close @ 5400
Nifty Aug Fut = 40 points profit.
Nifty 5400 put = 49 points loss.
Overall = 9 points LOSS

4. nifty close @ 5410
Nifty Aug Fut = 50 points profit.
Nifty 5400 put = 49 points loss.
Overall = 1 points Profit

5. nifty close @ 5500
Nifty Aug Fut = 140 points profit.
Nifty 5400 put = 49 points loss.
Overall = 91 points Profit

Max Loss:
9 points if Nifty close <= 5400.

Max Gain:
Anything above 5410, profit will be (Aug.close-5409) points.

Risking 9 points for unlimited reward.

 

[linkon7]

what if:
1. nifty close @ 5200
Nifty Aug Fut = 160 points loss.
Nifty 5400 put = 151 points profit.
Overall = 9 points LOSS

2. nifty close @ 5300
Nifty Aug Fut = 60 points loss.
Nifty 5400 put = 51 points profit
Overall = 9 points LOSS

3. nifty close @ 5400
Nifty Aug Fut = 40 points profit.
Nifty 5400 put = 49 points loss.
Overall = 9 points LOSS

4. nifty close @ 5410
Nifty Aug Fut = 50 points profit.
Nifty 5400 put = 49 points loss.
Overall = 1 points Profit

5. nifty close @ 5500
Nifty Aug Fut = 140 points profit.
Nifty 5400 put = 49 points loss.
Overall = 91 points Profit

Max Loss:
9 points if Nifty close <= 5400.

Max Gain:
Anything above 5410, profit will be (Aug.close-5409) points.

Risking 9 points for unlimited reward.

now... question is... why go though all that trouble..when a simple 5400 call buy @ 13 would give the same potential P/L graph....!

There would be less investment...!

 

[DanPickUp]

now... question is... why go though all that trouble..when a simple 5400 call buy @ 13 would give the same potential P/L graph....!

There would be less investment...!

Dear Linkon

Do not get your question as there is no trouble. If you know from the begin you enter why you use this strategy, then there is not trouble.

You are long the future at 5360 and then hedged with an Aug 5400 put.

Now you have synthetic call.

The question is: When do we use synthetic calls and how do we trade them?

 

[linkon7]

Dear Linkon

Do not get your question as there is no trouble. If you know from the begin you enter why you use this strategy, then there is not trouble.

You are long the future at 5360 and then hedged with an Aug 5400 put.

Now you have synthetic call.

The question is: When do we use synthetic calls and how do we trade them?

I am playing for a gap up tomorrow. In case, market does not oblige... I get away with very small scratch...!

 

[onlinegtrash]

Hey Linkon7,

you have Einsteins pic for your profile!

here is a trivia for you do you know:
"Einstein lost his 1921 Nobel Prize money in the Great Depression when the stock market crashed. "

Sorry for going out of topic, but found the above trivia fascinating !

 

[linkon7]

Hey Linkon7,

you have Einsteins pic for your profile!

here is a trivia for you do you know:
"Einstein lost his 1921 Nobel Prize money in the Great Depression when the stock market crashed. "

Einstein was never known for his riches...! :lol:

he was more known for his ability to not judge a fish by its ability to climb trees....!

 

[DanPickUp]

I am playing for a gap up tomorrow. In case, market does not oblige... I get away with very small scratch...!

Stop loss, target and exit strategies are not defined or at least not explained by you in your post.


You not have to answer that, as I see now you know what you do.

Good luck tomorrow.

DanPickUp