Pls explain my following Call Options for tata Motors

#1
Hello friends,

I am new to F&O.

I would like to trace virtually my 2 call options just to make clear understanding of what happen if i make order for them.

Right now , Tata motors closed at 415 Rs. at 1 Nov,2004.
25 Nov 2004 - CA - 400Rs is available at premium of 24 Rs.
25 Nov 2004 - PA - 400Rs is available at premium of 6 Rs.

Suppose i buy
1 lot of [email protected] by paying 24Rs. &
1 lot of [email protected] by paying 6 Rs

And Lets say on 25 Nov... Tata Motor is trading at
1) 390
2) 394
3) 400
4) 410

Then in all 4 cases, which of my order will get executed ? which options will expire without execution.

Well, i understand for the same example if i buy
[email protected] at 4.30 Rs today...
1) If on 25Nov, it is trading at 430
------------- I know, this contract will expire without execution & i will loose 4.30 Rs / share, for 1 lot of 815 Shares.

2) If on 25Nov, it is trading at 450
------------- I will make profit of 10-4.30 = 5.70 Rs per share for 1 lot (815 shares).


Thanks in advance for your reply.

Vijay.
 
#2
Suppose i buy
1 lot of [email protected] by paying 24Rs. &
1 lot of [email protected] by paying 6 Rs

And Lets say on 25 Nov... Tata Motor is trading at
1) 390
2) 394
3) 400
4) 410
On expiry this will be the value of your CALLS:

1)0.00
2)0.00
3)0.00
4)10.00

On expiry this will be the value of your PUTS:

1)10.00
2)6.00
3)0.00
4)0.00

Well, i understand for the same example if i buy
[email protected] at 4.30 Rs today...
1) If on 25Nov, it is trading at 430
------------- I know, this contract will expire without execution & i will loose 4.30 Rs / share, for 1 lot of 815 Shares.
YES!

2) If on 25Nov, it is trading at 450
------------- I will make profit of 10-4.30 = 5.70 Rs per share for 1 lot (815 shares).
YES!
 
#3
Thank you TradingPics..

It is making my view more clear.

One more query...

1) What happen if i will sell 1 lot of "[email protected]" at 10.25Rs.
-------- Will this give me 10.25 Rs today on 2nd Nov ?
& i think i would be bound to condition that
"I must have to buy 825 shares of TATAMOTORS on 25 Nov. at 420Rs".

Now.. lets say on 23 Nov....
I will buy 1 lot of "[email protected]" at XX.XX Rs.. then i have cleared my position... Is that true... ?

--- Right now.... is "sharekhan" or "hdfcsec" or "icicidirect" allowing me to sell PA (put option) & have some fund in my account for 20 days without any extra margin limit ?

This is giving me direction to learn F&O.

Thank you,
Vijay.
 
#4
vijay96238 said:
Thank you TradingPics..

It is making my view more clear.

One more query...

1) What happen if i will sell 1 lot of "[email protected]" at 10.25Rs.
-------- Will this give me 10.25 Rs today on 2nd Nov ?
& i think i would be bound to condition that
"I must have to buy 825 shares of TATAMOTORS on 25 Nov. at 420Rs".

Now.. lets say on 23 Nov....
I will buy 1 lot of "[email protected]" at XX.XX Rs.. then i have cleared my position... Is that true... ?

--- Right now.... is "sharekhan" or "hdfcsec" or "icicidirect" allowing me to sell PA (put option) & have some fund in my account for 20 days without any extra margin limit ?

This is giving me direction to learn F&O.

Thank you,
Vijay.
When you sell any option (call or put) you need to pay a margin to the broker.

If you sell a call or put you can close your position by buying back that call or put before expiry date.

When you sell 1 lot of "[email protected]" at 10.25Rs you will receive the 10.25 right away and no you do not have to BUY the shares back.
 

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