Hi all.
Here i am new to this topic.One thing is confusing me for long time & before venturing into this i want to clarify myself that's why i opened this thread.
Of course i know that selling naked options is itself very dangerous for new bees like me.But i will use this instrument only for hedging futures.Before that i want to have clear picture for all things.
I know there are so many veterans here, so i request all of them to guide new comers like me.
I would like to know how to calculate profit/ loss by selling options.
I know that i gather premium lets assume it is 6.5 by selling option at strike price 300.
Case 1) If i would square up my position before expiry date then how to calculate profit/ loss.suppose i sold call at 300 strike & booked profit at 200 .How much is the profit for me? Means 300-200=100 only? Or does it includes premium also that i get by selling call?
Case 2)After expiry if i have not squared up the position & strike price value reduced to 200 from 300.
How much profit i will get ? full premium value at that stage?
When will i incur loss? & at what stage?
Regards.
Here i am new to this topic.One thing is confusing me for long time & before venturing into this i want to clarify myself that's why i opened this thread.
Of course i know that selling naked options is itself very dangerous for new bees like me.But i will use this instrument only for hedging futures.Before that i want to have clear picture for all things.
I know there are so many veterans here, so i request all of them to guide new comers like me.
I would like to know how to calculate profit/ loss by selling options.
I know that i gather premium lets assume it is 6.5 by selling option at strike price 300.
Case 1) If i would square up my position before expiry date then how to calculate profit/ loss.suppose i sold call at 300 strike & booked profit at 200 .How much is the profit for me? Means 300-200=100 only? Or does it includes premium also that i get by selling call?
Case 2)After expiry if i have not squared up the position & strike price value reduced to 200 from 300.
How much profit i will get ? full premium value at that stage?
When will i incur loss? & at what stage?
Regards.
