Sure Shot Futures & Options Calls

[Dev Mookerji]

covered call vs selling naked puts which is profitable?

my que was
covred call vs selling naked put
-----------------------------------------
which is more profitable and why?
This que is for all....

I dont know. Hope the arguement ends here.

I should say it’s very funny and completely bullshit. I recommend you to learn basic option pricing.

if nifty drops 145 pt in 2 days, your loss will be around 90-100.
Almost same with covered call.

kindly read my comments again.

I was not having idea in my mind to eat premium of the call but to hedge my long positions up to a certain level and when stocks would have moved in our direction should have exited from the options, but unfortunately that didn't happened. Basically I love to play wild moves in the stocks & futures, U must be remembering from our early days.

At first Sail long position was taken. Idea was to get some wild upswing. But entire market was flat and market bias was turned negativ, but I was confident that downside was limited for the stock at that particular point of view. But to safeguard my position I had written the call. U er correct if it should have moved down around another 10% or more, in that case buying put should have considered as a better option.


But we are ignoring one's ability in technical analysis. I was confident about what I were doing and the trade results shows my ability.

 

[pkusingh]

Nifty is trading at 4900 and the 4900CE and 4900PE are trading at 145 each.

1 we buy NF at 4900 and sell 4900CE on the downside we are protected till 4755 =
YOU ARE CORRECT AND PROFIT AT 4755 = ZERO DONT FORGET IT
(BEZ UR LOSING AT FUTURE SIDE)

BUT WHAT ABOUT BELOW 4755 LEVEL??? UNLIMITED LOSS ON FUTURE IS IT?? WHY U FORGOT THAT???
---------------------------------------------------------

Whereas suppose you sell 4900PE @ 145 what is your protection? =PREMIUM IT SELF IS PROTECTION....

AND MAX PROFIT = 145 AND TRADE IS SAFE TILL 4755

BELOW 4755 BOTH COVRED CALL AND NAKED PUT LOSES ....

BOTH ARE SAME// BUT IN COVERED CALL WE TAKE TWO TRADES ..AND EATING BROKERS..... AND NEEDS MORE MONEY (NOVICE DO THIS STRATEGY)

SELLING PUT = SINGLE TRADE AND LESS PREMIUM AND BETTER COMPARED TO COVERED CALL///

Not always...


Here is an example
Today
S 4926
K 4900
T 28days
vol 23%
-----------------------------
Call 148.2545027
put 103.4959804
------------------------------
Today+2

S 4755
K 4900
T 26
vol 21%

Call 55.74222749
put 183.3212148
----------------------------------
Loss
Covered call 4926-4755-(148-55)=78 pts
naked put 183-103=80 pts
-------------------------------------
Today+2

S 5000
K 4900
T 26
vol 21%
----------------------------------
Call 178.9636024
put 61.54258975

-------------------------
Profit
Covered call 5000-4926-(178-148)=44 pts
naked put 42 pts


again almost same.

But............................

In naked put you are hedged till 4926-103=4823
but in covered call=4926-143=4783

So If I bought covered call then I am investing more and paying more brokerage compare to covered call but I got 40 pts extra hedge.

In covered call case I have to invest 50K and and approx 200 Rs brokrage(including both side , and not exact calculation).
In Naked put I have to invest 25K and approx 75 Rs brokrage.

So I am saving 125Rs or 2.5 pts vs 40 pts hedge. That's sound ok to me.

So naked put is just little leveraged trade.

What do u think?

 

[kindman]

mr dev
yor were wondering about kindman silliness...now i am wondering ur silliness.
The covered call and the naked put are basically the same thing.

hai feiends
pkusingh has given the answer ...
So all got the answer ....
Good luck...

 

[trader.trends]

Nifty is trading at 4900 and the 4900CE and 4900PE are trading at 145 each.

1 we buy NF at 4900 and sell 4900CE on the downside we are protected till 4755 =
YOU ARE CORRECT AND PROFIT AT 4755 = ZERO DONT FORGET IT
(BEZ UR LOSING AT FUTURE SIDE)

BUT WHAT ABOUT BELOW 4755 LEVEL??? UNLIMITED LOSS ON FUTURE IS IT?? WHY U FORGOT THAT???
---------------------------------------------------------

Whereas suppose you sell 4900PE @ 145 what is your protection? =PREMIUM IT SELF IS PROTECTION....

AND MAX PROFIT = 145 AND TRADE IS SAFE TILL 4755

BELOW 4755 BOTH COVRED CALL AND NAKED PUT LOSES ....

BOTH ARE SAME// BUT IN COVERED CALL WE TAKE TWO TRADES ..AND EATING BROKERS..... AND NEEDS MORE MONEY (NOVICE DO THIS STRATEGY)

SELLING PUT = SINGLE TRADE AND LESS PREMIUM AND BETTER COMPARED TO COVERED CALL///

You have time till 4755 is reached to alter your setup.

I have said that the upside in both is same and the downside in both starts after 4755. read the post again. The choice for you is one of philosophy. How much will you start panicking if NF starts going down as soon as you short 4900PE. Most of us don't really wait for expiry to square position.

Please cut the capitals when you post. It looks like you are shouting. Since you have answered the questions you have raised, I guess we can close the subject.

 

[suhas.bhayekar]

Thanks,
for useful message.

 

[Dev Mookerji]

hai feiends
pkusingh has given the answer ...
So all got the answer ....
Good luck...

So I have to believe u were not aware of it

Stop making fun buddy

 

[Dev Mookerji]

I was busy in Holi festival so could not go through the posts properly, and replied earlier posts in a hurry.

So far enough discussion happened.

Now I donn gonna reply anybody about any f***** query regarding my strategies in this thread.

It is strange to note that some forum members dont have patience to go through all the posts, and simply passing their valuable comments reading a single post. Like Pkusingh.

Nobody has time to go through the entire thread or trading positions. The trades were :-

Dated 01 Feb 10.

Buy SAIL Future @ Market rate 213 . T- 229/244 . SL - 199

When the position was in loss due to some negative bias in the market I had given the call to hedge position on the next day on dated 02 Feb 10 @ closing hours. Idea was to recover the losses to a certain points.

Hedge position by selling 210 call @ 8.5

Now how the questions are arising whether covered call is profitable or selling naked puts. when one have an open long postiton how it can be considered another naked put writing? Also I have already mentioned that my idea was not to trade only for premiums. If that should have been the idea I should have written a Call or put.

Now the initial questions were :-

DEV BAYYA I AM ASKING SOME DOUBTS ...
BUY FUTURE + SELLING CALL (MOSTLY UPPER STRIKE ) = CALLED COVERED CALL AND NOT HEDGE..
-------------------------------------------------------
SECOND DOUBT CAME IN MY MIND WHY U SOLD CALL AT SAME STRIKE
------------------------------------------------------------------
THIRD DOUBT IN MY MIND...
IN ABOVE EXAMPLE U PURCHASED SAIL FUT AND U SOLD CALL AT SAME STRIKE..
MEANS YOU TOOK TWO TRADES...
INSTEAD OF THAT WHY DONT YOU SELL A PUT AT SAME STRIKE (IT WILL GIVE U LESS MARGIN AND GOOD PROFITS THAN COVERED CALL)

And when I replied to kindman this gentleman (pikusingh) simply jumped upon me and questioned about my silliness. He has joined just now having couple of posts to his credit in this forum, and dont have idea about our relations ...with kindman. Mr singh should have learned from the word "Bayya" . He is just like my younger brother. We have chatted several times in ym, and I know this guy is a genuine trader. Also in the past his id was used by his little sister. So I was wondering about silliness. Jumping in something without the known facts called stupidity Mr pkusingh.

Yor were wondering about Kindman silliness...Now I am wondering ur silliness.

........time and again I have learned the humbleness and controlling myself. Otherwise I should have replied u in the same manner for the words u have used like bull **** etc.

if u wanna check my past profile check it here.

http://www.traderji.com/members/dev-mookerji.html. I know bullshit better than u.



It seems I have to stop my trading here itself, have to learn basics of options that what is called covered call, then again I have to reply why it is covered call? why not put writing?

Then again question may arise why it is Sail why Not Tisco? Then again one may ask why it is Feb why not March and so on.


Enough is enough. Thanks for spoiling my day.

 

[pkusingh]

I was busy in Holi festival so could not go through the posts properly, and replied earlier posts in a hurry.

So far enough discussion happened.

Now I donn gonna reply anybody about any f***** query regarding my strategies in this thread.

It is strange to note that some forum members dont have patience to go through all the posts, and simply passing their valuable comments reading a single post. Like Pkusingh.

Nobody has time to go through the entire thread or trading positions. The trades were :-

Dated 01 Feb 10.



When the position was in loss due to some negative bias in the market I had given the call to hedge position on the next day on dated 02 Feb 10 @ closing hours. Idea was to recover the losses to a certain points.



Now how the questions are arising whether covered call is profitable or selling naked puts. when one have an open long postiton how it can be considered another naked put writing? Also I have already mentioned that my idea was not to trade only for premiums. If that should have been the idea I should have written a Call or put.

Now the initial questions were :-



And when I replied to kindman this gentleman (pikusingh) simply jumped upon me and questioned about my silliness. He has joined just now having couple of posts to his credit in this forum, and dont have idea about our relations ...with kindman. Mr singh should have learned from the word "Bayya" . He is just like my younger brother. We have chatted several times in ym, and I know this guy is a genuine trader. Also in the past his id was used by his little sister. So I was wondering about silliness. Jumping in something without the known facts called stupidity Mr pkusingh.



........time and again I have learned the humbleness and controlling myself. Otherwise I should have replied u in the same manner for the words u have used like bull **** etc.

if u wanna check my past profile check it here.

http://www.traderji.com/members/dev-mookerji.html. I know bullshit better than u.



It seems I have to stop my trading here itself, have to learn basics of options that what is called covered call, then again I have to reply why it is covered call? why not put writing?

Then again question may arise why it is Sail why Not Tisco? Then again one may ask why it is Feb why not March and so on.


Enough is enough. Thanks for spoiling my day.

Mr. Dev, I am not here to learn your relationship with kindman.

I just replied kindman's question.

"covered call vs selling naked puts which is profitable? " and your comment "Naked put writing means limited profit and unlimited losses."

That was nothing to do with ur SAIL tips.

Then I replied trader.trends's comment that was "If NF drops to 4755 from 4900 within the next couple of days you are already staring at a loss as the 4900PE will be worth at least 200 or more. ."... I said this statement was bullshit and trust me it is.

I never told you to learn anything. I know you are too good in this field, at least you are much much better then me.

And yes you are right , I am stupid.... I am learning.

........time and again I have learned the humbleness and controlling myself. Otherwise I should have replied u in the same manner for the words u have used like bull **** etc.

Thanks I really appreciate it.

 

[Dev Mookerji]

Hi guys,,

I have to leave for outstation for couple of days. Wont be able to track markets properly, thus may not be able to update the threads for time being....