Hi,
Before TCS results, I was recommended TCS strategy by my brokerage firm of
buying TCS 1200 call 1 lot @ 26.50 and buying TCS 1100 put 1 lot @ 20.
Currently I am losing money on both positions and really do not know what to do as I am new to options. Please help as expiry is on this thursday.
Pls Reply.
The options rates mentioned by you apparently are for the August series. Such strategy can be useful only when you're expecting big movement in the share price on either side due to some important event (such as results). Once that event is over, there is no point in continuing such strategy since you'd be losing money on both sides, i.e., on the Put option as well as Call option due to time decay. For example, yesterday (29th July), the closing prices of TCS 1200 Call August was only Rs. 10.30 and 1100 Put August option was only Rs. 17.55, vis-a-vis your purchase price of Rs. 26.50 and Rs. 20, respectively. Therefore, already there is a loss of about 50% in just about 3 days. So, it would be advisable to book losses and put an end to the losing strategy.
One more thing, when your brokerage house advises you with such a strategy, it was expected of them to tell an innocent client like you about the exit strategy as well. In the absence of that, you continue to lose money by holding the position as if it is a long term investment.