I have given the following strategy:
Nifty closed today (5 Dec) at 6241.10. If anybody has entered the above trade, the break even point was 6400. There is still gap of around 160 points. So, there was nothing to worry in ordinary circumstances. However, we do not know what will happen on Monday (by that time, election result will be out). There might be big jump in Nifty. So, to avoid loss, I think the easiest method is to close the two short legs (6300 CE and 6400 CE). Approx premium for these two strike price is 118 and 75 points. So, you lose around 90 points (say Rs. 4,500/=). But, we need not close 6600 CE as it might give some profit provided Nifty goes up considerably.
Note: In true sense, this was not a lose booking month but to avoid huge loss in case of big increase in Nifty spot, I think it is better to take the lose and close the short legs.
As far as entering new trade, let us see the situation for next three days after election result (Monday, Tuesday and Wednesday). I prefer not to enter into new trade because of unpredictable market after election result.
Transaction to be done on 29 Nov 2013 for Base Index at 6106.30
(Nifty closed at 6091.85 but Option Chain is based on index 6106.30)
Buy 6600 CE at Price 13.23
Sell 6300 CE at Price 73.97
Sell 6400 CE at Price 44.55
Net Points Received: 105.29
(Nifty closed at 6091.85 but Option Chain is based on index 6106.30)
Buy 6600 CE at Price 13.23
Sell 6300 CE at Price 73.97
Sell 6400 CE at Price 44.55
Net Points Received: 105.29
Note: In true sense, this was not a lose booking month but to avoid huge loss in case of big increase in Nifty spot, I think it is better to take the lose and close the short legs.
As far as entering new trade, let us see the situation for next three days after election result (Monday, Tuesday and Wednesday). I prefer not to enter into new trade because of unpredictable market after election result.