The options are expiring on 26 Dec 2013. If by that date, Nifty remains within 6300, you get full premium. Even at 6400, you are not losing much, you are gaining 5 points whereas brokerage, STT may comes to say 10-15 points.
Suppose, Nifty goes below 6100 and remain around that level (or below this level), you keep gaining around 4 points each day. So, if you want to avoid risk, you can close any time after gaining 50 to 60 points or you may wait till 26 Dec 2013.
The main concern is Nifty touches 6300 within a day or two. In that case, theta is not used at all and Delta comes into full swing. So, you may likely to lose around 100 points. However, the simple option is to hedge this by purchasing Future. If Nifty has to move to 6300 or above in a day or two, it has to move at great pace. Whenever, it is making upward move with a great pace, just buy Nifty Future and whatever you are losing in options, you can cover in Future. However, it has to be understood that you can buy Future only if Nifty is moving at a great pace. In any other case, if Nifty starts coming down, you may lose on Future also. So, you have to be careful while hedging with Nifty Future and with proper stop loss. It is very important that if you hedge options with Future, as soon as you cover points through Future, close the options trade and you are either left with little loss or little profit.
If you do not want to take additional risk of Nifty Future, then you can simple close the trade and take the loss. After all, losses are part of trading. The key thing is we need to do 10 winning trades and 1-2 losing trades.
Note: Till date, the highest value of Nifty has gone on the following days:
Highest of High 6357.10 on 8 Jan 2008
Highest of Open 6335.25 on 8 Nov 2010
Highest of Close 6317.35 on 3 Nov 2013.
If you see historical data, Nifty never crossed 6357.10 till date. In any case, you are safe if Nifty reaches 6400 on 26 Dec 2013. But, in stock market, you never know what will happen and when. So, you need to be ready with all the alternatives.
Suppose, Nifty goes below 6100 and remain around that level (or below this level), you keep gaining around 4 points each day. So, if you want to avoid risk, you can close any time after gaining 50 to 60 points or you may wait till 26 Dec 2013.
The main concern is Nifty touches 6300 within a day or two. In that case, theta is not used at all and Delta comes into full swing. So, you may likely to lose around 100 points. However, the simple option is to hedge this by purchasing Future. If Nifty has to move to 6300 or above in a day or two, it has to move at great pace. Whenever, it is making upward move with a great pace, just buy Nifty Future and whatever you are losing in options, you can cover in Future. However, it has to be understood that you can buy Future only if Nifty is moving at a great pace. In any other case, if Nifty starts coming down, you may lose on Future also. So, you have to be careful while hedging with Nifty Future and with proper stop loss. It is very important that if you hedge options with Future, as soon as you cover points through Future, close the options trade and you are either left with little loss or little profit.
If you do not want to take additional risk of Nifty Future, then you can simple close the trade and take the loss. After all, losses are part of trading. The key thing is we need to do 10 winning trades and 1-2 losing trades.
Note: Till date, the highest value of Nifty has gone on the following days:
Highest of High 6357.10 on 8 Jan 2008
Highest of Open 6335.25 on 8 Nov 2010
Highest of Close 6317.35 on 3 Nov 2013.
If you see historical data, Nifty never crossed 6357.10 till date. In any case, you are safe if Nifty reaches 6400 on 26 Dec 2013. But, in stock market, you never know what will happen and when. So, you need to be ready with all the alternatives.