now position held :
5100 put april short at 82
5200 put March short at 22
5200 put April long at 102
can anyone explain what my possible What-if scenario are..?
Linkon, I was shocked by last stmt above ?It is your position, and you shd be knowing the what-if outcomes from this. So I am interpreting it as
"can others show their views on it ?" and sharing my views here..
I looked at some of your prev posts to check your view about mkt and as I understand, you are mildly bearish in short term. With all FII /India rating etc, u seems to be bullish on longer term. Hence I am making my observations here. You have already got a view from TT who analysed the strategy from vertical spreads perspective.
1) 5200 Calender Spread (buy 5200 april put, and sell 5200 mar put) is something that u created first. It is mkt neutral and should be able to give u 22 rs of premium by month end. Assuming, due to volatlity increase (which is likely, if we fall), 5200 April Put does not increase at faster pace.
So, what ever is the case, treat it as Calender spread and don't worry about the mkt drop.
2) Considering your short term bearish view, I fail to understand, why would one go for naked short put, in bearish market and invite the disaster.
As you are slightly bullish on longer term, 5100 apr short put fits with that view. But keep in mind that it is naked short put and hence any surprise crash can hit hard.
So if mkt is nice to you and it behaves nicely till expiry, then you will gain some time decay of 4 days on it. But any 40 points move in nifty is sufficient to eat away that 20 points profit due to timedecay.
3) Maybe on the day of expiry, depding on mkt conditions, you might like to adjust the position and convert this naked short to Bearish Put Debit Spread of 5100-5200 April.
or create 5000-5100 Bullish put Credit spread by buying 5000 put as protection.
Wednesday being holiday, it would be better to manage the high risk of naked short trade in advance. All markets globally are overdue for correction and it can happen at anytime. And IMO, biggies, FII are in no hurry to buy on the same or very next day of announcement.
This is assuming that you have slightly long term holding horizon for this trade. If it is short term trade, then probably all above may not make any sense.
Hope this helps.
PS - while I was writing my post, realised that u have already made one post. So please read my post in right perspective.
Happy Trading