Nifty Options Fortune Trades.

[anuragmunjal]

Originally Posted by munde_77
One doubt. If nifty moves sharply in the las half an hour on expiry day why cant we sell in the last two minutes and leave the position unsquared on expiry day . Suppose the nifty moved from 2800 to 2850 in the last hour and we sold around 2845,can we get the rate of 2825 on expiry day if left unsquared. Please clarify

interesting question...any answer please...
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hi

u will never be able to get a 20 rs. price difference (frm the average of the undrlying) in the last five minutes or so becos
big fund houses and brokers have softwares installed which calculate the average price of the underlying on realtime basis ( the futures get squared off on the last half hour avg. price of the underlying) and even if they find a 2-4 rs. gap in futures from the avg. of the underlying, they would put in a bid to buy or sell thousands of shares.

regards

 

[TraderRavi]

Thanks,
October Put 5800 was purchased on 7th September, 2010
November Call 6500 was purchased on 29th September, 2010. Today it is at 62.00

November Call 6500 price is @ 64..(profit of 64 - 41 = 23 x 50 = 1150 Rs.)...

 

[Rajat Sethi]

Hello Anurag, I am Rajat I have read one of your post on Arbitrage Trading I know people call it as a risk free profit But I really dont understand if there is really a risk free profit out there in anything in world then why cant everybody be rich by now. I wanted to do this arbitrage trading as a part time thing but not sure to give a 50k fees for learning this course. I would really appreciate if you can help me understanding what is arbitrage and is it really a risk free profit. Looking forward to hear from you.

Thanks & Regards

Rajat sethi

 

[anuragmunjal]

Hello Anurag, I am Rajat I have read one of your post on Arbitrage Trading I know people call it as a risk free profit But I really dont understand if there is really a risk free profit out there in anything in world then why cant everybody be rich by now. I wanted to do this arbitrage trading as a part time thing but not sure to give a 50k fees for learning this course. I would really appreciate if you can help me understanding what is arbitrage and is it really a risk free profit. Looking forward to hear from you.

Thanks & Regards

Rajat sethi

hi Rajat

arbitrage is basically a simultaneous buy and sell of a similar or same product with the aim of exploiting any kind of price inefficiency in two different markets. (for instance if u see the rate of crude oil is quoting lower in the international mkts as compared to indian mkt, u can buy there and sell here with the aim of squaring off ur trade in the respective mkts.once the inefficiency disappears. I am assuming here that the exchange rate of dollar and rupee remains stable as sometimes it can go in ur favour and at times it goes against u,therefore in the long run it nullifies). another example could be buying a stock in the cash market and selling it in the futures, if the futures is selling at a significant premium over cash.
coming to the risk part, yes the risk is much less as compared to any other form of trading, (the only risk here is if u execute a trade in one mkt and are not able to execute the simultaneous trade in the other mkt, due to some reason), but so is the oppertunity.
a few years back this was a very lucrative proffession where speed of execution was of paramount importance.
But these days there are big fund houses and big brokers, with very low cost of funds, who are constantly scouting for such oppertunities and after the advent of trading softwares,they also have the fastest speed of execution.hence, any inefficiancy that exists is exploited by them very quickly.
therefore , in my opinion it is very difficult for an individual to make any decent money in this form of trading these days.

hope this helps

regards