Options Trading Strategies

[AW10]

My Doubt is:
I want to Short a "out of money" Nifty Call of Apr 2009 Contract ie Nifty spot is 3380 and i want to sell a Nifty Call of strike Price of 3600 and this is a naked call ie i donot have any position.
What are the margin implications of this deal?

Your contract value of 3600 strike is = 3600*50 = 180k. Broker generally charge a % of this liabiilty as margin. Say if they charge 20% as margin to you then 36k will be blocked. This % varies from broker to broker and also from client to client for same broker. So plz chk with yr broker on exact margin requirement.

My intention is if Nifty rises to near around 3550 i would buy it in spot and in case the contract is Assigned to me ie if the contract is Exercised i would be safe only
Then how does ths the margin play role?

Basic funda of call is that as price go up, call premium also goes up. So when nifty was at 3380 and say 3600 call has premium of 50Rs. then when nifty goes up to 3550, same 3600 call premium will be 200+ Rs.
In india, Nifty calls are european style so they can't be excercised before expiry. So don't worry about assignment of Index option in your analysis. If you are considering Stock options, then it is applicable.

Broker might use current spot price to determine mark-to-market risk at the end of the day and accordingly charge higher margin if they requires.

In my strategy can anyone tell me what are the losses attainable?

IMO, the problem with this will be the
1) Low liquidity of 3600 options which is almost 4 strike away from spot (eg - 3380). You will get very small premium for this and majority of that will be eaten away by brokerage.
2) This strategy will get into paper loss as soon as Nifty start going up at larger speed then the time decay of 3600 option.
Real loss at expiry will come only when nifty spot goes above 3600 + premium recieved value. Otherwise, it is going to allow u to pocket whole premium.

Happy Trading

 

[trader21]

Fantastic thread :clapping:

 

[rai07]

Hi,

I have formed a strategy pls guide me whether i should execute it and what would be stoploss if market breaks out on one side

Sell Sep 2010 5200 PE @37(Closing-18-08-2010)
Sell Sep 2010 5600 PE @54(Closing-18-08-2010)
Safe between 5109 and 5691 on expiry.

Sir pls tell me whether i should execute and in between exprity if market breaks out on any direction where should i keep a stoploss.

Waiting for ur reply.
Thanking
Nirmit

 

[DanPickUp]

Mr rai07

http://www.traderji.com/options/305...g-strategy-option-spreads-118.html#post462452

http://www.traderji.com/options/16794-option-buy-recomendations-298.html#post462453

http://www.traderji.com/options/24278-options-trading-strategies-12.html#post462455

How many times more you want to post the same question ?

By the way, there is a FREE option software in India which is called option oracle. http://www.samoasky.com/download.html

Good luck

 

[naveenvadavadagi]

Hi Sir,

Nice thread.:clap::clap::clap:

 

[rai07]

Dear Option Professor Dan

If u know the stoploss why r u not telling the stoploss let me c how much u have learnt. sir if u dnt want to answer better dnt comment on others if u know u can help others by advising them this a forum for learners. and sir pls tell me the stoploss i want 2 c how much u have learnt.

Sorry for harsh words bt i have to use.

Thanks

 

[DanPickUp]

Dear Option Professor Dan

If u know the stoploss why r u not telling the stoploss let me c how much u have learnt. sir if u dnt want to answer better dnt comment on others if u know u can help others by advising them this a forum for learners. and sir pls tell me the stoploss i want 2 c how much u have learnt.

Sorry for harsh words bt i have to use.

Thanks

Take care and good luck.

 

[rey7271]

can u tell me how can i use this software ... i m doing delta hedge but how can i usee ?????????

 

[DanPickUp]

Hi rey7271

How did you trade your delta hedge until know ?

What software did you use until know or how have been your calculations to be sure, that it was a delta hedge ?

Take care

DanPickUp

 

[rey7271]

I USE SOFTWARE TALK DELTA/ greek