Options Trading

[intra_call]

Options no way in indian market . We can make money only short term calls

 

[aca_trader]

Options no way in indian market . We can make money only short term calls

Is it So?

What you say about this proposed trade for Ashok Leyland?

CMP = 50.25

Trade:- Write one put option Strike 50 @ Rs. 3.65 , Expiry - Jan 08
Write One Call Option Strike 60 @ Rs. 1.85, Expiry - Jan 08
Write One Call Option Strike 65 @ Rs. 1.25, Expiry - Jan 08

Risk-Reward :- Margin (As required by ICICI Direct) = Rs. 35,000 (Approx)
(After Adjustment of Credit Received)
Max. Profit = Rs. 32,225 (In the range of 51-59)
Break-Even Range = Rs. 43.5- Rs. 66

As you can see, the maximum profit of Rs. 32,225 is realised Even if the Price ends in a range of 16% of CMP and the Trade does not make any loss if price flctuates in a range of 45% of CMP.

The Risk-Reward Graph for the expiry date with the assumption that volatility does not change in the meanwhile is attached. With IV of call options running in the range of 85%, it'll be a much better trade if the volatility retraces back to normal levels.

Best Regards,
--Ashish

 

[pasha]

Hi Ashish,
Good to see you back!
Are you dabbling in options now or have you been doing this for some time?

Edit: How did you get the figure of "Max. Profit = Rs. 32,225 (In the range of 51-59)"?

 

[pasha]

Ok,so the lot size was 4775, thats where I went wrong.
Any link to get correct lot sizes?

 

[rkkarnani]

If Ashok lelyend remain same, u would enjoy total premium. But if Ashok Leylend reach at 65 on 10 January 2008 ? (as is there a gurantee that Ashok Lelyend would not break 60 ?)

You can enjoy premium received on your put option whereas your call strike 60 and 65 would be approx 10 and 4 respectively.



If I am wrong, please clear my confusion.

F

How did you arrive at the price of Call at approx Rs.10/- a Rs.60/- strike call and 4/- for Rs.65/- strike call when we assume that Spot price of the underlying reaches > 60/-???
Yesterday Ashok Leyland was trading at around Rs.50/- and the Rs.50/- strike Call (at the money) was traded at around Rs.5/- and Rs.45/-strike (deep in the money)Call was traded at around 7.50 and Rs.55/- Call (out 0f money) was traded at 2.50
With the date 10th Januray quoted by you still 14 days away the rates would face some time decay however small so I feel that the figure assumed by you may not be correct.
I am still trying to learn options so may be have made some errors!!!
Regards
R K Karnani

 

[rickyric_ny]

guys i am new 2 options ... kindly check whether this works out.

nifty -CMP- 6081
nifty tgt- 6150

-----------------------------
nifty-call - 6200@144- 3 lots
nifty-put- 5700@74- 1 lot

-----------------
money to be invested 26k+

Profit > 15k
loss around 2k+.

 

[aca_trader]

Hi Ashish,
Good to see you back!
Are you dabbling in options now or have you been doing this for some time?

Edit: How did you get the figure of "Max. Profit = Rs. 32,225 (In the range of 51-59)"?

Hi Pasha!
I am glad to be back as well.
I am not much old to options. But spreads trading is certainly very new. So far, the focus has been on Writing Naked/Covered Options.
For lot sizes, refer to http://www.nseindia.com/content/fo/fo_mktlots.csv
Regards,
--Ashish

 

[aca_trader]

How it can be 35000 ? What % ?
Ashok Leylend lot size 4775 (for Dec not checked for Jan) @ 52 = 248300
20% (Approx) of this amt comes 49660. For writting u require 49660*3 = 148980.(I am calcuating it with current price only)

Premium Received on put option 50 strike 17428.
Recd on call option 60 strike 8833
Recd on call 65 strike 5968
Total Premium recd 32229.
Reduce it from margian recd 148980-32229 = net margian required 116759.

Hi! I am sorry for not clarifying that the Rs. 35,000 margin was on one contract. However, it won't require Rs. 1.16 lacs as calculated by you. Put and Call are off-setting positions and SPAN Margin calculations calculate margin on entire portfolio and not on single contracts. Hence, the margin will be somewhere approx Rs. 70,000. (35,000*2)

If Ashok lelyend remain same, u would enjoy total premium. But if Ashok Leylend reach at 65 on 10 January 2008 ? (as is there a gurantee that Ashok Lelyend would not break 60 ?)
You can enjoy premium received on your put option whereas your call strike 60 and 65 would be approx 10 and 4 respectively.

I assume that you are an equity trader. Let me ask you a question, Do you ever enter a trade where there is no guarantee that price will not go in a direction against you? If you do, can you please tell me what do you do if price goes against your direction? If you say you take corrective action, what makes you presume that an option trade will not take them and mind you, the option traders reportire of Defensive Techniques is much broader than is available to a plain equity trader. On Occassions, these defensive techniques even give credit as well.

If I am wrong, please clear my confusion.

I wonder if people in confusion put their questions/remarks with a sarcastic rolling eyes?

Best Regards,
--Ashish

 

[aca_trader]

guys i am new 2 options ... kindly check whether this works out.

nifty -CMP- 6081
nifty tgt- 6150

-----------------------------
nifty-call - 6200@144- 3 lots
nifty-put- 5700@74- 1 lot

-----------------
money to be invested 26k+

Profit > 15k
loss around 2k+.

Hi!

Can you please tell as how the loss has been calculated? Is it based upon some stop-loss mechanism? If not, the loss of this trade can be the entire premium paid (I have assumed that you have purchased put and not written them).

Now coming to the Risk Reward Scenario, If the trade is left to expiry, i.e., 31st January, Money is made on an expiry below 5190 or on expiry above 6370 (Approx.). However, If you exit the trade once 6150 is touched, the rewards will vary depending upon the no of days taken to reach the mile stone.

A what-if analysis with price target at 6150 throws the following results:-

Date of target Return

28/12/2007 3659
31/12/2007 1904
01/01/2008 1305
02/01/2008 698
03/01/2008 84
04/01/2008 (539) == Loss starts from here.
07/01/2008 \(2461)
14/01/2008 (7324)
21/01/2008 (12960)
28/01/2008 (20276)

Ofcourse, there may be myrid variations of prices on any of days and the Rewards will change accordingly.

BTW, if you are bullish, why to purchase a Put Option?

Regards,
--Ashish

 

[ashokg]

how do rolllover ?? what is the cost.. what is the process.. is it different than selling this months option and buying other months option ??

or is it something different.. ?? please need help ..