hello all,
this is interesting thread and I am new to options. I have a practical question .
EXAMPLE:- a trader(AMAN1) buys Nifty august 4050 puts @ 60 say 2 contracts of nifty (50+50=100).
question:- 1) at what price will he break even? and start making profit.
2) what will be his maximum profit?
3) what will be his maximum loss ?
4) can he square off his put option any time before expiry
or he will have to wait for the last expiry day?
MARGIN PAID:- 6000 (3000+3000).
thanks and Regards,
Aman1
this is interesting thread and I am new to options. I have a practical question .
EXAMPLE:- a trader(AMAN1) buys Nifty august 4050 puts @ 60 say 2 contracts of nifty (50+50=100).
question:- 1) at what price will he break even? and start making profit.
2) what will be his maximum profit?
3) what will be his maximum loss ?
4) can he square off his put option any time before expiry
or he will have to wait for the last expiry day?
MARGIN PAID:- 6000 (3000+3000).
thanks and Regards,
Aman1
2. Maximum profit is achieved when the Nifty falls to 0. So max profit will be Rs. 199500 per lot, or Rs. 399000 for both lots.
3. Maximum loss is limited to premium paid. So Rs. 3000 per lot, for a total of Rs. 6000 for both lots.
4. Position can be squared off at any time till expiry, or will be automatically exercised if in the money on expiry.