GOOD PROFIT: Hedged nifty positions with straddle...

[aditya14]

We got a lot of days for the next series to end and the Intrinsic value is very low. Taking a naked short straddle means you are expecting market to be range bound for the next few weeks. Incase volatality comes back to the market, IV will shoot up

so you are not going to gain if :
1. volatality increases...(its a cycle, u initiated the straddle when vix is low and when vix shoots up, your premium will jump)
2. market continues in its present momentum for a tgt of 5300 (weekly chart is very bullish and 5298 is the next known resistance)
3. we have a deep correction ( with so many qip coming in and big companies raising cash, liquidity gets sucked out of the system)

preferably... buy 5200 call and 4600 put as a hedge to your position. Keeping it naked is just a bit risky.

Won`t that require higher margin requirements if it moves either way of 4900.The autosquareoff will get triggered unless you add more margin.How profitable is this strategy in your opinion.

 

[ghosh_ak34]

Won`t that require higher margin requirements if it moves either way of 4900.The autosquareoff will get triggered unless you add more margin.How profitable is this strategy in your opinion.

Linkon has reco. buy of 5200 call and 4600 put to hedge. How come margin and auto-square off comes into picture.

Regards

 

[lazytrader]

Linkon has reco. buy of 5200 call and 4600 put to hedge. How come margin and auto-square off comes into picture.

Regards

He is talking about margin and margin call from straddle.

 

[lazytrader]

Won`t that require higher margin requirements if it moves either way of 4900.The autosquareoff will get triggered unless you add more margin.How profitable is this strategy in your opinion.

Any leveraged tading requires that you keep enough funds available to make sure you don't meet margin call.

 

[linkon7]

Won`t that require higher margin requirements if it moves either way of 4900.The autosquareoff will get triggered unless you add more margin.How profitable is this strategy in your opinion.

Buddy,if u plan to write options...u have to have sufficient m2m margin. But if u r writing a straddle... then the m2m requirement is not that big...

 

[aditya14]

Linkon has reco. buy of 5200 call and 4600 put to hedge. How come margin and auto-square off comes into picture.

Regards

Did you READ my post?

 

[linkon7]

Did you READ my post?

Aditya,
When vijay has shorted 4900 straddle, he got 380 points as credit. so effectively, his m2m is 1 lot of nifty plus the extra value of the straddle if it is more than 380. Now only way extra premium will be applicable if nifty trades above 5200 or below 4600. since there is a lot of time left, time decay wont eat away the loosing leg as fast as the winning leg appreciates.

What Ghosh was pointing out was just that buying 5200 call and 4600 put will come from the premium he has already recieved and hence he wont need extra margin.

 

[aditya14]

Aditya,
When vijay has shorted 4900 straddle, he got 380 points as credit. so effectively, his m2m is 1 lot of nifty plus the extra value of the straddle if it is more than 380. Now only way extra premium will be applicable if nifty trades above 5200 or below 4600. since there is a lot of time left, time decay wont eat away the loosing leg as fast as the winning leg appreciates.

What Ghosh was pointing out was just that buying 5200 call and 4600 put will come from the premium he has already recieved and hence he wont need extra margin.

Nice cover for Ghosh sir.U hedged his post quite well i must say

 

[VJAY]

Dear Linkon,
Please give guidance on my posiion of short stradle(4900).Can I squre it of hold?now almost profit of 75 points....

 

[linkon7]

Dear Linkon,
Please give guidance on my posiion of short stradle(4900).Can I squre it of hold?now almost profit of 75 points....

buy a 5000 call and keep it as a hedge...till 4920 is broken on closing basis....