Help with Nifty strategy.

[noobtrader]

Today I bought Nifty Futures at 2751.10 and sold Nifty Call (2700 Strike) at 164.


I thought that the option premium for the 2700 call was pretty high and I wanted to cover the risk of selling the Call buy buying Nifty Futures.

Could someone tell me what is the maximum risk and maximum profit. And is this a profitable strategy ? (I'm new to nifty trading so I'm not sure. But, I think that the maximum profit will be 103 and I don't know what the maximum loss would be).

 

[arnav_rulz]

Re: Help with Nifty stratergy.

Today I bought Nifty Futures at 2751.10 and sold Nifty Call (2700 Strike) at 164.


I thought that the option premium for the 2700 call was pretty high and I wanted to cover the risk of selling the Call buy buying Nifty Futures.

Could someone tell me what is the maximum risk and maximum profit. And is this a profitable strategy ? (I'm new to nifty trading so I'm not sure. But, I think that the maximum profit will be 103 and I don't know what the maximum loss would be).

Your Maximum loss is unlimited.. Or we can also you would start losing below 2587.
Your maximum Profit = 113
To make it simple... think that you sold a blank Put Of 2700 @ 113

Also generally you dont buy a future to cover the risk of selling a call but do the Exact opposite that ie, sell a call to cover the risk of Future.

It will be a profitable strategy if you think that the markets will not fall below 2590 in this month.

cheers

 

[joy.edakad]

Re: Help with Nifty stratergy.

u have made a trade and u don't know what u had done.

 

[noobtrader]

Re: Help with Nifty stratergy.

u have made a trade and u don't know what u had done.

ya.. I was holding naked 3100 puts and I sold those today. After that I didn't know what to do. The market was just moving about 2780 odd. I wanted to go long on the market (since I think tonight the US might end in the positive because of some news on the remaining $350 billion being tapped). I don't like buying naked futures so I was looking at calls. 2700 seemed the most active in the money call but the premium of 160 odd looked high. So, I sold that even though I'm positive on the market. And then to cover that I bought the Nifty future. Anyway so the whole point is that ya ur right I traded without knowing what I was doing.

 

[arnav_rulz]

Re: Help with Nifty stratergy.

ya.. I was holding naked 3100 puts and I sold those today. After that I didn't know what to do. The market was just moving about 2780 odd. I wanted to go long on the market (since I think tonight the US might end in the positive because of some news on the remaining $350 billion being tapped). I don't like buying naked futures so I was looking at calls. 2700 seemed the most active in the money call but the premium of 160 odd looked high. So, I sold that even though I'm positive on the market. And then to cover that I bought the Nifty future. Anyway so the whole point is that ya ur right I traded without knowing what I was doing.

Its never too late to correct your mistake.(taking into account as you said that "I traded without knowing what i was doing")

You can still square off your position n maybe even recover ur brokerage cost for now, else you will regret a lot later if this trade turns into losses.

Better late than sorry, But in this case you arnt even late yet !
cheers

 

[noobtrader]

Re: Help with Nifty stratergy.

Your Maximum loss is unlimited.. Or we can also you would start losing below 2587.
Your maximum Profit = 113
To make it simple... think that you sold a blank Put Of 2700 @ 113

Also generally you dont buy a future to cover the risk of selling a call but do the Exact opposite that ie, sell a call to cover the risk of Future.

It will be a profitable strategy if you think that the markets will not fall below 2590 in this month.

cheers

thanks a lot.

 

[noobtrader]

Re: Help with Nifty stratergy.

Its never too late to correct your mistake.(taking into account as you said that "I traded without knowing what i was doing")

You can still square off your position n maybe even recover ur brokerage cost for now, else you will regret a lot later if this trade turns into losses.

Better late than sorry, But in this case you arnt even late yet !
cheers

Why?

Well I only make a loss beyond 2587. Before that hopefully I will still make a profit (maybe very small).

 

[terminator_123]

Re: Help with Nifty stratergy.

Why?

Well I only make a loss beyond 2587. Before that hopefully I will still make a profit (maybe very small).

Because there is still "hopefully" in your statement. If you actually study about the derivatives for a while and then invest knowing what you are doing before you trade, you can let the "hope, fear, greed" part out of the equation.
So instead of "Why" think "Why not". What have you got to lose by studying first ? The market will always be there but the money may not be...

 

[arnav_rulz]

Re: Help with Nifty stratergy.

Why?

Well I only make a loss beyond 2587. Before that hopefully I will still make a profit (maybe very small).

Cause you are not ready as of now to trade in derivative market.. as you don't have much knowledge about it.. and no idea about what risk you might be taking.

And let me tell you 1 thing about risk.I think there is a possibility that markets may touch sub 2100 levels in January alone but are you sure you are up for losing 25k even if you are trading in 1 lot and also considering that you wont average your trade(like most starters do..) when the market starts to fall ?

Also don't tell me it is not possible, cause if you think it is not, go check out what happened in October..

 

[bandlab2]

Re: Help with Nifty stratergy.

important thing is FnO is to avoi exposure to UNLIMITED loss. selling calls without a hedge is dangerous

you may buy a 2500 put to cover yr trade. or else square of both