Low Risk Options Trading Strategy - Option Spreads

[AW10]

Insurance is needed the moment risk comes into play for our long term existence.

Very True TT.

But people still live without or under or over insurance.

 

[summasumma]

Short Straddle @ 5100 :

Sell 1 July 5100 CE @ 170
Sell 1 July 5100 PE @ 166.50

Protection for Straddle:
Buy 1 July 4800 PE @ 81.50
Buy 1 July 5400 CE @ 45.35

hi sagar,

Thanks for clearing my doubt.

i want to know about combining nifty futures(as protection) with that straddle rather than a protective stranggle.
what do u think about this idea? That is, you are protected upto range from 4763.5 on the downside to 5436.50 on the upside.
So why can't you go:
Long Nifty Future --- when market breaks the upper range of 5433-5440
Short Nifty Future --- when it breaks the lower range of 4770-4760

I think in this way you can avoid the loss beyond range by gaining in nifty???
And also, You dont need SL for this Nifty trade, since if that nifty long/short goes in loss, your straddle will protect it equally since u short the ITM call and put.
Please comment about the pros and cons of this approach.
AW10, can you also comment on this?

Thanks,
...Summa

 

[vssoma]

dear,
just now i sold Nifty june 4800 CE @ 423 and PE @ 3.3
what is your opinion on this trade.

 

[ksesha]

You intend to gain profit by expecting NIFTY fall from current levels till 4800 and also eager to earn more if the fall is beyond 4800.

Did you ever thought of the possibility of nifty expiring above 5220 !!

dear,
just now i sold Nifty june 4800 CE @ 423 and PE @ 3.3
what is your opinion on this trade.

 

[sadiq]

dear,
just now i sold Nifty june 4800 CE @ 423 and PE @ 3.3
what is your opinion on this trade.

What u will do if market reaches 5400 before june 24th?
you will loose 5400-5250(aprox cmp) = 150*50 = 7500 loss ?

 

[bhushanmoney]

Ok,
I am reading through this post from the beginning!
and thank you for the information

Now,
I am stuck in a position here.
I have 4700PE @ 53 Avg price! (4lots)
and 5000 PE @ 33 Avg price!! (1lot)

I am not sure how to deal those now!
I was calculating a downtrend here!
something went wrong, and here I am!!

Help please.

bhushanmoney.

 

[rrmhatre72]

dear,
just now i sold Nifty june 4800 CE @ 423 and PE @ 3.3
what is your opinion on this trade.

Hi Swamy,

You have sold PE @3.3.
Isn't it as good as selling naked CE at 423?
I may not be as expert as you but just wanted to know logic.

 

[vssoma]

dear,
actually my view is bearish for rest of the week. so, i didn't think even for a second before initiate the trade.
later, i realized...but it's too late....
now i am thinking....if i wait until the expiry date....will it useful or i need to close the trade in red.

 

[AW10]

hi sagar,

Thanks for clearing my doubt.

i want to know about combining nifty futures(as protection) with that straddle rather than a protective stranggle.
what do u think about this idea? That is, you are protected upto range from 4763.5 on the downside to 5436.50 on the upside.
So why can't you go:
Long Nifty Future --- when market breaks the upper range of 5433-5440
Short Nifty Future --- when it breaks the lower range of 4770-4760

I think in this way you can avoid the loss beyond range by gaining in nifty???
And also, You dont need SL for this Nifty trade, since if that nifty long/short goes in loss, your straddle will protect it equally since u short the ITM call and put.
Please comment about the pros and cons of this approach.
AW10, can you also comment on this?

Thanks,
...Summa

Summa, Seems to be very common approach in Indian mkt. I have already written a lot about it in the past..

Pleae check out this thread by Linkon on this topic..

http://www.traderji.com/options/28235-good-profit-hedged-nifty-positions-straddle.html

happy Trading

 

[AW10]

dear,
actually my view is bearish for rest of the week. so, i didn't think even for a second before initiate the trade.
later, i realized...but it's too late....
now i am thinking....if i wait until the expiry date....will it useful or i need to close the trade in red.

Swamy,
So now when position is in Loss.. you want to hold on to the looser ?

you might be right in your view on the bearish market..but that doesn't help in trading where u have to be objective and trade what u see..
So define your stoploss (i.e. how much money u are ready to loose on this trade and be prepared to cut yr loss there).

IMO, selling 3.3 put is of no use.. maybe u have already given more brokerage then 3.3.
You would have better off selling 5200 put or so, so that u would have got more money to protect against loss on short call.
Short straddle strategy needs option with Juice in it.. i.e TIME VALUE.
Such a deep ITM call is full of real value and very little Time value.

And if you are trading for drop in market thru naked short call, then your trade is fine.
It is almost as good as going short NF now.
Just keep in mind that your position does not have any hedge or buffer for unlimited risk.
so focus on risk management.. If market falls, then u will gain almost 1 points for each point in drop in Nifty.

Hope this helps.
Happy Trading