Low Risk Options Trading Strategy - Option Spreads

[AW10]

Each strike has its own delta and as a result, there is net delta for spread position.
If underlying goes to say 280/290 level, then delta of both the strike will reach very close to 1.00 (maybe 1 and 0.98) giving net delta very close to 0. In such case you might be able to see max profit early. If underlying just goes to 252 / 255, then net delta of spread will be away from 0 and hence you will not see max profit.

To assess the impact of various variable on price, plz use the tool like optionoracle.
Keep in mind that tool will just give u some theoratical result and in reality, it might be different. So be prepared for deviation from actual result shown by tool.

Happy Trading.

 

[AmitParmar]

Hi,

Can anyone explain SHORT STRADDLE strategy with real time example...? what if I exercise before expiry? how much premium will I get?

 

[vssoma]

Hi,

Can anyone explain SHORT STRADDLE strategy with real time example...? what if I exercise before expiry? how much premium will I get?

dear,
i am trying to explain as of my understanding....(still needs some senior's comments)

if you are thinking that nifty will close near 4200 up to end of this month ( end of option contract, that is 24-nov-2011)
and you want to initiate this trade to benefit form time decay...

sell both call and put of 4200

if nifty will close at or near 4200 both options will worthless and you keep all the premium which you received by selling the options.
if it goes up/down ( far from your strike price-4200 ) you'll end up unlimited loss....

 

[AmitParmar]

Hi,

Thanks for your valuable input. still one doubt. nifty current level is 5300 around. suppose i write call n put both but what if i exercise it before expiry n nifty is still under break even point from both side.

 

[vssoma]

Hi,

Thanks for your valuable input. still one doubt. nifty current level is 5300 around. suppose i write call n put both but what if i exercise it before expiry n nifty is still under break even point from both side.

dear,
pls. use options oracle and check at bottom, there is one column named "return at target" , fill the number where you want to know the value of nifty....
i think it helps....

 

[vssoma]

dear,
i am confusing with this options chain....before there was one column named " Net Change" before LTP, now it is missing.....or am i browsing wrong site?

 

[jain.er]

They have removed it and put an new col of IV

 

[vrajan2011]

Dear brother , What is the strategy if the markets are in bullish direction
please do confirm that I am right or wrong
sell 5300 put
buy 5200 put is that ok

 

[sachinpatilsp]

Hello AW10,

I was reading and trying to gewt the details about the spreads can give some spreads for current markets.

Sachin

 

[DanPickUp]

Dear brother , What is the strategy if the markets are in bullish direction
please do confirm that I am right or wrong
sell 5300 put
buy 5200 put is that ok

Hi

Did you follow your idea until today?

If so, you now could analyze the mistakes you made with your market outlook.

Trading spreads direct atm needs a good estimation of the current market situation. As a beginner, you should not trade atm option spreads.

Expand your time frame to one week, sit back and have a look at the pivots given in this time frame. This pivots will be your strike levels.

Beside that, you have to be clear how long you want to be with this spread and how big the vola in the market is.

If vola is low and if expiry is in three days and you have a position far away from the actual strike price, your chance to bring home the different from the sold and bought options are bigger compare to high vola markets with more near at the money spreads.

Good luck

DanPickUp