Thanks Nimish, appreciate your suggestion.
I don't understand futures as such, I also heard its risky so need to spend some months in learning/practcing before going there.
I am dealing only in options.
If you explain little bit more on this strategy that would be great. just for learning sake. I know intra day in equity but futures never dealt so far.
Bhai futures is much less complicated than options.
You sold Option or in other words the right to someone to own the market if market goes above 5500. Futures is the present value of nifty in future time period.
Now here when you sold the market at 5500 getting a premium of Rs 58 your expectation for august is that market will close below 5558. Only then you are in profit as the value of call on expiry will be the present value of nifty on the day of expiry-the strike price or the exercise price. Now since you are naked you should always have points at which you should start protecting yourself.
You can do so by getting an opposite position in a derivative contract that is based on the same underlying security in this case that will be nifty futures.
You shorted 50 shares of Nifty at 5500 at 58 Rs
But if nifty goes above 5500 you buy nifty 50 shares and cancel your position thus getting the full premium of 58.
The only risk here is if the market goes above 5500 your buy order for future is executed and soon after that nifty tanks your future position will be in a loss and but option would be in profit. You will lose money if nifty goes below 5442 once entered long.
Hope it clears your doubts and raises some question. If it raises some questions my job is done and you should research on Internet about derivatives go on investopedia understand them if you do your questions would be answered automatically.
Also on this forum there are greats like AW10 and Linkon7 who are maestro at writing options and making money risk free go view their threads.
Happy trading.
