Nifty Futures Trading

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Sunil

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sunil sir we really need edit button.
please do something.
oops
u r right...

i first wanted to try bearish put spread, and was on two minds what to choose for such bearish spread... puts or calls???

Missed Arnav yesterday - actually, answer relates to something called "IV"
IVs of that option decide which is better to go for.... puts or calls
 

arnav_rulz

Well-Known Member
oops
u r right...

i first wanted to try bearish put spread, and was on two minds what to choose for such bearish spread... puts or calls???

Missed Arnav yesterday - actually, answer relates to something called "IV"
IVs of that option decide which is better to go for.... puts or calls

Hey Im Here now Sunil :D.

I dont have any idea abt what all is IVs of an options.. honestly ive never even studied anything abt options.. i just take it as maths.. lol

So i think the question you wanted to ask me was.. whether you should go for

a)sell 2500 call and buy 2600 call OR
b)Buy 2600 Put and Sell 2500 Put.

Well if that was the question.. then the answer is.. theoretically both of them are the same. No volatility of anything would make either of the strategy better from the other one.

Its just that there is sometimes a minor difference of 2-3 points(due to changing of prices and demand and supply) of which you can take advantage, but rest is the same.

In the case above when you Sell 2500 call and buy 2600 Call you receive a total premium of 55.(i.e losses start above 2555 on expiry)

Therefore, because Selling a 2500 call and buying a 2600 Call is Exactly the same as buying a 2600 Put and selling a 2500 Put, therefore if The diff btw the Premium of 2600 and 2500 Put is less than 45, say 40 then it means that on Expiry your losses start above 2560, therefore in this case buying a Put spread gives u a slight adv.

however, if premium diff is more than 45, say 50 then your losses start above 2550, thus in this case Call bear Spread was better because in that case your losses started above 2555.

I hope this is what you wanted to ask only .. If not, then just take this post as a learning that --

Buying put(X strike price) and selling Put(y strike price) = Selling call (Y strike price and Buy Call (X strike price)
 
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