NIFTY Options Trading by RAJ

[umesh12]

Just a simple question.....

i Sell Nifty 8450CE @56.25 and buy 8450PE @54.70

Now CE @33.25 and PE @76.70

Short CE Lot 25 (1406.25)
Long PE lot 25 (1367.5)

around 55 Point profit...i think

so premium is 2773(CE+PE), profit is 55x50=2750....

i am in loss??

confused in Option Trading.....

If you square off your positions
then you are in profit in both the trades

 

[fahadmalik]

Dear Umesh Sir,

Thanks for the quick reply.

if i squared off today(intraday style)...at the above price...then how much will i earn...

i am doing paper trade....need as much clarification... i dont know even volatility also...just know if Nifty falls then Short CE and Long PE will be in profit and vice versa...

55 Point Profit... , and exiting my position as intraday daily.

Roughly how much will be in my account...because there is a big doubt about premium :annoyed::annoyed::annoyed:

 

[umesh12]

Dear Umesh Sir,

Thanks for the quick reply.

if i squared off today(intraday style)...at the above price...then how much will i earn...

i am doing paper trade....need as much clarification... i dont know even volatility also...just know if Nifty falls then Short CE and Long PE will be in profit and vice versa...

55 Point Profit... , and exiting my position as intraday daily.

Roughly how much will be in my account...because there is a big doubt about premium :annoyed::annoyed::annoyed:

Hi

I have to leave now.
Will reply in the evening, if no one here reply your query

BTW no SIR please
I am a simple man.
Simply call me Umesh
No sir, nothing else

 

[healthraj]

Just a simple question.....

i Sell Nifty 8450CE @56.25 and buy 8450PE @54.70

Now CE @33.25 and PE @76.70

Short CE Lot 25 (1406.25)
Long PE lot 25 (1367.5)

around 55 Point profit...i think

so premium is 2773(CE+PE), profit is 55x50=2750....

i am in loss??

confused in Option Trading.....

First of all if you cannot understand this simple stuff, then you are not ready for Option trading.

Please remember the phrase SELL High and BUY LOW
OR BUY LOW and SELL HIGH

So one leg you Sold at 56.25 and now at 33.25. So a profit of 23 points - SELL HIGH BUY LOW
Second leg bought at 54.7 and now at 76.7. So a profit of 22 points. - BUY LOW SELL HIGH

Total profit of 45 points. And actual profit is 45 * 25 and NOT 45 * 50.


The other way to look at is When you Sell Options Money comes to you... When you Buy options, Money goes out of your account.

So When you buy and SELL, You add the "SELL" portion and Subtract the "BUY" Portion. So your net outgoing is 56.25-54.7=1.55.

When you close it will become -33.25+76.7 = 43.45

So if you add 1.55 and 43.45 you get 45 which is what you get finally. You had 25 quantities in each and so it would be 25* 45 = 1125 is your profit without commission

 

[umesh12]

First of all if you cannot understand this simple stuff, then you are not ready for Option trading.

Please remember the phrase SELL High and BUY LOW
OR BUY LOW and SELL HIGH

So one leg you Sold at 56.25 and now at 33.25. So a profit of 23 points - SELL HIGH BUY LOW
Second leg bought at 54.7 and now at 76.7. So a profit of 22 points. - BUY LOW SELL HIGH

Total profit of 45 points. And actual profit is 45 * 25 and NOT 45 * 50.


The other way to look at is When you Sell Options Money comes to you... When you Buy options, Money goes out of your account.

So When you buy and SELL, You add the "SELL" portion and Subtract the "BUY" Portion. So your net outgoing is 56.25-54.7=1.55.

When you close it will become -33.25+76.7 = 43.45

So if you add 1.55 and 43.45 you get 45 which is what you get finally. You had 25 quantities in each and so it would be 25* 45 = 1125 is your profit without commission

Thanks Raj Bro

You explained in a better way, than I would have.


@ fahadmalik

"Total profit of 45 points. And actual profit is 45 * 25 and NOT 45 * 50."

Now 1 lot NIFTY derivatives are of 25 and not of 50

And a suggestion
Do not jump into option trading unless you understand the nuances of it
Though it looks very lucrative and profitable
But it can blow you trading account in no time

 

[parthbobby]

Hi..... can i have the link of your spreadsheet

 

[fahadmalik]

Great Explanation....

But somewhere i read that i have to pay premium price ...if 40 points i earned at 25 lots then its 1000Rs profit...and premium is 2770:annoyed:

To be true...i am doing paper trade...and predict nifty and then if Nifty falls then Sell CE and Buy PE and if nifty rises then Buy CE and sell PE...i am a newbie and opened account in zerodha and previously i lost in commodities in when i was in Religare...i follow the TIPS of broker and lost 10000Rs...

Now i am reading forum continuously and analysing what i have done wrong at that time...

i dont want to be next warren buffet...but i want to earn atleast 1000Rs safely...hope i am not so much greedy...

Today i done paper trade and earn around 45 Points in options, Nifty 17 Points and crude 7 Points...all are in paper trade....like tomorrow BuyCE8400@58 and sell PE8400@49 and predict Nifty tomorrow will rise....i already wrote it down...Just a prediction and on paper trade

Coming to the point...before i start trading..i want to learn atleast 3 Strategies one for Nifty, one for Crude and one for Option....thats it....Nifty and Options are parallel...

So thats why i want clarification that am i in loss or in profit???....as suggested by you guys...Option is a risky trading...but i dont have much capital left to take risk....thats why before entering into real trade..i want all my weapons ready for any situation. Hope i am not demanding much from market and with the help of you guys...i think i can add atleast 20% capital growth per month on average...

Thanks for reading such a long essay i love to talk to members who have more knowledge of the market...

 

[Somatung]

Well, the strategy dear Fahadmalik refers too is called: Short Combo: http://www.avasaram.com/docs/strate...onid=F9E8FEB217B7099A642E059892BE5A8A.server1 How ever it is modified, it is and it stays as that.

There is enough information around in the net and no use to explain any thing again about such simple option strategies. Kindly Google it and educate your self about what a "Short Combo" or even a "Long Combo" is and how it is traded on a basic level, include the risk and profit potential you face with that specific option strategy, which is just one of many others.

Take care / Dan

 

[fahadmalik]

Thanks...

I posted on another thread because this thread is so much long that i thought no one will see it...thats why i choose that thread where limited post is there...

but i got replied at that thread also...so its bad if any senior member is replying to my post and i dont say even thanks to them,...thats why i replied again....

and thanks for the link...

Thanks for the support......:thumb:

 

[Somatung]

Thanks...

I posted on another thread because this thread is so much long that i thought no one will see it...thats why i choose that thread where limited post is there...

but i got replied at that thread also...so its bad if any senior member is replying to my post and i dont say even thanks to them,...thats why i replied again....

and thanks for the link...

Thanks for the support......:thumb:

You are welcome and see you around / Dan