Option trading strategies that i hope will work.

[detrich]

Just a gentle reminder this is a trading market. Look before you leap and do not initiate any trades in options

 

[anup0212]

Hi detrich,
I have TCS CE @34 ...now it is 17....how can I hedge my position ? Do you have any idea ?

thanks
anup0212

 

[anup0212]

strike price 1200...sorry forget to mention....

 

[detrich]

dear Anup the primary job of a option contract is hedging. This makes it difficul to hedge a position which has been on the opposite side of the trend. Currently looking at charts of TCS it is in bearish trading phase after a good rally from two years it looks like profit taking is taking place. For the short term it would be best to write a call contract of 1200 to offset the loss and please exit the current call contract since market is up today @19 and take the opposite position. But for this it will require under 125k marging requirement if it is not feasible no issue just do not wait to recover the losses because trading markets can be nasty wait for better opportunity.

 

[anup0212]

thanks Detrich! for this reply , but if I take a postion in opposite direction, and if I still hold both PE and CE atleast for a next week direction as I am not sure about it is direction , but would like to know your advice .

 

[detrich]

dear Anup holding a put will not help since it is trading market what I meant was to write a call option i.e sell a call option but it is an expensive transaction hence if I were in your shoes I would avoid holding the position till expiry because as per charts the stock has found a resistance @ 1200-1250 band with market going sideways for April it will be tough even for TCS to break 1200 mark by 26 April. The position that you had initiated would have been good in trending market . Best of luck bro

 

[anup0212]

thanks Detrich!...let see next week if I am able to recover some loss I will sell the call as suggested ....

 

[HARIVEL]

detrichji
I have hedged Nifty spot 5270 writing 5300Ce & 5400PE(2lots), Is it correct hedging method.

 

[detrich]

dear harivel please specify the series of the contract and if April then I think if the market remains positive or trading this combo would be profitable, if there is a bearish phase then there isa potential loss. Till 5150 there will be no issue and carrying forward I am also mildly bullish about the nifty in May series. Hence I believe that this combo will be successful. But caution the market strength lies @ 5100.

 

[darshanshukla]

Very few option trader understand this logic and this is heart of option trading
Keep it up bro...

dear Anup the primary job of a option contract is hedging. This makes it difficul to hedge a position which has been on the opposite side of the trend. Currently looking at charts of TCS it is in bearish trading phase after a good rally from two years it looks like profit taking is taking place. For the short term it would be best to write a call contract of 1200 to offset the loss and please exit the current call contract since market is up today @19 and take the opposite position. But for this it will require under 125k marging requirement if it is not feasible no issue just do not wait to recover the losses because trading markets can be nasty wait for better opportunity.