Option trading with DanPickUp

[gunsho]

Hi,
I did this spread on 27th Sept.
View Bearish
Buy [email protected]
Sell [email protected].
Giving
Profit Below 5562.7/- with total cost of 1865/- and Max Profit of 8135/-

Views??

Excellent risk reward ratio :thumb:

A question for thought. The max profit is attained if NF is below 5562 at expiry. What if Nifty goes below 5560 and then moves up back again? How will you position these PEs?

 

[a1b1trader]

bought nifty 1500 nov 5700 pe at 108

bought nifty 1500 nov 5700 ce at 166.5

:thumb::clap:

Hi
This is a trade done as per http://www.traderji.com/trading-diary/55687-paper-trade-options-7.html
Will someone please elaborate the strategy behind this spread/trade.

 

[gunsho]

Hi
This is a trade done as per http://www.traderji.com/trading-diary/55687-paper-trade-options-7.html
Will someone please elaborate the strategy behind this spread/trade.

A1B1trader, if you notice few posts before that, the trader was expecting the market to be rangebound (5400-6000) and sold 5700 straddle. Once the position is in profit of ~30 points, trader has closed by buying back the same.

 

[a1b1trader]

A1B1trader, if you notice few posts before that, the trader was expecting the market to be rangebound (5400-6000) and sold 5700 straddle. Once the position is in profit of ~30 points, trader has closed by buying back the same.

Thanks gunsho.

Actually I noticed his previous trade of 26.9.12 but just forget to link two trades, that the second trade is the squaring off of his previous trade and not a new trade.

However, my main interest is to know the rationale behind, buying (or selling) calls and put of same strike. How much profitable is this strategy when market is in uptrend or downtrend or sideways. Can you please elaborate. Thanks

 

[gunsho]

Thanks gunsho.

Actually I noticed his previous trade of 26.9.12 but just forget to link two trades, that the second trade is the squaring off of his previous trade and not a new trade.

However, my main interest is to know the rationale behind, buying (or selling) calls and put of same strike. How much profitable is this strategy when market is in uptrend or downtrend or sideways. Can you please elaborate. Thanks

This is called straddle. http://www.investopedia.com/terms/s/straddle.asp.

Basically if you see a market in range bound, you can sell both PE and CE ATM options. Now if XYZ is the total premium received, you are safe as long as market is Strike price +/- XYZ.

In this example, 5700 CE (169.2) + PE (134.2) were sold. So as long as market is between 5700 - 303.4 and 5700 + 303.4, the premium received will take care of the loss in one of the legs.

The maximum profit is when market expires at 5700, you keep the entire premium (~300). Generally you don't have to wait until expiry. If together the pair has reduced enough due to time decay, we can buy back them and close the trade.

Max risk is unlimited. If nifty goes above 6000 or below 5400, then we make loss.

You can read more about Iron condors where risk can be limited.

 

[TRK]

i think good sprade

 

[gmt900]

I have been using OptionOracle software for a year or so. However , now a days I get the following message :
Preferred server not available. Using PlugIn server US ( CBOE ) Instead.
Can you advise how to overcome this problem ?
Thanks and regards,
gmt 900

 

[a1b1trader]

Sorry gmt
No solution in sight.
There are many threads in TJ on this problem.
Moreover, Samoasky is not replying to our mails.
No way to overcome this problem.
Have to bear till Samoasky takes some step to rectify this problem.

 

[sys]

Helo sinears my quree is how much balance in ac to sell option thanks

 

[singlap]

Generally , margin required is 7 % and hence for a Nifty option of around 5500 , you require roughly Rs 20 k. also you will get the credit equivalent to the premium sold. So in case you sell 5500 nifty option @ rs 100 , Rs 50 x 100 = 5000 will be credited to your account and hence net outflow will be 20k - 5k = 15 k.