Paper Trading Nifty Straddles

[munde_77]

Thanks Vineet for correcting. You are right, that shd be 2750 call and 2750 put.

Happy Trading

I think CE 2800 and PE 2800 may be better as nifty is around 2800

 

[myvineet]

I think CE 2800 and PE 2800 may be better as nifty is around 2800

that post is only giving defination & examples only..not suggesting a trade ..

hope it clear now

vineet

 

[heeemz]

strategy 2 hit stoploss.

so in 2 months, strategy 1 hit prifit 50% 2 times and strategy 2 hit stop loss 50% 2 times.

tomorrow we will initiate strategy 1 for april. we have 4 holidays in april, ofcourse the premium is decided considering this anyways

Though April has 4 holidays but still April series seems to have more number of trading sessions (21 days in Apr vs. 18 in Mar and 19 in Feb) - what does this imply? Does it indicate higher premium levels? Pardon me - if it is too rudimentary question...

Cheers,

Heeemz

 

[AW10]

I think CE 2800 and PE 2800 may be better as nifty is around 2800

As rightly pointed by Vineet, 2750 is just an example More then the number, look at the usage of ATM/OTM/ITM in differentiating these 3 strategies.
(infact it was not an example on 17-Mar close of nifty at 2758 level).

Happy Trading

 

[bandlab2]

Though April has 4 holidays but still April series seems to have more number of trading sessions (21 days in Apr vs. 18 in Mar and 19 in Feb) - what does this imply? Does it indicate higher premium levels? Pardon me - if it is too rudimentary question...

Cheers,

Heeemz

hameez thats a good point. whats impotant is the total trading days not the holidays

 

[AW10]

Option pricing calculation does not consider number of trading day/ holiday between today and expiry date.. It consider CALENDER DAYS so april expiry is 41 days away from today, so the theoratical price of option say 2700 CAll option should be the sum of
1) Intrinsic value today i.e. spot price - strike price for call option
2) Time value for 41 days = which roughly comes to about 158 Rs.
when 35 days are left for april expiry = the time value will be approx 145 Rs.
That means, irrespective of what happens to other variables, this option will loose 13 Rs of value in next 5 days. If Nifty moves up, so part 1 of the option premium will increase.

Happy trading.

 

[sumeetsj]

Another Straddle shorted today

Nifty April 2800 CE - Shorted at 120

Nifty April 2800 PE - Shorted at 144

 

[heeemz]

Option pricing calculation does not consider number of trading day/ holiday between today and expiry date.. It consider CALENDER DAYS so april expiry is 41 days away from today, so the theoratical price of option say 2700 CAll option should be the sum of
1) Intrinsic value today i.e. spot price - strike price for call option
2) Time value for 41 days = which roughly comes to about 158 Rs.
when 35 days are left for april expiry = the time value will be approx 145 Rs.
That means, irrespective of what happens to other variables, this option will loose 13 Rs of value in next 5 days. If Nifty moves up, so part 1 of the option premium will increase.

Happy trading.

AW10: Thanks for inputs. I have a follow-up question though, how does one calculte time value? like here in this case you mentioned around RS. 158 - how did you get this value? and with this example 2700 CE (@ 2800 Nifty spot on today) should have been around 100 + 158 = 258 but it is around 180... How do we interpret this? is it due to demand - supply ?

PS: I am new to this forum and I am not sure which button to use for thank you... anyways please accept my thanks


Cheers,

Heeemz

 

[munde_77]

Another Straddle shorted today

Nifty April 2800 CE - Shorted at 120

Nifty April 2800 PE - Shorted at 144

ME 2 shorted the short straddle


April 2800 CE - Shorted at 125
April 2800 P3 - Shorted at 140

All the best

 

[bandlab2]

Strategy 1 for april is initiated. sold 2800 call, put for a total premium of 260 rs