Paper Trading Nifty Straddles

[munde_77]

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

Me 2 shorted total premium 265

 

[heeemz]

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

I have initiated trade as below...

April 2800 CE - Shorted at 128
April 2800 PE - Shorted at 132

=== Total Premium stands at 260

Couple of thoughts Please correct if I am misreading it

1 Would it be appropriate to say that the strategy would yield decent profits as long as market remains within the range (2550 3050) for decent number of sessions in April. But if it goes other wise, that is very big move in either direction say 2200 or 3200, we may end up on loosing side. I get the feel that there has to be a big move very soon on either side, Nifty is moving in range of 2550 2950 for quite a while now
2 In view of above, I have done following trades to hedge this would cover me atleast till this expiry Please suggest if this makes sense, not sure how to do this for April series as premium is too high.

March 2600 PE Bought at 3.2
March 3000 CE Bought at 2.2

2 On the other note, any views with respect to possible closing of Nifty for this expiry? There are ways and means by which one can derive the possible range for expiry but I dont know that

Cheers,

Heeemz

 

[heeemz]

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

AW10: One more question - taking in to consideration number of calender days left to expiry instead of number of trading days - April series seems to have more number of calander days, in view of this - what is the impact seen on options pricing and premium? Can you please explain this aspect?

Cheers,

Heeemz

 

[pasha]

I get the feel that there has to be a big move very soon on either side, Nifty is moving in range of 2550 – 2950 for quite a while now…
2 – In view of above, I have done following trades to hedge – this would cover me atleast till this expiry… Please suggest if this makes sense, not sure how to do this for April series as premium is too high.

March 2600 PE – Bought at 3.2
March 3000 CE – Bought at 2.2

Smart move to hedge, I am expecting a 100+ nifty point move before expiry. You can hedge by buying April/May options 100/200 points away from the straddle strike depending on your opinion.

 

[heeemz]

Smart move to hedge, I am expecting a 100+ nifty point move before expiry. You can hedge by buying April/May options 100/200 points away from the straddle strike depending on your opinion.

Pasha: 200 or even 300 points away from straddle strike price is quotng quite high right now - between range of 40 to 60 for Apr series. and this way if I go for any of them then it would be too much of burden to put for the straddle.

Cheers,

Heems

 

[dumdum20008]

Hi,

here is straddle with protection till mar 09 expiry.

(prices are from last bid/ask in my rkg terminal)

2600 CE APRIL = 182
2600 PE APRIL = 162

Sold for 182 + 162 = 344

Now Protection side ( 200 DOWN and 200 UP, time is much more so upside also need protection)

2800 CE MARCH = 31
2400 PE MARCH = 32

Bought for 31 + 32 = 63

Nett Premium Recd. 344 - 63 = 281

[ 81 points excess value than protection levels ( 281 -200) make this more attractive, as position seems win-win whatever decisive value beyond protection range NF can take till March 09 expiry]

lets see what unfolds.

if the intention is not to carry to april, then i would buy protection only on downside. i can live with upside risk till march expiry. if we go for both sides hedging then your profit will be very less by march expiry

Yes bro, one can leave upper bound given the prevailing bearish conditions ( in real i too would done so or even more, im just coming on that) but for a test paper trade for all ( every one here ) let the both protection run.
[ some times, month of march and december have very hectic activities by MF/FI/LongDatedHedgers]
................

I think its clear now better to be safe than sorry. Even after a huge runup from 2600, combined strategy with protection is still safe.
squareing off straddle and protections

2600 CE APRIL = 377
2600 PE APRIL = 39

Bought for 377 + 39 = 416

selling both protections

2800 CE MARCH = 151
2400 PE MARCH = 0

Sold for 151 + 0 = 151

nett premium paid 416 - 151 = 265

Total strategy gain = 281 - 265 = 16 points

 

[pasha]

Hope most of you have exited, price is now about 335.
More upside expected before the weekend.

 

[munde_77]

Hope most of you have exited, price is now about 335.
More upside expected before the weekend.

Are we trapped in CE 2600 and PE 2600 of April series

 

[bandlab2]

update by eod Mar 24, total premium is 300, loss is 40 rs

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

 

[pasha]

Are we trapped in CE 2600 and PE 2600 of April series

Not necessary, closing a position on a small loss is better than waiting as the loss could become bigger.
All depends on what you are comfortable with.