Paper Trading Nifty Straddles

[AW10]

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.

At first glance, it looked amazing trade to me to see that with worst case move of 200 points in either direction, we will still be up 81 rs. But when I looked at the contract details, then I noticed that the hedge is available only till march expiry whereas the base trade is till april end.
As per my understanding, it will give us good sleep till march expiry but on very next day, we will be exposed to big loss on April position because one of the short leg will be deep deep ITM (almost by 10% at nifty spot level).

Are you also keeping the option of cutting the position, if it goes against us (as Bandlab has 50% of premium lost as stoploss limit) ?

Happy Trading

 

[dumdum20008]

At first glance, it looked amazing trade to me to see that with worst case move of 200 points in either direction, we will still be up 81 rs. But when I looked at the contract details, then I noticed that the hedge is available only till march expiry whereas the base trade is till april end.
As per my understanding, it will give us good sleep till march expiry but on very next day, we will be exposed to big loss on April position because one of the short leg will be deep deep ITM (almost by 10% at nifty spot level).

Are you also keeping the option of cutting the position, if it goes against us (as Bandlab has 50% of premium lost as stoploss limit) ?

Happy Trading

Hi,

The these positions are created with intention to eat some premium of April contract "with in/till" march expiry and not intended to carry after march expiry. As these include 2 different months contract so profit-loss visualization is littile tricky and only time passage will elaborate that.
Bandlab has protection in terms of 50% loss equvivalent to premium but here protection itself inbuilt in positions via near month contracts.
[However for a guess, perhaps max. loss in this position till march expiry is limited to 50-60 points.]

 

[munde_77]

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.

We have buy one CE of march on PE of March and We have to CE of April and PE of April , Then again we have to square off, i.e means 4 plus 8 = 8 lots. I think we have to calculate around roughly between 8 to 12 points as brokerage.Please clarify my doubt and reply.

 

[munde_77]

We have buy one CE of march on PE of March and We have to CE of April and PE of April , Then again we have to square off, i.e means 4 plus 8 = 8 lots. I think we have to calculate around roughly between 8 to 12 points as brokerage.Please clarify my doubt and reply.

Sorry 4 plus 4 = 8 lots

 

[dumdum20008]

We have buy one CE of march on PE of March and We have to CE of April and PE of April , Then again we have to square off, i.e means 4 plus 8 = 8 lots. I think we have to calculate around roughly between 8 to 12 points as brokerage.Please clarify my doubt and reply.

u must have an account with low brokerage, like one is rkg.
each square-off pair ( buy+sell) of Nifty options will cost u around 0.65 Rs/NiftyPoints( means 0.65 x 50 = 33Rs) as approx maximum. Hence such 4 pairs costs 0.65 x 4 = 2.6 Nifty Points.

 

[munde_77]

Hi,

The these positions are created with intention to eat some premium of April contract "with in/till" march expiry and not intended to carry after march expiry. As these include 2 different months contract so profit-loss visualization is littile tricky and only time passage will elaborate that.
Bandlab has protection in terms of 50% loss equvivalent to premium but here protection itself inbuilt in positions via near month contracts.
[However for a guess, perhaps max. loss in this position till march expiry is limited to 50-60 points.]

Could you please tell how much is margin required altogether for 4 lots

 

[munde_77]

Hi,

The these positions are created with intention to eat some premium of April contract "with in/till" march expiry and not intended to carry after march expiry. As these include 2 different months contract so profit-loss visualization is littile tricky and only time passage will elaborate that.
Bandlab has protection in terms of 50% loss equvivalent to premium but here protection itself inbuilt in positions via near month contracts.
[However for a guess, perhaps max. loss in this position till march expiry is limited to 50-60 points.]

Why cant we buy CE 2600 of April and PE of 2400 instead of March.
Will this workout

 

[dumdum20008]

Could you please tell how much is margin required altogether for 4 lots

typically it calculates span margin and that too vary according to time remaining, strik price etc.
at present april cantarct pair(call + put) require margine around 27K-30K.

 

[dumdum20008]

Why cant we buy CE 2600 of April and PE of 2400 instead of March.
Will this workout

i think ur confusing in option legs.
U have to eat time-premium from April Contract which is more( which ull sell) and protection from march contract ( which ull buy) which is cheap.

 

[munde_77]

u must have an account with low brokerage, like one is rkg.
each square-off pair ( buy+sell) of Nifty options will cost u around 0.65 Rs/NiftyPoints( means 0.65 x 50 = 33Rs) as approx maximum. Hence such 4 pairs costs 0.65 x 4 = 2.6 Nifty Points.

Gr8 very cheap brokerages.