PUT and CALL options

[jamit_05]

At Spot 6096

Delta of 6100 CE 0.582
Delta of 6100 PE 0.435

That is a big difference. What does it indicate?

 

[gmt900]

I am implementing diagonal short iron butterfly which I learned from the Option Trader Handbook recommended by Dan.
Sold July short straddle as follows;
6100 CE 160
6100 PE 134
Total Credit 294
Baught June long strangle as follows ;
6200 CE 69
6000 PE 67
Total Cost 136
Net Credit 158
Margin Required approx. 50,000.
I intend to cover the positions before June expiry.
Friends may comment on the trade and point out mistakes, if any.
Thanks and regards,
gmt900

 

[bthakwani]

Hello,

Please will some senior tell me the details of charges of letting a option position expire -

1. on buy side

2. on sell side

Is it better to let a buy position expire or to square off before expiry

Similarly is it better to let a sell position expire or to square off before expiry

Thanks.

Chill yaar...

hi ovongus,

i hope u wont mind me answering ur question even though im no senior..

if u have bought an option and u dont sell it off before expiry it will be squared off at the closing price of the expiry day.. and u will not be charged brokerage for that but all other charges will apply.. if ur option expires worthless that is 0.05 paise, u can simply forget it.. nothing will happen.. if it expires at lets say 20 rupees.. then u get Rs. 1000 - the taxes..

though im not into option writing (selling) i think the same should apply.. ur option will be bought back or squared off at the closing price of the expiry day.. u shouldnt be charged brokerage.. now if it expires worthless then nothing happens and u keep all the premium u received while selling it and whatever margin u paid to sell the option gets released.. if the option expires at some value whether it is more or less than ur selling price.. it will be settled at that price accordingly..

hope that clears ur query

 

[jamit_05]

I am implementing diagonal short iron butterfly which I learned from the Option Trader Handbook recommended by Dan.
Sold July short straddle as follows;
6100 CE 160
6100 PE 134
Total Credit 294
Baught June long strangle as follows ;
6200 CE 69
6000 PE 67
Total Cost 136
Net Credit 158
Margin Required approx. 50,000.
I intend to cover the positions before June expiry.
Friends may comment on the trade and point out mistakes, if any.
Thanks and regards,
gmt900

It will cost around Rs.225 to buy back the July Straddle at June expiry. So one leg of June Strangle must give profit of Rs.100; For that June must expire at 5900 or 6300 which might be tough as Nifty chart is well guarded by strong pivots.

I think one is better off shorting a strangle of June 62/59 (credit 95):

If there is a breakout convert to a ratio spread (you have a buffer of Rs.95).
Else, enjoy the Theta, which gives you the chance to exit profitably even before expiry. However, in the iron butterfly, the June Purchase will decay faster than July Sale, which means as days go buy the cost of neutralizing the spread will increase (plus the expenses).

In general, odds are against us if we bet on Nifty moving strongly. This bet would require a debit spread and suitable only if you see a specific setup and expect Nifty to breakout. A credit spread is usually better, provided you can proficiently spot breakouts on the daily chart.


PS: But tomorrow is not a good time to Short 62/59 since it decayed by Rs.19 today !!

 

[columbus]

May.30 MAY-series Day.24(END) Nifty=6124 (20)

May Series ended at 6124.

JUNE series.
=========

Expected zone is tentatively at (5800~6200).

 

[jamit_05]

Re: May.30 MAY-series Day.24(END) Nifty=6124 (20)

May Series ended at 6124.

JUNE series.
=========

Expected zone is tentatively at (5800~6200).

Sir,

Please take the trouble to explain the diagram. It appears very detailed and full of information.

Thank You.

 

[columbus]

Re: May.30 MAY-series Day.24(END) Nifty=6124 (20)

Sir,

Please take the trouble to explain the diagram. It appears very detailed and full of information.

Thank You.

Expected zone is nothing but CROSS-SECTION of CALL and PUT windows.
The top and bottom frames boundaries where TOTAL-OI jumps from Lakhs to
Millions.But Open Interest build-up will be seen from tomorrow onwards.Hence
the word "Tentative".

 

[aditya14]

Hello bthakwani,

Thanks for your reply.

But I am talking about regulatory charges.

If I am not wrong it is better to square off an ITM option before expire (on buy side).

I am not sure as I am not able to find the correct and reliable source of information.

Thanks again.

Chill yaar...

Buy side ITM - Square off else ur STT will be on full value of Nifty (50*6100)
Sell side ITM/OTM - No charges

 

[aditya14]

I am implementing diagonal short iron butterfly which I learned from the Option Trader Handbook recommended by Dan.
Sold July short straddle as follows;
6100 CE 160
6100 PE 134
Total Credit 294
Baught June long strangle as follows ;
6200 CE 69
6000 PE 67
Total Cost 136
Net Credit 158
Margin Required approx. 50,000.
I intend to cover the positions before June expiry.
Friends may comment on the trade and point out mistakes, if any.
Thanks and regards,
gmt900

Keep us posted how it works day by day

 

[gmt900]

Keep us posted how it works day by day

I will keep posting the progress of the trade periodically, not necessarily every day.
At this moment the status is as follows;
July 6100C 160 - 127 = +33
July 6100P 134 - 147 = -13
June 6200C 47 - 69 = --22
June 6000P 77 - 67 = +10

Total Profit +8