query on future and option of nifty

[Mihirkumar]

I Am New To Future And Option Trading

I Have Bought Nifty Future 50@4440
I Have Also Bought Put Of Nifty At Strike 4400 @ 142

I Would Like To Know Whether My Descission Of Put Is Right Or Wrong And Also Please Explain Me If I Am Wrong
Also Please Tell Me How Shall I Be Benifited By The Put.

I Would Alos Like To Know That Whether I Should Have Bought The Put Of 4450 Strike

Please Guide Me, I Shall Be Very Much Thankfull To Him And The Forum
Thanks
Mihirkumar

 

[esskay]

You have made the right choice of buying a put to hedge your future position.

 

[Mihirkumar]

I AM THANKFUL FOR YOUR ANSWER BUT IT IS INCOMPLE
I REQUEST YOU TO GIVE COMPLETE ANSWER TO MY QUERY

I AM NEW TO FUTURE AND OPTION TRADING

I HAVE BOUGHT NIFTY FUTURE 50@4440

I HAVE ALSO BOUGHT PUT OF NIFTY AT STRIKE 4400 @ 142
WOULD LIKE TO KNOW WHETHER MY DESCISSION OF PUT IS RIGHT OR WRONG AND ALSO PLEASE EXPLAIN ME IF I AM WRONG

ALSO PLEASE TELL ME HOW SHALL I BE BENIFITED BY THE PUT.

I WOULD ALOS LIKE TO KNOW THAT WHETHER I SHOULD HAVE BOUGHT THE PUT OF STRIKE PRICE 4400 OR 4450 AS SPOT NIFTY IS ON 4445.

WHETHER PUT IS BENIFITED BY THE VARIATION IN SPOT MARKET PRICE OF NIFTY OR FUTURE PRICE OF NIFTY.

THE DIFFERENT COLOURS ARE MY QUERY SO PLEASE SOLVE SIMILARLY

PLEASE GUIDE ME, I SHALL BE VERY MUCH THANKFULL TO HIM AND THE FORUM
THANKS
MIHIRKUMAR

 

[ranj_2k]

I think you must have basic idea of F&O. If not I would like to elaborate as under:

You have bought Future @ 4440. It is implied that if nifty goes from above level you will gain and if it is down you will be in loss.

Secondally you have bought put @ 142 with strike of 4400. It means you have sold nifty at 4258 (4400-142= 4258).

You can say that you have put the stop loss for both the position at a loss of Rs.9100. (4440-4258=182*50=9100) if you are waiting till expiry for both the contract.

As far as I understand if you would have taken position with zero stop loss, which is not possible, you would have gained by either side up or down at the end of expiry. Deltra Neutral position is possible in Cash Vs F&O where you have square up position at the end of expiry.

You can square up both the position before expiry wherever you gain from them by taking risk.

I am not confident whether I have been able to answer your queries.

Thanks,

 

[Mihirkumar]

sir according to me as u said if nifty goes upside i shall be in profit it is understood
but i have bought put only because i hold the position overnight in future and just to hedge the position, both the lot of future and put are till monday only.
sir please note my actual querry
according to my knowledge i bought future @ 4440 on friday and as two days markets are close and on monday may there be gap up or down opening
according to me in case if mkt open gap down then to reduce my losses will my put help me as i shall square of my future lot in loss and continue with my put the decision of any one shall be taken on monday opening.
also if nifty open gap up i shall continue with my future lot and shall sell the put at some loss

whether this knowledge of my shall help me or not and the position of put or future is not for long only till any of the lot is in profit shall leave one position and then convert to short of nifty.
but till monday 1st half hour shall both the things help me or not
the positions are not to be hold till expiry
i m thankfull for your good explanation and noted in the dairy of my knowledge
sir also if nifty trades below 4400 then my put shall start giving profit or not

 

[ranj_2k]

You have bought put @ 142 with a strike of 4400. It means you have paid @ 142 premium for selling the nifty at 4400. so your break even of nifty is 4400-142= 4258. If nifty goes below 4258 at the expiry you will be benefitted. Current months contract expires on last Thursday of current month.

In call or put, how much premium you are paying that matters. It depends on the strike price. In your case if you have bought put with strike of 4450 then you would have to pay roughly 142+50 i.e. 172.

Today the premium of 4400 strike put gone high upto 148.8 and closed at 131.5. If you would have squared up the positon at 148 you would have gained 6.8 points over your buy.

You have bought nifty future at 4440 and sold at 4258 (4400-142) by taking put position, you will not be benefitted by squarring both the position at a time. The gap of 4440-4258 = 182 will remain same. If market will go down premium of put will be high and you can square up. If market does up square up the future position separately.

In my opinion if you will buy August future and simulatensouly sell sept future. This way you can hedge the position. Only difference of both the contracts will be your loss if you square up both the position at at time.

It would have been better if you have squarred up the position by putting stop loss for your nifty future of 4440 instead of buying put.

If you are new to F&O. I would suggest go for call option. Where your losses are limited to premium amount only. In future losses are unlimited. You can take call with strike where market is hovering. Like nifty is ranging between 4450 to 4515 you can take the call with strike of 4500.

Initially do only one lot at a time and try to square up with your targeted profit.

If you still have any query pl revert

 

[Mihirkumar]

sir, thanks for such a fantastic explanation.
I sold my nifty future at about 2.00 pm @4464 which i had bought @ 4440
I sold my put @ 142 at 3.19 pm same rate at what i bought so i just loose the brokerage of 2.5% but i earned in nifty by selling at high and earned 1200 - brokerage
it means that my deal of today was of no much profit due to holding of put
but before some reaction come tomorrow i sold the put also as i got the chance because the market is volatile
sir i would like to play in nifty future where and when to buy and sell which forum can guide me well for the same
i am very much thankful for your explanation and i got you and shall never buy option else square of my position if feel doubt
how to find the trend for nifty futures on low,high,close for trade

 

[ranj_2k]

Dear Mihir,

Happy to note that you have successfully squarred up your position. I am also not expert of this domain. I am also a investor like you who wants to earn some money by up and down of market. Unless you put stop loss on your future you may lose heavily like fallen market on last Friday. In my opinion for trading in nifty we should exit the position immediately after getting the targeted profit. Target profit should be realistic.

 

[Mihirkumar]

sir how to put stoploss and how to execute them on both side when our call is +ve and when our call is -ve
i know sir but i was lucky that i got chance to square of both the put and future on the same day. while in the morning i thought that i was screwed on my put side as the market went upside
sir please help me to use the stop loss
also when a call is recomended with stoploss and if the stoploss triggers we should leave the stock is it correct
for eg. buy rcom @ cmp 545, tgt 615 and sl 535
if rcom instead of going upside goes downside to 535 what should we do? should i leave the position or should continue

 

[Mihirkumar]

also the trend point or pivot point is given what should we do for day trading when should we buy stock by using calculation with high, low, close, and open
relation