Trading with PT style

[enygma]

Sirjee,

I know - I was just letting you know that this one is getting famous - not sure whether it is good or bad

Regards,
Enygma.

But, I am not working for ET, so there is no chance of my knowing their covering it in their paper today. I was using just what was taught by SG.( BB, SMA & stoc) :thumb:

 

[raj86]

yes, i done it.

 

[hiteshsjoshi]

Murtaza bhai,

At the end of the month, Call will be at profit above 4830 and the loosing leg i.e. PE4700 will be at 0. In that case why do you consider the loosing leg here?

I agree that straddles will work very well when the market may move either side of the straddle in a big way. And will not work when the market moves in side way range at straddle point.

Just my two cents....

CALL 4700 was bought at 130
PUT 4700 was bought at 130
Total cost of buying straddle: 260

Scenario 1:
If Nifty closes at 4830, value of CALL would be 130. Value of PUT would be 0. So, total cost of selling straddle: 130.
Loss in this case would be 260 - 130 = 130.

Scenario 2:
If Nifty closes at 4960, value of CALL would be 260. Value of PUT would be 0. So, total cost of selling straddle: 260.
Profit in this case would be 260 - 260 = 260 (break-even on upside)

Scenario 3:
If Nifty closes at 4440, value of CALL would be 0. Value of PUT would be 260. So, total cost of selling straddle: 260.
Profit in this case would be 260 - 260 = 260 (break-even on downside)

- Hitesh

 

[MurAtt]

Murtaza bhai,

At the end of the month, Call will be at profit above 4830 and the loosing leg i.e. PE4700 will be at 0. In that case why do you consider the loosing leg here?

I agree that straddles will work very well when the market may move either side of the straddle in a big way. And will not work when the market moves in side way range at straddle point.

Why not -- the cost has to be included na -- see to work the straddle profitably we have to move out of one of the legs (of course the loosing leg) at some point of time (once the trend is confirmed) so that the upmove of the winning leg will cover the loss of the loosing leg.

Like what I've done now is squared off my PEs at 103. So effectively from 259, my cost of the calls are now 259-103=156/-.

The reason they are at cost of the currently trading price is because my straddle was taken at a time when mkts were bearish at 4580 levels and Puts premium were more than Calls premium. Now that market has reversed, the calls premiums are more and puts less, therefore selling puts gave me lesser reutrns. Also at the time of taking the straddle, the Puts were ITM by 100 pts and at the time of sq off the puts, calls are only ITM by 40 pts. Therefore the discrepancy in the prices. Once the calls are ITM by 100+ pts, the price/premium will be more and it will become a more profitable trade.

 

[SavantGarde]

Hi SM,

Perfect Trade...

This Is What One Is Required To Do When Hedging....Build A Good Perception Of The Market....& Hedge For Overnight Position & Square Off The Opposite Direction....Simple...

Happy & Safer Trading

SavantGarde

Why not -- the cost has to be included na -- see to work the straddle profitably we have to move out of one of the legs (of course the loosing leg) at some point of time (once the trend is confirmed) so that the upmove of the winning leg will cover the loss of the loosing leg.

Like what I've done now is squared off my PEs at 103. So effectively from 259, my cost of the calls are now 259-103=156/-.

The reason they are at cost of the currently trading price is because my straddle was taken at a time when mkts were bearish at 4580 levels and Puts premium were more than Calls premium. Now that market has reversed, the calls premiums are more and puts less, therefore selling puts gave me lesser reutrns. Also at the time of taking the straddle, the Puts were ITM by 100 pts and at the time of sq off the puts, calls are only ITM by 40 pts. Therefore the discrepancy in the prices. Once the calls are ITM by 100+ pts, the price/premium will be more and it will become a more profitable trade.

 

[MurAtt]

Now added one more call (for daily trading basis - will hold overnite in case trend is very strong) at 153/-.

Also plannig to buy the 4700PEs again when mkts reach previous high of 4780 levels (as a hedge again) Once 4800 is crossed will dispose off them.

 

[MurAtt]

A lot of fresh buying being seen in :

DLF
Unitech
Suzlon
J P Associates
ICICI Bank
Tata Motors

Short covering in :
Nifty
IDFC
RCom

Reliance is the only script which is seeing some selling (this is because of its spat with RNRL and the GOI maybe to some extend involved bcoz of NTPC)

This info gathered on the basis of change of OI only.

Oops -- now it has been corrected. Thoda idhar udhar ho gaya list

 

[MurAtt]

Now added one more call (for daily trading basis - will hold overnite in case trend is very strong) at 153/-.

Also plannig to buy the 4700PEs again when mkts reach previous high of 4780 levels (as a hedge again) Once 4800 is crossed will dispose off them.

Exited the additional call taken at 153/- at 167/- (14 rs profit) which now rduces the cost of the existing two CEs 4700. Now the buy price comes to 156-6=150/-. cmp 167/-.!!!!

 

[MurAtt]

Time to celebrate =---- 4800 on the NFutures hit, new 2009 High

:thumb:

 

[chachi]

Why not -- the cost has to be included na -- see to work the straddle profitably we have to move out of one of the legs (of course the loosing leg) at some point of time (once the trend is confirmed) so that the upmove of the winning leg will cover the loss of the loosing leg.

Like what I've done now is squared off my PEs at 103. So effectively from 259, my cost of the calls are now 259-103=156/-.

The reason they are at cost of the currently trading price is because my straddle was taken at a time when mkts were bearish at 4580 levels and Puts premium were more than Calls premium. Now that market has reversed, the calls premiums are more and puts less, therefore selling puts gave me lesser reutrns. Also at the time of taking the straddle, the Puts were ITM by 100 pts and at the time of sq off the puts, calls are only ITM by 40 pts. Therefore the discrepancy in the prices. Once the calls are ITM by 100+ pts, the price/premium will be more and it will become a more profitable trade.

Excellent.........

Thanks for the beautiful explanation.

I was away from the computer until now and could not do anything....

Just made mistake that when the call was at 175 I put stoploss at 168 and it hit.....

Now carrying only put with me. hope tomorrow i will do better.

Regards
Chachi