What are the criterias to choose any kind of option strategy?

[Madhusnair]

Dan,

Not the right place i know, but please do look at this option strategy & provide feedback. Unable to send u a PM.

http://www.traderji.com/derivatives/72062-will-system-work.html

 

[DanPickUp]

Dan,

Not the right place i know, but please do look at this option strategy & provide feedback. Unable to send u a PM.

http://www.traderji.com/derivatives/72062-will-system-work.html

It's done.

 

[PartTime_Trader]

Hello

Thanks Aditya & Dan for help on fixing my system issues, i have decided to try n install OO on diff system




I am trying to understand this Long only Option strategy,

Current Nifty Spot is about 5100, August Future 5122 (premium 24-25 points i.e. 0.5% aprox)

Strat
Long PE 5400 285
Long CE 4800 335

Analysis
Total cost 620 points,

Box of 600 points, premium paid for it will be 20 points

Round trip cost will be max 8 points, so maximum notional risk 28 points.


Gain should be around 20 points for a 100 points move away from current price (5100) in any direction. Expecting move of 200 points on either side with-in next 3 weeks, so target is gain of 40 points i.e. 660 against cost of 620.

Anything i have over seen, what else should i check, will like to have feedback on the above strat.

Thanks

 

[Sunny1]

parttime...

what about premium decrease due to time ?

 

[PartTime_Trader]

parttime...

what about premium decrease due to time ?

What about it?

We are using deep in the money options, current time value premium is 10 points on each side, as we go nearer to any of the SP the time value premium should increase, any increase in volatility should also help in getting better price . . .

Having said that lets wait for experienced option traders to give their views

 

[Sunny1]

What about it?

We are using deep in the money options, current time value premium is 10 points on each side, as we go nearer to any of the SP the time value premium should increase, any increase in volatility should also help in getting better price . . .

Having said that lets wait for experienced option traders to give their views

oops sorry I goofed up....my mistake..

 

[PartTime_Trader]

Strat
Long PE 5400 285
Long CE 4800 335

Analysis
Total cost 620 points,

Box of 600 points, premium paid for it will be 20 points

Round trip cost will be max 8 points, so maximum notional risk 28 points.


Gain should be around 20 points for a 100 points move away from current price (5100) in any direction. Expecting move of 200 points on either side with-in next 3 weeks, so target is gain of 40 points i.e. 660 against cost of 620.

Anything i have over seen, what else should i check, will like to have feedback on the above strat.

Thanks

Expiry Date		Settelment Price	   Aprox. Change
28-Jul-11			5487.75			  N.A
25-Aug-11			4839.60			 [COLOR="Blue"][B]-650[/B][/COLOR]
29-Sep-11			5015.45			 [COLOR="Blue"][B]+200[/B][/COLOR]
25-Oct-11			5191.60			 [COLOR="Blue"][B]+175[/B][/COLOR]
24-Nov-11			4756.45			 [COLOR="Blue"][B]-450[/B][/COLOR]
29-Dec-11			4646.25			 [COLOR="Grey"][B]-100[/B][/COLOR]
25-Jan-12			5158.30			 [COLOR="Blue"][B]+500[/B][/COLOR]
23-Feb-12			5483.30			 [COLOR="Blue"][B]+325[/B][/COLOR]
29-Mar-12			5178.85			 [COLOR="Blue"][B]-300[/B][/COLOR]
26-Apr-12			5189.00			 [COLOR="Red"][B]+10[/B][/COLOR]
31-May-12			4924.25			 [COLOR="Blue"][B]-250[/B][/COLOR]
28-Jun-12			5149.15			 [COLOR="Blue"][B]+225[/B][/COLOR]
26-July-12		        5100			 [COLOR="Red"][B]-50[/B][/COLOR]

Last year out of 12 months we had moves of more than 200 points 9 times out of 12 months, 100 points 1 time of 12 and less than that 2 time of 12 months.

Thanks

 

[PartTime_Trader]

oops sorry I goofed up....my mistake..

No need to be sorry buddy,

maybe we have not yet taken into consideration few things because of which the entire strategy may fall apart :lol:

So we should wait for expert comments or forward test it

 

[hhh]

Hello

Thanks Aditya & Dan for help on fixing my system issues, i have decided to try n install OO on diff system




I am trying to understand this Long only Option strategy,

Current Nifty Spot is about 5100, August Future 5122 (premium 24-25 points i.e. 0.5% aprox)

Strat
Long PE 5400 285
Long CE 4800 335

Analysis
Total cost 620 points,

Box of 600 points, premium paid for it will be 20 points

Round trip cost will be max 8 points, so maximum notional risk 28 points.


Gain should be around 20 points for a 100 points move away from current price (5100) in any direction. Expecting move of 200 points on either side with-in next 3 weeks, so target is gain of 40 points i.e. 660 against cost of 620.

Anything i have over seen, what else should i check, will like to have feedback on the above strat.

Thanks

You will not see any increase in the premium even vix increases and you will not get into profit until the nifty breaks 4800/5400.
I didn't understand what is the reason for the startegy if you want 40 points profit!!! and expecting 200 points move in nifty.
Once the call/put becomes deep in the money, there will be some difference in bid/ask. Just check DITM spread,

 

[Sunny1]

Dude considering 250 + points in nifty every month..

Why dont we buy ce pe of near strike price ....and square off both when nifty moves 250 points?
just an idea