Zero Loss Strategy

[DanPickUp]

Hi miscos

The strategy you explain is rely traded best in a sideway market. I do not know, if you ever traded such strategies in reality in Nifty.

Linda Braschke uses some times some sort of your mentioned strategy. It is not the same way traded as you mentioned as it is each traders choice, to define by him self how she/he is going to change and implement the chosen and in details improved strategy.

Support and resistance levels are part of such strategy's.

The good thing with such strategies like the one you mentioned is the caped risk.

It is a typical hedge strategy and we hedge, to reduce our loses. It is no a guaranty, that we not make losses, but it is a guaranty, that our losses are limited.

Thanks for taking time to bring up a more advanced strategy.

Take care

DanPickUp

 

[marketmaster]

Dear friend,

Kindly let me know if I take this position, will it work nicely in any situation. i.e. even if Nifty goes 500 points either way.

1.) Selling - Sep'10 Call - 5400 @ 131 /-
2.) Buying - Sep'10 Call - 5500 @ 74/-
Simultaneously
3.) Selling – Sep'10 Put – 5500 @ 129/-
4.) Buying – Sep'10 Put – 5400 @ 89/-.

at present Spot Nifty is at 5445 and above is approximately current prices of Call / Put options.

Regards,

 

[yogeshkkw]

1.SQUARE OFF ON THE SAME DAY WHEN YOU PURCHSASE PUT/CALL,SO THAT THERE WONT BE A BROKERAGE ON SECOND LEG

2.USE BETTER BROKER
I USE ANGEL BROKER WHICH OFFERS 50 RS BROKERAGE ON FIRST LEG AND NONE ON OTHER FOR INTRADAY SQUARE OFF

3.IF YOU BUY PUT AT RS 80 THEN KEEP STOPLOSS AT 78 AN LIMIT SELLING PRICE AT 84
SO MAX PROFIT WILL BE 200-50=150
ANS MAX LOSS WILL BE 100+50=150
SO IF YOU ARE RIGHT ABOUT DIRECTION IN MOST OF THE CASES THEN YOU WILL ONLY GAIN AND SO ZERO LOSS

EVEN YOU CAN INCREASE YOUR LIMIT AND STOPLOSSES BY LOOKING AT FAST MOVING PRICES.sO YOUR STOPLOSS CAN ENTER INTO PROFIT..!!!

 

[OptionsAce]

Dear friend,

Kindly let me know if I take this position, will it work nicely in any situation. i.e. even if Nifty goes 500 points either way.

1.) Selling - Sep'10 Call - 5400 @ 131 /-
2.) Buying - Sep'10 Call - 5500 @ 74/-
Simultaneously
3.) Selling Sep'10 Put 5500 @ 129/-
4.) Buying Sep'10 Put 5400 @ 89/-.

at present Spot Nifty is at 5445 and above is approximately current prices of Call / Put options.

Regards,

Marketmaster,

Theoretically, this should work.

I mean not at the exact prices you have quoted (that results in a loss of 150+brokerage charges - see attached), but you're not far away from the concept.

There are two problems with this though:

1. The brokerage charges for this (4 lots transaction, 4 lots expiry) would be very high for the retail investor. Payoffs, if any would be marginal and the brokerage would not encourage such an investment.

2. You're competing with investment houses and people like me, who work for them on top-of-the-line trading systems to take advantage for such openings. By the time, you can type a quote, the window will be closed. Speed is against you, my friend.

Personally, I prefer such pure arbitrage arrangements as compared to the phone risk-based ones.

Regards,
OptionsAce

 

[trader.trends]

Dear friend,

Kindly let me know if I take this position, will it work nicely in any situation. i.e. even if Nifty goes 500 points either way.

1.) Selling - Sep'10 Call - 5400 @ 131 /-
2.) Buying - Sep'10 Call - 5500 @ 74/-
Simultaneously
3.) Selling Sep'10 Put 5500 @ 129/-
4.) Buying Sep'10 Put 5400 @ 89/-.

at present Spot Nifty is at 5445 and above is approximately current prices of Call / Put options.

Regards,

You are getting into a credit call spread and a credit put spread. By doing this you get (131-74 = 57/-) + (129-89=40/-) = 97 into your kitty. But no matter where the market ends you will be paying out 100/-. If the mkt ends at 5500, you pay 100/- for the 5400 call and if it ends at 5400 you pay 100/- for the 5500 put. Add the cost of transaction which can be 5 or 6 transaction depending on where the mkt ends, you are definitely ending up in a loss on expiry. So what is the logic of this transaction, unless I have missed the obvious.

 

[DanPickUp]

You are getting into a credit call spread and a credit put spread. By doing this you get (131-74 = 57/-) + (129-89=40/-) = 97 into your kitty. But no matter where the market ends you will be paying out 100/-. If the mkt ends at 5500, you pay 100/- for the 5400 call and if it ends at 5400 you pay 100/- for the 5500 put. Add the cost of transaction which can be 5 or 6 transaction depending on where the mkt ends, you are definitely ending up in a loss on expiry. So what is the logic of this transaction, unless I have missed the obvious.

Hi TT

The strategy is called : Short Box and what you mentioned so far is right. It is complicated and requires many contracts to be effective.

It is a completely hedged position where the ultimate profit should be known with certainty ahead of time. Bid ask spread makes it difficult to guarantee a profitable position. The risk profile locks like a horizontal line when traded as he mentioned.

There are other ways to trade boxes, but it is every traders choice, how he want to implement and trade any chosen strategy.

Take care

DanPickUp

 

[DanPickUp]

Marketmaste

2. You're competing with investment houses and people like me, who work for them on top-of-the-line trading systems to take advantage for such openings. By the time, you can type a quote, the window will be closed. Speed is against you, my friend.


Regards,
OptionsAce

Hi OptionsAce

Nice to see ones here some body else, which speaks openly and tells clearly, that retail traders competing with investment houses.

At the moment we show them our plans in advance, like the one with a short box trade and ask for a price for such a strategy, our counterpart is informed about what we are planing. That is the same as showing my card in a poker game to the other players and hoping they then will be so nice to help me, because I only asked them how to play the game. The road will be a losing road.

Planing and professional implementing of such complex option strategies in real markets is surely nothing for any beginners and even more experienced option traders will/can have a problem with that.

Even then, nice to see people which are interested in such complex strategies.

Take care and thanks to hear it once form some body else.

DanPickUp

 

[kamlesh73]

cash arbitrage

you buy stock(cash) whose future running at good premium and sell same stock future same qty, hold it till expiry.

premium is your profit.

 

[rrmhatre72]

cash arbitrage

you buy stock(cash) whose future running at good premium and sell same stock future same qty, hold it till expiry.

premium is your profit.

Hi Kamlesh,

Is this data readily available on any site?
I mean list of stocks with spot price & future prices to get quick comparison.
If yes then pls forward link.

 

[kamlesh73]

posted link earlier, seems blocked

check venture1 dot com of ventura securities
go to derivatives-> arbitrage opportunity