BEAR SPREAD IN HINDUNILVR
Here we present you bear spread strategy in options. This strategy seeking maximum profit when the price of the underlying security declines. The strategy involves the simultaneous purchase and sale of options; puts or calls can be used. A higher strike price is purchased and a lower strike price is sold.
We take prices as today’s closing price.
As soon as HINDUNILVR moves towards 360 levels profit will be increasing and will be maximized as soon as it reaches 360 and below.
Strategy can be closed before settlement by creating offsetting positions.
LEG 1:BUY HINDUNILVR 380 PUT @ 8-8.25
LEG 2:SELL HINDUNILVR 340 PUT @ 3-3.25
LOT SIZE =1000
NET INVESTMENT(RISK)= 5*1000=5000
RETURN = UNLIMITED
Closing price
|
Lot size
|
trading cost
|
net investment
|
Total Investment
|
Return per share
|
Total Return
|
Payoff
|
290
|
1000
|
130
|
5050
|
5180
|
20
|
20000
|
14820
|
300
|
1000
|
130
|
5050
|
5180
|
20
|
20000
|
14820
|
310
|
1000
|
130
|
5050
|
5180
|
20
|
20000
|
14820
|
320
|
1000
|
130
|
5050
|
5180
|
20
|
20000
|
14820
|
330
|
1000
|
130
|
5050
|
5180
|
20
|
20000
|
14820
|
340
|
1000
|
130
|
5050
|
5180
|
20
|
20000
|
14820
|
350
|
1000
|
130
|
5050
|
5180
|
20
|
20000
|
14820
|
360
|
1000
|
130
|
5050
|
5180
|
20
|
20000
|
14820
|
370
|
1000
|
130
|
5050
|
5180
|
10
|
10000
|
4820
|
380
|
1000
|
130
|
5050
|
5180
|
0
|
0
|
-5180
|
390
|
1000
|
130
|
5050
|
5180
|
0
|
0
|
-5180
|
400
|
1000
|
130
|
5050
|
5180
|
0
|
0
|
-5180
|
410
|
1000
|
130
|
5050
|
5180
|
0
|
0
|
-5180
|
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