Thursday, 22 December 2011


DLF BUTTERFLY STRATEGY
DLF is highly volatile stock but as expiry in due in almost a week. Volatility will show sharp decline in coming week. DLF butterfly strategyis an attempt to encash this volatility.
Butterfly strategy have 3 legs and four option contract are involved.
BUY DLF 190 CALL @ 12
SELL TWO DLF 200 CALL @ 5.3
BUY DLF 210 CALL @ 1.90
TOTAL RISK 3300
MAX PROFIT 6700
Maximum profit generated when DLF expired @ 200
LOWER BREAK EVEN POINT : 193
HIGHER BREAK EVEN POINT: 207
To get more option trading calls CLICK HERE

PAY OFF TABLE
Closing price
Lot size
Total Investment
Return from call
loss from II call
return from
gross return
net return
184
1000
3300
0
0
0
0
-3300
186
1000
3300
0
0
0
0
-3300
188
1000
3300
0
0
0
0
-3300
190
1000
3300
0
0
0
0
-3300
192
1000
3300
2000
0
0
2000
-1300
194
1000
3300
4000
0
0
4000
700
196
1000
3300
6000
0
0
6000
2700
198
1000
3300
8000
0
0
8000
4700
200
1000
3300
10000
0
0
10000
6700
202
1000
3300
12000
4000
0
8000
4700
204
1000
3300
14000
8000
0
6000
2700
206
1000
3300
16000
12000
0
4000
700
208
1000
3300
18000
16000
0
2000
-1300
210
1000
3300
20000
20000
0
0
-3300
212
1000
3300
22000
24000
2000
0
-3300
214
1000
3300
24000
28000
4000
0
-3300












BUTTERFLY STRATEGY SYNOPSIS
 Long butterfly spreads are entered when the investor thinks that the underlying stock will not rise or fall much by expiration. Using calls, the long butterfly can be constructed by buying one lower striking in-the-money call, writing two at-the-money calls and buying another higher striking out-of-the-money call. A resulting net debit is taken to enter the trade
 JRNHXGQWAB7A
<a href="http://www.allforblog.com/">Free Blog Directory</a>

3 comments:

  1. your presentation makes option trading easy...

    ReplyDelete
  2. nice presentation...i will check this out and come back to u

    ReplyDelete
  3. This comment has been removed by the author.

    ReplyDelete