Saturday, 27 October 2012
I. Buy corresponding number of options as your Future positions. For example, if you have a position size of five futures contracts, purchase five corresponding options to completely hedge your position. Also, make sure the expiration month of the options you purchase matches the expiration date of the futures contracts you own.
II. Select a strike price that fits your accepted level of risk tolerance. When you purchase an option, you must specify a strike price. The closer the strike price is to the current futures price, the more expensive the option.
Thursday, 25 October 2012
Here we present you Bull call spread option trading strategy which is explained in detail in our earlier post http://optioncallputtradingtips.blogspot.in/
IDFC BULL CALL SPREAD STRATEGY
LEG1: BUY IDFC 160 NOV CALL OPTION @ 5.10
LEG2: SELL IDFC 170 NOV CALL OPTION @ 2.2
RISK PER LOT = (5.10-2.2)*2000=5800
MAX RETURN 14200
Pay off table
Tuesday, 23 October 2012
Below given are the DO’S while trading in options
1.Always deal with the market intermediaries registered with Sebi/Exchanges
2.Provide complete and correct email address and mobile number while opening trading / demat account.
3.Trade wisely ,create your own trading strategy depending upon the conclusions drawn from the various sources.
4.Insist on a Contract Note for every trade....
Saturday, 20 October 2012
in all financial trades. With option the fluctuations may be the whole thing! The most appropriate investment saying for it might be, "Buy at the right time"! For example, you may be certain that an asset will rise in value. You are correct, and the asset rises in value during the day, week, etc. But as it was rising it had a few moments of backtracking. If you bought a binary option for the asset to rise, but you timed it for the short period when it lost a bit of value on its way up, you will lose money on the option even though your analysis was completely correct, long term.
Information that Affects Timing
The following points are items that can affect a traders timing:
· Company earnings reports
· Government reports
· Political or social unrest
· Sudden introduction of a competitive product
· Volatility. If the asset is being traded more widely than usual, it often indicates strong market sentiment for the asset to continue moving in the same direction for a while.
To calculate the average monthly range one will need access to reliable historical prices. For any stock, you can get historical open, high, low and closing prices for a given date range. This will give you all the key numbers that will be used in the calculation - the high and the low for each trading day. The average monthly range is nothing more than an average price within which the market fluctuates in a given month between its high and its low.
Timing the Different Types of Option...
Thursday, 11 October 2012
FRIDAY being a shy day for the market , we are giving a short strangle strategy. This strategy is aiming to en cash option time value.
SELL Nifty 5700 call @94
SELL Nifty 5800 put @96
TOTAL RETURN=(94+96)*50= 9500
TOTAL RETURN=(94+96)*50= 9500
LOWER BREAK EVEN POINT=5606
HIGHER BREAK EVEN POINT=5896
STOPLOSS WHEN CUMULATIVE PRICE GOES TO 230
OUTLOOK FOR 7-9 DAYS