Monday 31 August 2015

HDIL OPTION STRATEGY

Buy HDIL 70 CALL @ 3
Buy HDIL 50 PUT @ 2.2
COST=5.2
TOTAL RISK  = 10400
RETURN = UNLIMITED
UPPER BREAK GIVEN POINT=75.2
LOWER BREAK GIVEN POINT=44.8
Pay off table:

Friday 21 August 2015

Long Call Butterfly


Long Call Butterfly is one of the sideway strategies employed in a low volatile stock. It usually involves buying one lower strike call, selling two middle strike calls and buying one higher strike call options of the same expiration date. Typically the distance between each strike prices are equal for this strategy.
Combining two short calls at a middle strike and one long call each at a lower and upper strike creates a long call butterfly. The upper and lower strikes (wings) must both be equidistant from the middle strike (body), and all the options must have the same expiration date.
You may also execute the Long Butterfly strategy using all puts options. When all puts options are used, it is referred to as the Long Put Butterfly strategy. As to whether a butterfly strategy should be executed using all calls or all put options depend on the relative price of the option. The premium of both puts and calls option should be taken into consideration to achieve the optimum trade
Market Outlook
 Neutral around Strike

Summary
This strategy generally profits if the underlying stock is at the body of the butterfly at expiration.
Breakeven:

· Upside Breakeven = Higher Strike less Net Premium Paid

· Downside Breakeven = Lower Strike add Net Premium Paid.


Advantages and Disadvantages
 
Advantages:

·         Ability to make profit from a range bound stock with relatively lower cost outlay.

·         Limited risk exposure compare to Short Straddle strategy when the underlying stock moved beyond the breakeven point on expiration date.

Disadvantages:

·         The profit potential only come from the narrow range between the 2 wing strikes.

·         Bid/Ask spread from the various option legs may adversely affect the profit potential of the strategy




Wednesday 12 August 2015

Saturday 8 August 2015

TATAMOTORS STRANGLE STRATEGY :410 CALL BOOKED

TATAMOTORS 410 CALL BOOKED FULL PROFIT @ 10 PROFIT IS 2550 @ 1 LOT
CONTINUE TO HOLD 350 PUT
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Friday 7 August 2015

OPTION STRATEGY UPDATE :BOOK PROFIT IN CALL

 OPTION STRATEGY GIVEN YESTERDAY  (06-08-15)
TATAMOTORS   410 CALL BOOK PROFIT NEAR 9.8-10

Thursday 6 August 2015

TATAMOTORS STRANGLE STRATEGY FOR AUGUST 2015

BUY 1 LOT TATAMOTORS 350 PUT @ 4.7
BUY 1 LOT TATAMOTORS  410 CALL @ 4.9
COST=9.6
TOTAL RISK  = 4800
RETURN = UNLIMITED
UPPER BREAK GIVEN POINT=414.9
LOWER BREAK GIVEN POINT=346.3
Pay off table:

Thursday 30 July 2015

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Wednesday 22 July 2015

Advantages of Options


Options can provide these advantages to your portfolio
Cost Efficiency Options have great leveraging power. As such, an investor can obtain an option position that will minimize a stock position almost identically, but at a huge cost savings.
Higher Potential Returns you don't need a calculator to figure out that if you spend much less money and make almost the same profit, you'll have a higher percentage return. When they pay off, that's what options typically offer to investors.
Flexibility Options can be used in a wide variety of strategies, from conservative to high-risk, and can be tailored to more expectations than simply "the stock will go up" or "the stock will go down."
Hedging Options allow investors to protect their positions against price fluctuations when it is not desirable to alter the underlying position.
Volatility The use of options also allows the investor to trade the market's "third dimension" Options allow the investor to trade not only stock movements, but also the passage of time and movements in volatility. Most stocks don't have large moves most of the time. Only a few stocks actually move significantly, and then they do it rarely.