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
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
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