Selling the call obligates you to sell stock you already own at
strike price if the option is assigned. One can run this strategy after they have already seen
nice gains on the stock. Often, they will sell out-of-the-money calls, so if the stock price goes up,
they are willing to part with the stock and take the profit....
Friday 23 November 2012
Wednesday 21 November 2012
HEDGING FUTURE WITH OPTION
Hedging in common words is insuring against a
negative event. This doesn't prevent a negative event from happening, but if it
does happen and you're properly hedged, the impact of the event is reduced.
HEDING FUTURE WITH OPTION
HEDING FUTURE WITH OPTION
1.Note
the size of your futures position and buy a corresponding number of options.....
Monday 19 November 2012
Friday 16 November 2012
OPTION BUYING V/S WRITING
Definition of Buy-Write
Option buying means buying a put option and option writing means selling a put option. Option buying has limited risk where as option writing has as much risk as future.
OPTION BUYING V/S OPTION WRITING
1.Buying options - limited loss, unlimited profits where as Writing options - limited profits, unlimited losses
2.Option writers have a significantly higher chance of making money as compared to option buyers......
Monday 12 November 2012
DIWALI 2012 PICKS
1.PANTALOON R
Buy around 198 tg 259
Expected returns= 23.55%
2.ALEMBIC PHARMA
Buy around 68 tg 99-100
Expected returns=32%...
Thursday 1 November 2012
BOOK PROFIT IN IDFC STRATEGY
IDFC
strategy given on 25 oct 2012 is giving profit
of 3.1 Hope you have booked profit. IDFC 160 NOV call is trading at 10 and IDFC 170 NOV call is trading at
4.65 now. More about Option Call Put tips on google+
Wednesday 31 October 2012
BOOK PROFIT IN IDFC BULL CALL SPREAD STRATEGY
IDFC strategy given on 25
oct 2012 is giving current profit of 1.1 contd to hold ...Book profit when you get profit of Rs 3. IDFC 160 NOV call is trading at 7.30 and IDFC 170 NOV call is trading at 3.20 now.More about Option Call Put tips on google+
Saturday 27 October 2012
HOW TO HEDGE FUTURE WITH OPTION
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
IDFC BULL CALL SPREAD STRATEGY
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
COST =5800
RISK PER LOT = (5.10-2.2)*2000=5800
MAX RETURN 14200
Pay off table
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