OPTION CALL PUT STRATEGY
NIFTY is extremely volatile these days.On account of RBI policy this volatility can be to its peak . further on account of global turmoil We expect this volatility to continue. To encash this volatility we suggest u strangle strategy in nifty.
The long strangle, also known as buy strangle or simply "strangle", is a neutral strategy in options trading that involve the simultaneous buying of a slightly out-of-the-money put and a slightly out-of-the-money call of the same underlying stock and expiration date.
NIFTY STRANGLE STRATEGY
LEG1: BUY NIFTY 4900 CALL @ 65
LEG2: BUY NIFTY 4700 PUT @ 65
COST =145
RISK PER LOT = (65+65)*50=6550
RETURN = UNLIMITED
Pay off table
The long options strangle is an unlimited profit, limited risk strategy that is taken when the options trader thinks that the underlying stock will experience significant volatility in the near term. Long strangles are debit spreads as a net debit is taken to enter the trade.
NIFTY is extremely volatile these days.On account of RBI policy this volatility can be to its peak . further on account of global turmoil We expect this volatility to continue. To encash this volatility we suggest u strangle strategy in nifty.
The long strangle, also known as buy strangle or simply "strangle", is a neutral strategy in options trading that involve the simultaneous buying of a slightly out-of-the-money put and a slightly out-of-the-money call of the same underlying stock and expiration date.
NIFTY STRANGLE STRATEGY
LEG1: BUY NIFTY 4900 CALL @ 65
LEG2: BUY NIFTY 4700 PUT @ 65
COST =145
RISK PER LOT = (65+65)*50=6550
RETURN = UNLIMITED
Pay off table
Call Option Price
|
Strike Price
|
PUT Option Price
|
Closing price
|
Total Investment
|
Return from call
|
return from put
|
Payoff
|
65
|
4600
|
65
|
3900
|
6500
|
0
|
35000
|
28500
|
65
|
4600
|
65
|
3950
|
6500
|
0
|
32500
|
26000
|
65
|
4600
|
65
|
4000
|
6500
|
0
|
30000
|
23500
|
65
|
4600
|
65
|
4050
|
6500
|
0
|
27500
|
21000
|
65
|
4600
|
65
|
4100
|
6500
|
0
|
25000
|
18500
|
65
|
4600
|
65
|
4150
|
6500
|
0
|
22500
|
16000
|
65
|
4600
|
65
|
4200
|
6500
|
0
|
20000
|
13500
|
65
|
4600
|
65
|
4250
|
6500
|
0
|
17500
|
11000
|
65
|
4600
|
65
|
4300
|
6500
|
0
|
15000
|
8500
|
65
|
4600
|
65
|
4350
|
6500
|
0
|
12500
|
6000
|
65
|
4600
|
65
|
4400
|
6500
|
0
|
10000
|
3500
|
65
|
4600
|
65
|
4450
|
6500
|
0
|
7500
|
1000
|
65
|
4600
|
65
|
4500
|
6500
|
0
|
5000
|
-1500
|
65
|
4600
|
65
|
4550
|
6500
|
0
|
2500
|
-4000
|
65
|
4600
|
65
|
4600
|
6500
|
0
|
0
|
-6500
|
65
|
4600
|
65
|
4650
|
6500
|
0
|
0
|
-6500
|
65
|
4600
|
65
|
4700
|
6500
|
0
|
0
|
-6500
|
65
|
4600
|
65
|
4750
|
6500
|
0
|
0
|
-6500
|
65
|
4600
|
65
|
4800
|
6500
|
0
|
0
|
-6500
|
65
|
4600
|
65
|
4850
|
6500
|
2500
|
0
|
-4000
|
65
|
4600
|
65
|
4900
|
6500
|
5000
|
0
|
-1500
|
65
|
4600
|
65
|
4950
|
6500
|
7500
|
0
|
1000
|
65
|
4600
|
65
|
5000
|
6500
|
10000
|
0
|
3500
|
65
|
4600
|
65
|
5050
|
6500
|
12500
|
0
|
6000
|
65
|
4600
|
65
|
5100
|
6500
|
15000
|
0
|
8500
|
65
|
4600
|
65
|
5150
|
6500
|
17500
|
0
|
11000
|
65
|
4600
|
65
|
5200
|
6500
|
20000
|
0
|
13500
|
65
|
4600
|
65
|
5250
|
6500
|
22500
|
0
|
16000
|
65
|
4600
|
65
|
5300
|
6500
|
25000
|
0
|
18500
|
65
|
4600
|
65
|
5350
|
6500
|
27500
|
0
|
21000
|
65
|
4600
|
65
|
5400
|
6500
|
30000
|
0
|
23500
|
The long options strangle is an unlimited profit, limited risk strategy that is taken when the options trader thinks that the underlying stock will experience significant volatility in the near term. Long strangles are debit spreads as a net debit is taken to enter the trade.