NIFTY OPTION LONG STRANGLE STRATEGY

OPTION CALL PUT STRATEGY

                      

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 5400 CALL @ 70

LEG2: BUY NIFTY 5000 PUT @ 70

COST =140          

 RISK PER LOT = 7000

RETURN = UNLIMITED

Pay off table

Closing price	Lot size	trading cost	Total Investment	Return from call	return from put	Payoff
4800	50		7000	0	10000	3000
4825	50		7000	0	8750	1750
4850	50		7000	0	7500	500
4875	50		7000	0	6250	-750
4900	50		7000	0	5000	-2000
4925	50		7000	0	3750	-3250
4950	50		7000	0	2500	-4500
4975	50		7000	0	1250	-5750
5000	50		7000	0	0	-7000
5025	50		7000	1250	0	-5750
5050	50		7000	2500	0	-4500
5075	50		7000	3750	0	-3250
5100	50		7000	5000	0	-2000
5125	50		7000	6250	0	-750
5150	50		7000	7500	0	500
5175	50		7000	8750	0	1750
5200	50		7000	10000	0	3000
5225	50		7000	11250	0	4250
5250	50		7000	12500	0	5500
5275	50		7000	13750	0	6750
5300	50		7000	15000	0	8000
5325	50		7000	16250	0	9250
5350	50		7000	17500	0	10500
5375	50		7000	18750	0	11750
5400	50		7000	20000	0	13000
5425	50		7000	21250	0	14250
5450	50		7000	22500	0	15500
5475	50		7000	23750	0	16750
5500	50		7000	25000	0	18000
5525	50		7000	26250	0	19250
5550	50		7000	27500	0	20500
5575	50		7000	28750	0	21750
5600	50		7000	30000	0	23000

6 Golden Rules For Option Trading

6 Golden Rules For Option (call put) Trading

1. Clear Vision Of Target

We must always remember that reward and risk go hand-in-hand in trading and that we cannot expect to achieve high returns without planning for high risk (i.e. draw-downs). Your objectives and goals will be very specific to you, but they must have the following characteristics to be useful:

Be measurable
Be achievable
Be worthwhile
Be positive  

2. Discipline

This is most important part of option trading. In order to realize the full potential of your trading systems it is critical that you take every trading entry, adjust every stop, and close out every trade as and when your system says you should do

3. Never add to a losing trade

Averaging is Options could prove to be very dangerous as there is always time factor.

4. Don’t take too much risk

Risk associated in every Option call should be very low and well calculated before entering any trade.

5. Minimize all trading business costs

You should select your broker carefully and should be aware of all the cost associated with each trade.

6. Be well educated
Keep a track of borad meetings ,any possible major event in market Etc because they create huge effect on Option pricing

PROFIT BOOKED IN IFCI OPTION STRATEGY

IFCI OPTION STRATEGY UPDATE

Profit of 5200 @ investment of 12800

http://optioncallputtradingtips.blogspot.com/2012/01/ifci-strangle-strategy.html

What is Sell Strangle Option Strategy ?

Sell Strangle Option Strategy

When volatility is very high, and the market has just made a dramatic move and you are expecting it to consolidate and take some time to digest its gains, you might consider selling a strangle.
This strategy involves selling an out-of-the-money call option and an out-of-the-money put option on the same asset with the same expiration date. This strategy differs from the Sell Straddle strategy because the options are not at the same strike price. This provides a different profit/loss curve that is worth checking out.
This gives you a known, but limited gain, but does expose you to unlimited risk, so you must be careful with this position and be confident of your assumptions. It is not suitable for all investors.
With this strategy, your gain is composed of the premium you received for the call and the put, less the commissions.
When we sell a Strangle, the put and call that we sell are normally on over-priced options that are out-the- money. We consider doing this after a dramatic move in the market, when we are expecting it to consolidate the move and digest its gains before moving again. Because of the dramatic move that was made, volatility is high, making the options we sell very expensive. Then as the market consolidates, volatility decreases and lowers the price of the options. Decay also works in our favor with this position.
But be ready to buy back one of the options if there is any indication that the market will resume its trend or reverse direction. If it looks like the market will trend up, buy back the call; if it looks like the market will trend down, buy back the put.
It is also important to cover risks and caveats of this strategy.
The risk of this position is unlimited so you must be very careful. Remember that the commission you pay for this position will be higher because you are initiating two related option transactions.
It is important to analyze your expectations for the underlying asset and for the market before selecting your strategy.