IFCI STRANGLE STRATEGY

OPTION CALL PUT STRATEGY

IFCI  is extremely volatile these days. Annulized volatility of IFCI is above 91.We suggest strangle strategy in IFCI to make most of this situation.

                      

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.

IFCI STRANGLE STRATEGY

LEG1: BUY IFCI 25 CALL @ .75

LEG2: BUY IFCI 20 PUT @ .85

COST =12800     

 RISK PER LOT = (.75+.85)*80000=12800

RETURN = UNLIMITED

LOWER BREAK EVEN POINT :18

HIGHER BREAK EVEN POINT 27

Pay off table

Closing price	Lot size	trading cost	Total Investment	Return from call	return from put	Payoff
17	8000		12800	0	24000	11200
17.5	8000		12800	0	20000	7200
18	8000		12800	0	16000	3200
18.5	8000		12800	0	12000	-800
19	8000		12800	0	8000	-4800
19.5	8000		12800	0	4000	-8800
20	8000		12800	0	0	-12800
20.5	8000		12800	0	0	-12800
21	8000		12800	0	0	-12800
21.5	8000		12800	0	0	-12800
22	8000		12800	0	0	-12800
22.5	8000		12800	0	0	-12800
23	8000		12800	0	0	-12800
23.5	8000		12800	0	0	-12800
24	8000		12800	0	0	-12800
24.5	8000		12800	0	0	-12800
25	8000		12800	0	0	-12800
25.5	8000		12800	4000	0	-8800
26	8000		12800	8000	0	-4800
26.5	8000		12800	12000	0	-800
27	8000		12800	16000	0	3200
27.5	8000		12800	20000	0	7200
28	8000		12800	24000	0	11200
28.5	8000		12800	28000	0	15200
29	8000		12800	32000	0	19200
29.5	8000		12800	36000	0	23200
30	8000		12800	40000	0	27200
30.5	8000		12800	44000	0	31200
31	8000		12800	48000	0	35200
31.5	8000		12800	52000	0	39200

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.

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

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

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