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| option stratergy for today : 1 | Views: 471 |
| Nov 07, 2007 10:03 am | | option stratergy for today : 1 | # |
Rajkumar lodha | |
sell INFOSYS 2010 call NOV option at prm 20/-
Buy infosys 10 shares at 1750 which is LTP.
Because IT is lagging due to the rising rupee INFOSYS has very min. chanses to close above 1950 by the end of the month.
Also Infosys has support at the 1750 level.
Now lot size is 100 you earn 2000/- as the prm this safeguard your downside of the 10 shares by amount 200 levels.
So at the end of the month position & profit are:
Thus you make profits as follows
Infosys 1550 - 1750 : profit - 0 to 2000/-
Infosys 1750 - 2010 : profit - 2000/- to 4600/-
infosys 2010 - 2060: profit - 4600/- to 0 Rs:
so till the infosys is in the range of 1550 - 2060 you are not loosing. at the end of the month.
now infosys will remain strong in the range of 1750 - 1900 till the month end. so you can earn min. profit of 2000/-
Investment required: 10% margin = 17500/-
10 share price: 17500/-
Total investment: 35000/-
MIn. profit you can make: 2000/- = 5.71%
Max. profit you can make: 4600/- = 13.14%
Note: You need to stay investment till expiration date i.e. 29th Nov. 07
there are other factors like time decay, volatility, etc. which can move call price to rise thus you make hear a margin call. But at the end of month you will gain.
Private Reply to Rajkumar lodha |
| Nov 08, 2007 3:41 pm | | re: option stratergy for today : 1 | # |
Rajkumar lodha | |
Todays position on this stratergy:
Prm of call 2010 has fallen to 12.5 this means we have gained.
7.5*100 = 750/-
Price of Infosys has fallen to 1717 thus we have lost
1740 - 1717 = 23*10 = 230/-
Thus The postion for the stratergy is profitable & stands as:
520 Rs. profit.
Private Reply to Rajkumar lodha |
| Nov 13, 2007 8:33 am | | re: re: option stratergy for today : 1 | # |
Rajkumar lodha | |
This is the perfect situation to understand the importance of joint buy & sell in option contract.
As we have purchased INFOSYS at the price 1750 & today it is 1625 we are still at the profit because of the sale of the call option.
The prm. recieved has yielded gains which are higher than the LTP of the INFOSYS.
Till the point infosys is trading above 1550 we are at the profit.
if you sqr. of the position in delivery mkt. at 1625 till your profit is 750/- on the investment on around 35000/- though the market has mvoed agaist what we have though.
Thanks,
take care
Rajkumar Lodha.Private Reply to Rajkumar lodha |
| Nov 14, 2007 4:50 am | | re: re: re: option stratergy for today : 1 | # |
Shrinath Navghane | | Good follow-on messages Raj...
It would be interesting to get feedback from fellow members on board who might be possibly following this.
Cheers!
Shrinath Navghane
Founder
Pune Entrepreneurs Network
Visit my complete Business Profile + Testimonials + Network on LinkedIN:
http://www.linkedin.com/in/shrinathPrivate Reply to Shrinath Navghane |
| Nov 15, 2007 5:39 am | | re: re: re: option stratergy for today : 1 | # |
Rajkumar lodha | |
Infosys is recovering from its 52 week low of 1607 & now trading around 1675/-this means that we are recovering our loss in the profit made by shorting the call option.
Thus at this movement,
Income from option prm. = 2000/-
loss from buying INFY shares = (750)
Thus our profit has increased from low of 500/- rs to 1250/-
Now all the brockers said that there was a resistance at 1750/- which we have taken as the guideline for this stratergy.
Many who have taken future or delivery at 1750 has lost but we are still making profit. This shows the tremendous power of option analysis.
Infosys is very good buy at the 1600-1625 level, Thus again the same stratergy can be repeated for the buy at 1600 level & sell call 1850 nov.07
Thanks
take care,
Rajkumar LodhaPrivate Reply to Rajkumar lodha |
| Nov 28, 2007 6:19 am | | re: re: re: re: option stratergy for today : 1 | # |
Rajkumar lodha | | Dear all,
tomorrow is the last day for the settlement of the FNO contracts & thus lets take review & dynamic view of our stratergy & define future stratergy.
Infosys call 2010 Nov. 07 is trading at 0.45 & we have sold when prm was 20/- Thus the profit is 1955/-
The price of the shares has dropped to the 1590 thus los of 160/- per share Thus total loss of 1600/-
So we are at the net profit of 355 which is 1.5% of the total investment done.
------------------------------------------------------
Now you can liquidate the option position of call 2010 nov.07 by taking the profit & take new position as follows:
sell call option 1710 dec 07 at 45 the current price,
The position is :
we have taken losses in to consideration in the last month contract & thus we have 10 share of infosys at 1590 instead of 1750.
Also we are selling call option 1710 at 45 so at the current position we will earn 4500/- Rs.
as we are earning 4500/- from option contract for 10 shares we bought we get risk coverage of 450/- per shares thus
the range becomes:
Price range (1140 - 1590) - profit range (0 - 4500)
Price range (1590 - 1709) - profit range(4500 - 16400)
price range (1709 - 1830) - profit range(16400 - 0 )
Thus the band which we are operating is 1140 - 1830
Again Rs is expected to appreciate in the long term & thus the IT stocks will remain undervalued for coming 3 - 4 months.
The investment required is 17100/- for option & 15900/- for shares we hold.
Thus our investment has decreased to 33000/- so the max returns we can earn is 50%
The infosys is likely to remain in the range of 1650 - 1700 till dec. 07 that means we can earn up tp 10000/- from this position.
Thanks
take care
Rajkumar Lodha
Private Reply to Rajkumar lodha |
| Dec 05, 2007 5:29 am | | re: re: re: re: re: option stratergy for today : 1 | # |
Rajkumar lodha | |
Dear all,
Lets take the review of the stratergy on infosys.
we have sold call 1710 Dec. 07 at 45, & we have 10 shares of infosys at 1590.
Today at this time,
call 1710 dec. 07 is trading at 27.9/28 rs. Thus the prm has dropped by around 17 Rs.
Thus we are at a profit for 1700/-
Also infosys is trading at 1615 thus 25 profit per share Thus total profit of 250/-
Thus total profit of the movementum str. is 1950/-
More profit will come from call option as we move towards the maturity. Thus more profit will arise.
Thanks,
Take care
Rajkumar Lodha
Private Reply to Rajkumar lodha |
| Dec 07, 2007 7:14 am | | re: re: re: re: re: re: option stratergy for today : 1 | # |
Rajkumar lodha | |
Greetings,
INFOSYS is trading near 1700 & its time to review the stratergy.
Liquidate the position in the 1710 call Dec. 07 at 40Rs. & take fresh position as sell call 1860 dec 07 at 15 Rs.
all the brockers are giving bullish call on the IT sector & the movementum is picking up in the IT sector. so INFOSYS can see a level of 1750 - 1800 again by the end of month.
Private Reply to Rajkumar lodha |
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