Tuesday, 24 February 2015

STRANGLE IN RCOM WITH NEGATIVE BIAS

RCOM OPTION STRATEGY  
BUY RCOM MAR 65 PUT @ 2.4
BUY RCOM MAR 80 CALL @ 1.3
COST=3.7
TOTAL RISK  = 7400
RETURN = UNLIMITED

UPPER BREAK GIVEN POINT=83.7

LOWER BREAK GIVEN POINT=61.3

Pay off table:

Monday, 23 February 2015

STOCKS TO BUY FOR UNION BUDGET 2015-16

In a week's time from now, Union Budget 2015-16 would be unveiled by Finance Minister, Arun Jaitley. The Union Budget is being unveiled on Saturday and while there were apprehensions on whether there would be trading on Saturday, the NSE and the BSE have announced that there would be trading on this day.
It's going to be an extremely volatile session on the day of the Budget, simply because there is so much expectations this time around. If this is not a dream budget, chances are there could be huge selling pressure in the markets.
Here are a few shares to buy ahead of Union Budget 2015-16.

Saturday, 21 February 2015

Arbitrage Strategies and Price Relationships


When looking at an option chain, you see all the data for an underlying asset and its related options.  Between the various sections – the underlying, the call and put options, and the different expiration months – there are fundamental relationships that underlie their pricing. 
When these relationships get out of line, an arbitrage opportunity exists—buying an option(s) and selling the related option(s) for a (near) risk-free profit.  To illustrate these relationships we will use arbitrage strategies, and we will begin by discussing synthetics, which form the basis for all the different arbitrage strategies. 
Synthetic Relationships
There can be up to three different parts to any potential option strategy: The underlying asset; the Call options; and the Put options.  Most arbitrage strategies use the concept of synthetics, and they are a large part of the strategies we use here.  A synthetic strategy is one where you combine any two parts (calls, puts and/or the underlying) to create a position that looks like the third one. 
For example, if you buy both the stock and a put option, you will make money if the market goes up, but your loss is limited if the market falls.  That's exactly the same risk/reward you would get if you bought a call option – you make money if the market goes up but your loss is limited to the premium paid if the market falls.  Buying the stock and buying a put is therefore called a synthetic call.  In terms of risk and reward, it is exactly the same thing!
The various synthetic relationships may seem a little confusing, but with a little practice you will see how easy it is to understand.  An important rule to keep in mind is that the strikes and months of the calls and puts must be identical.  For synthetics that involve both the stock and options, the number of shares represented by the options must be equal to the number of shares of stock.  The table below lists the basic synthetic positions:

Saturday, 14 February 2015

Bullish strategies in options trading

Bullish strategies in options trading are employed when the options trader expects the underlying stock price to move upwards. It is necessary to assess how high the stock price can go and the time frame in which the rally will occur in order to select the optimum trading strategy. 
Very Bullish The most bullish of options trading strategies is the simple call buying strategy used by most novice options traders.
Moderately Bullish In most cases, stocks seldom go up by leaps and bounds. Moderately bullish options trader usually set a target price for the bull run and utilize bull spreads to reduce risk. While maximum profit is capped for these strategies, they usually cost less to employ.
Mildly Bullish Mildly bullish trading strategies are options strategies that make money as long as the underlying stock price do not go down on options expiration date. These strategies usually provide a small downside protection as well. 


Wednesday, 4 February 2015

SBI STRATEGY UPDATE

SBIN STRATEGY GIVEN ON 2 FEB 2015
SBIN 285 PUT WAS GIVEN TO BUY @ 4.8 NOW BOOK PROFIT    IN SBIN 285 PUT NEAR 9 CONTD...TO HOLD THE 350 CALL

Monday, 2 February 2015

SBI STRANGLE STRATEGY

BUY SBIN 285 PUT @ 4.8
BUY  SBIN 350 CALL @ 4
COST=8.8
TOTAL RISK  = 11000
RETURN = UNLIMITED

UPPER BREAK GIVEN POINT=358.8

LOWER BREAK GIVEN POINT=276.2
Pay off table: