Those with a stomach for risk would play a risky Nifty options strategy in the present month on the premise that the index would elevate by 1.5 per-cent from yesterday's closing over the next six days after having held above 7700, the base level at which many traders have sold puts (1 Nifty option lot = 75 shares).
The call ratio strategy comprises buying one 7800 call & selling two 7900 calls to decrease the price of the former.
At yesterday's closing you would pay Rs 47 each 7800 share & get Rs 17 per 7900 share, cutting the net cost of the long option to 13 rs since you sell two calls of 7900 for Rs 34. The TGT(target) is Rs 7917 by the end of the existing series. You profit if Nifty close between 7813 (lower breakeven point) and 7917 (upper BEP). Max profit is Rs 104 & loss Rs 13, or a 1:8 risk return strategy. You lost 13 rs if Nifty ends below 7813. But above 7917, your losses deepen since you've sold two 7900 calls.
The call ratio strategy comprises buying one 7800 call & selling two 7900 calls to decrease the price of the former.
At yesterday's closing you would pay Rs 47 each 7800 share & get Rs 17 per 7900 share, cutting the net cost of the long option to 13 rs since you sell two calls of 7900 for Rs 34. The TGT(target) is Rs 7917 by the end of the existing series. You profit if Nifty close between 7813 (lower breakeven point) and 7917 (upper BEP). Max profit is Rs 104 & loss Rs 13, or a 1:8 risk return strategy. You lost 13 rs if Nifty ends below 7813. But above 7917, your losses deepen since you've sold two 7900 calls.
Read more : Nifty futures tips
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