|
  |
|
|
Bullet Advisory Indian Stocks-how to buy Nifty Call-Put Option and calculate profit or loss
By Narendra Nainani of Bullet Advisory Indian Stocks
Bullet Advisory Indian Stocks-how to buy Nifty Call-Put Option and calculate profit or loss
Everyday we listen about Nifty Option price closing up or down,Call Option,Put Option, market bullish or bearish .We wonder how to trade in Nifty Option and earn profit with limited loss and unlimited profit. What are the points we have to keep in mind while trading Nifty Option, how to calculate the profit and loss.First of all we have to determine the direction of the market whether market will be up or down.We can take the position in Nifty Option in the expected direction bullish or bearish.If we are bullish then we can buy Nifty Call Option and if bearish then we can buy Nifty Put Option.What trade we can execute and what would be our position in terms of profit and loss are explained below with examples.
If current price of Nifty is 2900 and Nifty Call Option Strike Price 3000 and Put Option Strike Price 2800 in January is 100=00 INRs and last date of expiry is on nth January. What trades we can do in Call and Put Option of Nifty and what will be our profit and loss position is as stated below.
If bullish we can Buy Nifty Call Option
(1)Buy Nifty Call Option January Strike Price 3000@100 INRs. Lot Size 50
Premium Paid=100*50=5000 INRs.
Maximum Loss=5000=00 INRs.
Maximum Profit=Unlimited
Break-even Price=3100
We can sell Nifty Call Option which we have bought anytime till last day of expiry i.e., nth January and can book profit or loss. If we do not sell Nifty Call Option we have bought till lasts day also then our trade will be automatically squared off at the settlement price of Nifty on last day of expiry decided by the exchange.
.Different Possibilities with our Nifty Call Option Buy position
(1) Nifty Call Option price 140 and sold before expiry then
140-100=40*50=2000.00 INRs. Profit
(2)Nifty Call Option price 60 and sold before expiry then
100-60=40*50=2000 INRs. Loss
(3)Nifty settlement price 3200 and we have not sold Nifty Call Option till expiry then
3200-3000=200*50=10,000-5000=5000=00 INRs. Profit
(4)Nifty settlement price equals to or below 3000 and we have not sold Nifty Call Option till expiry then
5000=00 INRs Loss
This is the maximum loss we can have even if Nifty falls to any level beyond 3000.
(5)Nifty settlement price 3100 and we have not sold Nifty Call Option till expiry then
3100-3000=100*50=5000-5000=0.0 INRs. No Profit No Loss
If bearish we can Buy Nifty Put Option
(1) Buy Nifty Put Option Strike Price 2800.@100 INRs. Lot Size=50
Premium Paid=100*50=5000.00 INRs.
Maximum Loss=5000.00 INRs.
Maximum Profit=Unlimited
Break-even Price=2700
We can sell Nifty Put Option bought anytime till last day of expiry i.e., nth January and can book profit or loss.If we do not sell Nifty Put Option we have bought till lasts day also then our trade will be automatically squared off at the settlement price of Nifty on last day of expiry decided by the exchange.
Different Possibilities with our Nifty Put Option Buy position
(1) Nifty Put Option price 140 and sold before expiry then
140-100=40*50=2000.00 INRs. Profit
(2)Nifty Put Option price 60 and sold before expiry then
100-60=40*50=2000 INRs. Loss
(3)Nifty settlement price 2600 and we have not sold Nifty Put Option till expiry then
2800-2600=200*50=10,000-5000=5000=00 INRs. Profit
(4)Nifty settlement price equals to or above 2800 and we have not sold Nifty Put Option till expiry then
5000=00 INRs Loss
This is the maximum loss we can have even if Nifty rises to any level beyond 2800.
(5)Nifty settlement price 2700 and we have not sold Nifty Put Option till expiry then
2800-2700=100*50=5000-5000=0.0 INRs. No Profit No Loss.
What is the advantage of buying Option compared to Future.Maximum loss is fixed and predefined.We cannot lose more then the premium paid to buy the Option under any circumstances and it is known to us before we trade.We can square up the Option position anytime after buying just like Future.We have to pay only amount of premium and not the margin which is required for buying future.
|
Contributor's Note
Bullet-India's top most no.1 best stockmarket advice blog,hot stocktips calls by expert technical analyst of India.Most preferred paid subscription stocktips calls website of India.Excellent success ratio of more than 90% with superb trading ideas.
M-9898162770
Website www.narendranainani.blogspot.com
|
|
PLEASE VISIT THE CONTRIBUTOR'S WEBSITE
No reactions yet.
Please login or sign up to rate this intel.
Please login or sign up to add a comment.
The copyright for this content entitled "Bullet Advisory Indian Stocks-how to buy Nifty Call-Put Option and calculate profit or loss" has been specified by the contributor as:
All Rights Reserved
This content may not be copied, distributed or adapted by anyone under any circumstances.
|
 |
|
This intel was contributed by naninn
|
May, 2012
2008
January, February, March, April, May, June, July, August, September, October, November, December
2009
January, February, March, April, May, June, July, August, September, October, November, December
2010
January, February, March, April, May, June, July, August, September, October, November, December
2011
January, February, March, April, May, June, July, August, September, October, November, December
2012
January, February, March, April, May
|
|
Not a member yet?
Qondio is a powerful network for making it online. If you have a website to
promote, we can help.
Sign up and get in on the action.
|
|
Welcome to Qondio! Discover the awesome power this network can deliver by going to our About page. Or you could skip straight to the Sign Up form.
|
|
