Monday, February 2, 2009

Update on the options strategy suggested...


I am into night flying phase and will quickly update on the options strategy regarding that I suggested. As expected and as mentioned the stock being overbought eased off a bit today. Early in the trade I virtually purchased one Put of strike price 180 for 7.2/- Rs and towards the later mid day a call for 190 strike price for Rs 4/-. that makes total investment for Rs 11.2 (11.2X1625 = Rs 18,200)
The ending prices for the respective call and put Call for 3.5/- and put for Rs 9/- (so cost as on closing - 12.5X1625 = 20,312)
Let us review it to include what it did and what is likely to happen. The stock moved in a copy text book type. Moved down as it was overbought and how much - equivalent to its ATR. If it goes down further red tomorrow it will be a welcome news as the Put should then cost almost as much as I paid for the Put and the call together and any further drop will be my ticket for honeymoon.
Hope all how would have tried this experiment would make money in next few days. My Aim would be of 20% return on any one direction on any one side and then book profit and let the other side expire. In range bound markets one can be surprised in opposite move where in it also gives a lot of money.
Cheers


allvoices

6 comments:

Uma said...

THE Options pro!

S S Cheema said...

NO Uma - they may go down the drain - the risk is 50%.
;-)

Uma said...

cheema, reliance is headed down I think bears might try to crack 1220
yesterday and today I made some bucks shorting educomp
yesterday, 10 shares paid off 1451
today 5 shares paid off 333

S S Cheema said...

congratulations as always Uma - I was waiting for reliance to go to 1400 levels - and I thought it will give overbought condition there but - I am sure that what you say is going to happen -
Seen something ? The volumes seem so thin. Am I right ? because you are the expert with figures...

Uma said...

cheema: Well I think 1378 is SL for a short position. Volumes thinning down could be because we're in a very tight range....Any strong move will change that

preet said...

Uma: breakout hoga - it is just a matter of a few days now. It should be big and exciting..