×

Weekly Strategy, March Week 4

By
March 23, 2014
7 comments
Sponsored by
March 23, 2014
Time: 1 pm

Weekly Strategy: Sell United Spirits (Mcdowell-n) 2500 Put option and 3000 Call option.

  1. United spirits traded around 2800, vertically rising from around 500.
  2. So few months before the options were very attractive.
  3. We made lot of money in United Spirits options.
  4. After that it went to correction mode for the last few months.
  5. Now once again activity is picking up.
  6. Since the momentum is very godd, it is not likely to fall below 2500.
  7. Again, it is not likely to go beyond 3000 also as there will be stiff resistance around that level.
  8. Also there are only 4 trading sessions for the expiry.
  9. United spirits 2500 Put option closed at Rs 8.35 and 3000 Call option at Rs 11 on Saturday.
  10. Total premium is around Rs 2400 as lot size is 125. This will be the maximum profit if United spirits close between 2500 and 3000.
  11. Total span margin will be around Rs 50000
  12. This works out be a return of about 5%.
  13. Considering the low risk and only 4 days left for expiry this is a very good return.

Written By

Options Trader and Trainer

Comments

  1. Unknown23 March 2014 at 15:18

    hai sir, first i thank u for ur last week bank nifty calls.Thats is performed super sir.now u give medowel.how u select script?

    ReplyDelete
    Replies
    1. P R Sundar23 March 2014 at 20:08

      First, the Bank Nifty call was given the week before last week. 10800 Put and 13000 Call, both around Rs 30 each, now both are trading one to two rupees. What a profit, despite so many concerns raised by our readers. Last week we have given Auro Pharma 470 Put and 570 Call, which has also given Rs6000 profit in one week. How do we select the stocks, that is where our research skills lie.

      Delete
  2. rubinson23 March 2014 at 16:51

    Hai Sir,
    If Mcdowell-n is not likely to fall below 2500,can we sell more 2500 put alone?. Is it very safe?
    rubinson

    ReplyDelete
    Replies
    1. P R Sundar23 March 2014 at 20:11

      Though we are taking a view, there is a possibility it may go wrong. Selling both put and call is a way of hedging. The stock may not go below 2500, if it goes to 2600, then there may be some mtm losses. If you sell both Put and Call, then you can avoid that mtm loss also. So always safety first. Do not ever take directional view, your view can always go wrong. We are not gods to assure you that we are always right.

      Delete
    2. Unknown24 March 2014 at 18:54

      Well said Sir, as McDowell down by 100 points, selling a call option would have ensured low MTM loss. Anyways, USL is unlikely to expire below 2500, hold put options with no panic.

      Delete
  3. Unknown23 March 2014 at 17:31

    Since Diageo is picking up in open market at lower levels (2000-2200), there would be huge demand for the stock at 2200-2300 levels. Elections to boost it's sales further :) ...

    It's an excellent call to SELL 2500 put as the average high price traded for this series is 2501, the expiry is unlikely to end below 2500 lvls.

    ReplyDelete
    Replies
    1. P R Sundar23 March 2014 at 20:13

      Prabhu qualifies more to be a fundamental person than technical. I like your comment, 'election will boost the sales'. Anyway first election date is in April. Our view is only for 4 days.

      Delete

Post a Comment

Subscribe to: Post Comments ( Atom)