Weekly Strategy, April Week #4 | Stocks and Commodities

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April 19, 2014
Time: 10.45 pm

Weekly Strategy: Sell Yes Bank 400 Put option and 450 Call option.

1. Yes Bank hit a high of Rs 455.70 on 10th of April.
2. Then started correcting and hit a low of 404 on 16th April.
3. Then now recovering from the low and trading at Rs 416.50.
4. There are only three more trading sessions for the expiry.
5. Markets are likely to be bullish.
6. Therefore selling 400 Put option is considered to be safe.
7. At the same time there will be resistance at around 450.
8. SO one can sell 450 Call also.
9. On Friday 400 Put closed at Rs 2.55 and 450 Call closed at Rs 1.45.
10. The total premium is Rs 4 per share and Rs 4000 per lot as the lot size is 1000.
11. Span margin required is around Rs 7000.
12. So if Yes Bank trades between 400 and 450 for the next three days, your profit will be Rs 4000 for your investment of Rs 70000.
13. This works out to be a return of 5.7%. This is considered to be a very good return considering the fact that there are only three trading sessions for the expiry.