Review | Stocks and Commodities

October 22, 2015
Time: 11.30 am

Review:

1. This is a review of what recommendations I have given earlier.
2. In my 'October Outlook', I suggested many strategies, let us look at one by one.
3. Strategy 1: Nifty 7900 Call and 7900 Put Sell for a combined premium of Rs 365.
4. This strategy has not done well, though on 14th October the combined premium has come down to Rs 295.
5. As of today, it is in no loss and no profit.
6. Strategy 2: Sell 7400 Put and 8400 Call.
7. This strategy, being low risk strategy, has not well.
8. The trade was set up at a combined premium of Rs 78.
9. The combined premium has never gone higher than Rs 78.
10. The combined premium slowly came down and now trading at Rs 14.
11. Strategy 3: Sell Bank Nifty 17200 Put and 17200 Call.
12. This is a high risk strategy and has done very well.
13. This trade was set up at a combined premium of Rs 1060.
14. Only on 29th September, the day of RBI policy, the combined premium was up just by Rs 5.
15. After that the premium started coming down.
16. Now the premium is only Rs 645 only.
17. This is a very good profit of Rs 415 per share and more than Rs 10,000 per lot.
18. Strategy 4: Sell Bank Nifty 15500 Put and 19000 Call for a combine premium of Rs 149.
19. This combined premium has never gone up.
20. Slowly came down and now the combined premium is only Rs 7.
21. This gives a profit of about Rs 140 and Rs 3500 per lot.
22. Assuming that one has created all the 4 positions, two in Nifty and two in Bank Nifty, the total profit as of today is more than Rs 15000.
23. The total Span Margin paid is Rs 75000. Assuming that our investment is Rs 1 Lakh, keeping Rs 25000 for MTM losses, still this works out to be 15% return.
24. This is an excellent return considering the risk level.
25. Still there are 5 more trading sessions.
26. Strategies to optimise the return: Invest only 40% of the money that you have.
27. Once the direction is clear, then use the remaining money to sell options on the opposite side.
28. For example, Nifty has broken out and crossed 8000, then one should have sold 7500, 7600 Put options, then when Nifty continued to trade firm and crossed 8200, one should have sold 7700, 7800 Put options.
29. The same thing goes for Bank Nifty, one could have sold 16000 Put and 16500 Put and in Call, one should have sold 18500 Call by this time.
30. This strategy will reduce the risk and at the same time will increase the return.