iCharts Discussions

[dee]

Options Hedging Strategy :

I am working on a hedging strategy in Options, as follows -

1. At the start of new series - buy equal amount of call & put options in nifty.
2. The strike price for the call should be 200 points more than nifty spot at that time.
3. The strike price for the put should be 200 points less than nifty spot at that time.
4. After studying past history I think this strategy should give decent returns.

I have actually traded this strategy this month.
Holding one 5400 nifty call at Rs. 58=50 and one 5000 nifty put at 69=00.
Total investment for one lot is Rs. 6375=00.

Kindly coment on this strategy.
Thanks.

[dee]

I have added one lot of 5400 call may series.
So, now I hold one lot of 5000 may put at Rs. 69/-
Two lots of 5400 call at Rs. 38.50 average.
Total investment = Rs. 7300/-
Days to expiry = 20

[svkum]

Dear DEE,
this strategy may work well only in cese
you SELL the options , and not BUY.

Since as per time decay option value as it is going down
options premiom varies as per volatility.
Go on booking profits as you proceed, and adust the selling of fresh call/put as the case may be.