The first trade in this series was feasible at the suggested prices.
LT CALL 1300 was available for Rs. 62.00 while LT Futures Dec 26 Expiry could be shorted at Rs. 1338. We would have liked a little higher price while shorting but we take what the market gives.
As we have paid about Rs. 24.00 as time premium for the Call option, this is our likely loss in the trade if the stock keeps moving up.
For the day, LT moved higher after going down in early trading.
Futures closed at Rs. 1353.35. CALL 1300 closed at Rs. 70.20.
Loss in Futures is Rs. 15.35 while profit from CALL is Rs. 8.20.
Loss for the day — Rs. 7.15 x 375 = Rs. 2681.
New Trade :
We initiate a trade in HDFC.
We buy HDFC DEC Futures at the current price of around Rs. 2320.
At the same time we buy HDFC PUT 2400 DEC Expiry for around Rs. 100-102.
The extra premium is approximately Rs. 5000-5500.
Margin for shorting the futures is approximately Rs. 103000 and buying the PUT option costs Rs. 25500.
With this trade, we swill have two hedged trades for this series.
Trade cautiously, trade profitably.
Disclaimer: This post and examples are for teaching purpose only and are not meant as advice/suggestion to trade in these stocks. Trading in Futures and Options can lead to big losses and should be done with appropriate knowledge and advice only. Mentioning the stocks here does not imply that I have a trading position or likely to take a trade in these stocks.