Markets were again in a big up move yesterday. And the move was largely based on banking stocks.

Bank Nifty closed above 30500. Our hedging PUT is at 30300 strike. That now becomes an out of money option and does not offer the correct hedging we want.

ICICIBANK did extremely well yesterday and was one of the major gainers. KOTAKBK and HDFCBANK too gained and all the sold PUTS lost value considerably.

BANKNIFTY PUT 30300 too went down in value as the index kept moving up all day.

So far, the strategy has worked out perfectly as anticipated.

Let us look at the numbers:

There is little value left in the sold options.

Same is the case with the bought options.

Waiting till expiry will give us additional Rs. 7000-8000 profit. If the trend reverses from here, the profit may go down a little. The hedging option PUT 30300 is no longer the right hedge. For that we have to move to PUT 30600 or 30500. That would increase the cost.

If at all if we have to do something, it would be best to close the strategy on Thursday ( today is a market holiday ) and set up another strategy for May Expiry.

We book a profit in this strategy on Thursday and move on to May Expiry.

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.