We were looking for an appropriate situation for setting up the strategy with Bank Nifty for last 4 trading sessions. As the credit at set up was not good enough we avoided the trades so far.
We look forward to today’s session to enter the strategy .
We sell the following Options:
HDFCBANK PUT 2280 May 30 2 Lots @ Rs. 54.00
ICICIBANK PUT 400 May 30 1 Lot @ Rs. 14.50
KOTAKBK PUT 1360 May 30 1 Lot @ Rs. 38.00
Credit to be received — 27000 + 39875 + 30400 = Rs. 97275
For hedging the risk, we buy 5 Lots of Bank Nifty PUT 29500 MAY 30 @ Rs. 750
Debit = Rs. 75000
Net Credit = Rs. 22275
Actual profit/loss will depend on how the stocks and the Bank Nifty move from here but if the trend remains upward, all the options expire worthless ans we get to keep the net credit.
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.
Vinay April 25, 2019 at 10:44 pm
What is the total margin required for the complete setup?Reply
Manish B April 26, 2019 at 1:40 am
Hi Sir! my friend Aditya recommended me to read your posts and I like your open-mindedness. Just a quick look at your Bank Nifty trade strategy – I have a thought about situation it could perform or outperform or what should a trader track to ensure his trade going in the right direction.
So, you’re selling call – meaning short view (or expect consolidation) on HDFC Bank which is 32% of bnf , ICICI 18% and kotak 12% bnf driver. Multiplying suggested lots you get 64% + 18% + 12% = nearly 95% or 100% for the sake of argument. And, buying 5 lots of bnf at the same time.
Or, in other words, I would say, this strategy = bnf minus private banks (at full component mix).
You’re left with only public banks and pray god to show superior performance in Axis, SBI, Indusind, Yes and RBL.
Don’t you think that post results these private bank would take shield of current support zone and if given chance – could outperform without associating with public banks in the same beta as it has been seen?
I could get the point where if market turmoil and Nifty falls – bnf will fall mostly through private banks rather than public banks (limited downside as it seem).
Risk – I see only in equation if reshuffling goes weird. Important to track all components. I won’t say it as enter and forget strategy. However, a very intelligent approach.
Do you think telecom and IT components will outperform and Metals & Auto will underperform in NIFTY, if yes – any trade you may think?Reply
admin April 26, 2019 at 8:05 am
Thanks for sharing your thoughtsReply
PRAKHAR April 26, 2019 at 4:17 am
Sir, was not following bank nifty trades.Reply
Did we incur any loss due to option freeze in various strike price.
Vishal Agarwal April 26, 2019 at 5:50 pm
Hi Prakhar, Sir suggested to close the trades much before expiry day.Reply
Madan Mohan M April 26, 2019 at 9:02 am
Dear Prakar, I was in 29800 PE, bought at 35, it was hedged by 29700 CE at 67, between 3 pm and 3.03 pm BN crashed by 160 points, ie, BN was crashef to 29570, There were no buyers and sellers for 3 minutes, 29800 PE was spiked from 58 to 180, a straight line,Reply
PRAKHAR April 26, 2019 at 10:52 am
Thanks for replying Madan ji.Reply
Wat was your gain/loss from trade.
How & when you squared off trade?
KV Rao April 26, 2019 at 4:02 pm
APRIL strategy gave a profit of Rs.73,850 if kept till endReply