Option Strategy - Reliance

Strategy – Short Strangle

This strategy is for the stock Reliance Industries; we expect the stock to remain in a range of 920 -1020 for most part of February month. We see the current downside in the stock to get arrested at 900/920 levels and a bounce back is expected after that. Option data also suggest that there is a good amount of open interest build up seen in 940 put and 1020 call.  We recommend a Short Strangle where one needs to Short 940 put at Rs 21 and simultaneously Short 1020 call at Rs 13 and gets total premium of 34 Rs.

Breakeven Points:

Upper Breakeven Point:               1054

Lower Breakeven Point :              906

It means loss only starts if Reliance goes above 1054 or below 906 levels in the month of February

Risk/Reward:

Max Profit:         8500/-

Max Loss:            Unlimited

Investment:       76000 ( Margin of 2 lots  of Reliance Inds )

RETURNS:            Upto 11.18%

                                Upto 134 % ( ANNUALIZED )