Strategy – Covered Call
We expect Nifty to find support @ 5350-5400 and a pull back is seen to 5650-5700 odd levels, though a sustained move above 5700 would be a difficult task. We recommend a Covered Call Strategy where one needs to Buy 1 lot of Nifty Feb 5500 call @ 87 and Sell 1 lot of Nifty Feb 5700 call @ 27.
Recommendation:
Long/Short Option Type Expiry Strike Price Premium Quantity
Long Call Feb – 2011 5500 87 50
Short Call Feb --2011 5700 27 50
Breakeven Points:
Decider Level : 5560
It means loss is incurred only if Nifty closes below 5560 on expiry of Feb month i.e. Till Nifty stays above 5560 this strategy would be in profit
Risk/Reward:
Max Profit: 7000/-
Max Loss: Limited ( Premium paid = 60 points = 3000/- per lot )
Investment: 33350 ( Margin of 1 lot of Nifty ( 29000 ) + Call premium paid ( 5700 strike ) )
RETURNS: Upto 20.98%
Upto 251 % ( ANNUALIZED )
Traders can keep a stoploss of 5350 on closing basis on Nifty, it is advised to exit this strategy with a minimal loss if Nifty breaches 5350 on closing basis
We expect Nifty to find support @ 5350-5400 and a pull back is seen to 5650-5700 odd levels, though a sustained move above 5700 would be a difficult task. We recommend a Covered Call Strategy where one needs to Buy 1 lot of Nifty Feb 5500 call @ 87 and Sell 1 lot of Nifty Feb 5700 call @ 27.
Recommendation:
Long/Short Option Type Expiry Strike Price Premium Quantity
Long Call Feb – 2011 5500 87 50
Short Call Feb --2011 5700 27 50
Breakeven Points:
Decider Level : 5560
It means loss is incurred only if Nifty closes below 5560 on expiry of Feb month i.e. Till Nifty stays above 5560 this strategy would be in profit
Risk/Reward:
Max Profit: 7000/-
Max Loss: Limited ( Premium paid = 60 points = 3000/- per lot )
Investment: 33350 ( Margin of 1 lot of Nifty ( 29000 ) + Call premium paid ( 5700 strike ) )
RETURNS: Upto 20.98%
Upto 251 % ( ANNUALIZED )
Traders can keep a stoploss of 5350 on closing basis on Nifty, it is advised to exit this strategy with a minimal loss if Nifty breaches 5350 on closing basis
Have a nice trading day
Regards
Ankit
I really appreciate your post and you explain each and every point very well.Thanks for sharing this information.And I’ll love to read your next post too.
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trade 4 target
Thanks for the appreciation...
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