Long 1 lot futures contract

Sell 1 OTM Call

Buy 1 ITM Put

With this strategy we can earn monthly up to 12% without risk

Buy 1 Lots of FEB 1000 PUT : 67

SELL 1 Lots of FEB 1020 CALL : 2.7

Buy 1 Lot of infosys Future at Rs.935

If the stock price rally to Rs.1020 or above at expiration date, his maximum profit is Rs.10,250

On the other hand, should the stock price plunge to Rs.900 instead,he has profit of Rs.250

However, should the stock price remain unchanged at Rs.935, while his net profit is still Rs.250

So,he is in profits regardless the movement of the stock.

1000 - ₹ 575

991 - ₹ 350

982 - ₹ 350

972 - ₹ 350

950 - ₹ 350

900 - ₹ 350

For ease of calculations, we have not taken into consideration the transaction cost that would be incurred by the investor upon entering the above strategy.

Investors are requested to calculate their brokerage and transaction charges as per applicable to them prior to entering any transaction.

Sell 1 OTM Call

Buy 1 ITM Put

_{}^{}With this strategy we can earn monthly up to 12% without risk

__Example-____Suppose the Infosys stock is currently trading at Rs.935 on February6 . If the trader is neutral to bullish and he setup this trade by writing the call option of 1020 for Rs2.7 while simultaneously he buys the 1000 put for Rs.67.__

Buy 1 Lots of FEB 1000 PUT : 67

SELL 1 Lots of FEB 1020 CALL : 2.7

Buy 1 Lot of infosys Future at Rs.935

If the stock price rally to Rs.1020 or above at expiration date, his maximum profit is Rs.10,250

On the other hand, should the stock price plunge to Rs.900 instead,he has profit of Rs.250

However, should the stock price remain unchanged at Rs.935, while his net profit is still Rs.250

So,he is in profits regardless the movement of the stock.

**Position Will be Closed on or Before FEB,2017 Expiry**
Maximum Loss Risk Involved in the trade : 0

Maximum Profit Potential : RS.10,350

Return if stock remains unchanged : RS.350

**During FEB Expiry**

**PAYOFF GRAPH**

**Underlying Value at Expiry Total Profit and Loss**

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1075 - ₹ 10,350

1047 - ₹ 10,350

1029 - ₹ 10,350

1019 - ₹ 9,925

1010 - ₹ 5,2501047 - ₹ 10,350

1029 - ₹ 10,350

1019 - ₹ 9,925

1000 - ₹ 575

991 - ₹ 350

982 - ₹ 350

972 - ₹ 350

950 - ₹ 350

900 - ₹ 350

__IMPORTANT NOTE__**Exclusion of transaction costs during calculation**

For ease of calculations, we have not taken into consideration the transaction cost that would be incurred by the investor upon entering the above strategy.

Investors are requested to calculate their brokerage and transaction charges as per applicable to them prior to entering any transaction.

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what happens to that one lot of long future ?

ReplyDeleteGo through TRADE HISTORY for better idea

Deletesquare off along with the call and put options

ReplyDeleteHow is the profit 5,250 at price 1010? wouldnt the cost of Put 6,700 be deducted from total profit? I would appreciate if you share detailed calculation

ReplyDelete