Weekly Strategy Update
Live Option Strategies – LONG STRANGLE to Take Advantage of Expected Rise in Volatility on Elections
April 2014 Nifty 6800 Call Option Premium at Rs.79. Implied Volatility of 14.07%.
April 2014 Nifty 6200 Put Option Premium at Rs.10.5. Implied Volatility of 20%.
Total Cost for the Strategy for 1 lot of Put and Call Options is equal to Rs.82 multiplied by lot size equal to 50 is Rs.4100. Current total price of the Options is equal to Rs.89.5 that gives a profit of Rs.7.5 multiplied by the lot size of 50 is equal to Rs.375 for the strategy. The Strategy has given 9.14% return since recommendation.
Hold on to the strategy as Volatility in the Market is expected to give either side movement towards 6200 or 6800 till April expiry.
Expect the total premium of Call and Put Option taken together to go ahead of Rs.82 say till Rs.100 for a return of Rs.100-Rs.82= Rs.18 multiplied by the lot size of 50. Total Gain is equal to Rs.900 that returns 21.95% for the Strategy.
Profit Potential 21.95%. Maximum Possible loss Rs.82 for one lot size of 50 of Nifty Index. Stop Loss in strategy Rs.35 combined for both the options.