Current Trading Strategy on NIFTY Spot - 19 Jan 2011

Synthetic Long Put : Short index + Buy OTM Call


Means,
Call Rectified...


Correct the premium of Buy NIFTY 5900 Call Feb Expiry @ Rs. 67 - 77. in place of Rs. 122 - 132.




So,
Rectified Premium of NIFTY 5900 Call Feb Expiry @ Rs. 67 - 77
Rectified Loss limited to Rs. 217 only
Rectified Break-Even Point @ 5683 




"Short NIFTY Future Feb Expiry @ 5759.95 to 5770 (according to your Risk Level) + Buy NIFTY 5900 Call Feb Expiry @ Rs. 67 to 77 (according to your Risk Level) with No Stop Loss."


*Risk :- Limited up to Rs. 217 to 207
Profit :- Unlimited 


*Break - Even Point :- 5683


*Calculation of Risk : Call Strike Price - Short Index level + Premium Paid for the Call
For this trading strategy,
NIFTY Call Strike Price = 5900
Short NIFTY Future Level = 5759.95
Premium Paid for the Call = Rs. 77


then, Risk = 5900 - 5759.95 + 77 = Rs. 217 (If NIFTY Spot is closed below at any level of Break - Even Point on expiry then, loss will be limited to only Rs. 217)


*Calculation of Break - Even Point: Short Index Level - Premium Paid for the Call
For this trading strategy,
Short Index Level = 5759.95
Premium Paid for the Call = Rs. 77


then, Break - Even Point = 5759.95 - 77 = 5683 ( If NIFTY Spot is closed at this level on expiry then no profit & loss will be there.)