Options possess their own significance with the Derivatives Niche, producing numerous of Virtually Risk Free Strategies. We obtain a lot of unique strikes and also different maturities of one underlying stock. Therefore will produce a distinct combination by by making use of Call and additionally Put Options involving different strikes that can most of the time generate Risk Free profits.
Put Call Parity, Unpredictability Spread is an important few impressive Nifty Options Techniques. One of several good samples of a Risk Free Options Strategy recently will come in Nifty Options Trading Strategies. After we see Nifty Options Chain with regards to June 2013, simply produce quality Put Call Parity which often may provide us with risk free returns.
As of now Nifty June Future will be running at 5820 on 11th June 2013 at 12.20PM along with
Nifty 5700 June Call Option is running at Rs.165
And therefore Nifty 5700 June Put Options are running at Rs.50
Hence we would make Put Call Parity Trade by buying 5700 June Call, Selling 5700 June Put along with Selling one June Future.
Making it more informative
We now have
1. Bought Nifty 5700 June Call Option at Rs.165
2. Sold Nifty 5700 June Put Option at Rs.50
3. Sold Nifty June Future at Rs.5820
1. Rs. 165 Loss in 5700 June Call
2. Rs.50 Loss in 5700 June Put
3. Rs.220 Profit from Nifty June Future
The total net profit will be Rs.5 at 5600 Level.
Similarly if Nifty reaches to 5900 levels on maturity then we will have following profit and loss in our portfolio,
1. Rs. 35 Profit in 5700 June Call
2. Rs.50 Profit in 5700 June Put
3. Rs.80 Loss in Nifty June Future
The total net profit will be Rs.5 at 5900 Levels.
And finally if Nifty remains constant at Rs.5820 level at maturity then we will have following profit and loss in our portfolio,
1. R's. 45 Loss in 5700 June Call
2. Rs.50 Profit in 5700 June Put
3. No Profit No Loss in Nifty June Future
The total net profit will be Rs.5 at At this point the net portfolio geeks of the above three trades are zero, which reveals that the quintessential impression of these trades is going to be Zero. Therefore the distinction in prices in the course of starting the trade happens to be our net and even risk free profit.
For Eg. If, perhaps Nifty extends to 5600 level of maturation then we will probably have following profit and also loss in our own portfolio, 5820 Level.
So that the above procedures are exhibiting a fixed financial gain of Rs.5 at the levels related to the market. It is not having any kind of concern no matter if the market soars, goes down and / or continues to be constant. There are numerous strategies that may possibly build wonderful returns regarding risk. Please note that typically, If for example the Money Options is running at a price reduction when compared to to Out of the Money Options because there's a load related with STT upon expiration of nearly all the In the money Options.
But for the reason that the maturity is approximately 15 days away accordingly it should be able to produce quality results intended for investors. We've got to develop all the three trades all at once in order to prevent the risk of undesirable market movements. Specific types of algorithm process buying and selling terminals are available which ensure the execution related to all the three trades at a time.