Thursday, January 23, 2014

LONG PUT FOR BEAR MARKET/DOWNTREND

Long Put


       Buy  a Put when Market is Bearish,Risk is Limited

         and Reward is Unlimited. Increase in volatility helps

         position, time decay is only hurt the position

       Example:

        Now Nifty@6345

       Buy Nifty14FEB6100PE@30

       If Nifty is BEARISH due to RBI rate hike and negative global cues

       Nifty touched 6100 in Feb Series your profit would be 
  
       strike price plus premium paid

       Profit is 6345-6100 = 245 + 30 = 275 x 50 = 13750

       Risk is premium paid that is 30  x 50 = 1500

YOU CAN APPLY THIS OPTIONS STRATEGY ON STOCK OPTIONS ALSO




7 comments:

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