Topic: Futures & Options
Niladri Jana
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Bull Call/Put Spread : Options Strategy

From : Niladri Jana at 07:39 AM - Mar 13, 2012 ( )

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Bull Call Spread is the strategy you can use to profit from moderate rise in profit of underlying security.
 
What you do here is that you buy  1 Call Option and also sell a higher value Put Option
 
Example lets say current value of nifty is 5000 and lot size is 50.
If the nifty call option is available for Rs 70 for the strike price of 5000 and sell call option position of 5200 for Rs 40.
 
Net money taken initially would be 70-40 = Rs 30*50.
 
A person will profit if Nifty stays between 5070 and 5160.

Maximum profit will be Difference in strike price - Amount paid = 200-30 = 170*50

Maximum loss will be amount paid = Rs 30*50.
 
ON the expiry if nifty is at 5120 then first contract will give profit of 120*50 = 6000 and second contract will become worth less = 40*50 = 2000, so the net profit will be 4000.
 
Both the contract should have same lot size and should expire in the same series.
 
This strategy was buying and selling Call Options if the same thing is done with Put options then it is called Bull Put Spread.


From: Niladri Jana at 07:45 AM - Mar 13, 2012


VIJAYABANK Bull Call Spread:  http://home.axisdirect.co.in/AxisDirectWEB/portal/axisdirect.portal?_nfpb=true&_portlet.async=false&_pageLabel=derSymbolChain&symbolchain=vijayabank

LICHSGFIN Bull Call Spread: http://home.axisdirect.co.in/AxisDirectWEB/portal/axisdirect.portal?_nfpb=true&_portlet.async=false&_pageLabel=derSymbolChain&symbolchain=lichsgfin

Source ( for more ): http://home.axisdirect.co.in/AxisDirectWEB/portal/axisdirect.portal?_nfpb=true&_nfxr=false&_pageLabel=rniDerivativeRecomMore_page&RniLeftNavbar=RniDerivativeMoreLink




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From : Nitin Potade at 07:59 AM - Mar 13, 2012 ( )

THANKS NILADRI...

FIXED PROFIT ( APPROX )OF 170 POINTS ABOVE 5200...

FIXED LOSS ( APPROX )OF 30 POINTS BELOW 5000...


From : Ahmed Jariwala at 07:54 AM - Mar 13, 2012 ( )

excellent information share by you in simple language.............


From : Rajesh Bhapkar at 07:46 AM - Mar 13, 2012 ( )

Hi Niladri,

At the outset, thanks for sharing this valuable knowledge and I request you to continue this thread for newbies like us, mentioning different option strategies. Also, would appreciate if you can mention, which of the multiple option strategies available, should be adopted in trading.

Further to your point mentioned above, can you please elaborate how did you reach at the figure of 5070 and 5160 as per your statement

"A person will profit if Nifty stays between 5070 and 5160."

Warm Regards...RB

 


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