Can I sell 14450CE (976) and hedge with 14550CE (737) of March Expiry as I’m expecting expiry below 14300 in March . These strikes are currently ITM. This way my premium collected is (976-737= 237) and its a win win situation regardless of market move.
How are you predicting it’s a win win situation ? What if nifty keeps going up and up …yes you can do it … Btw check the volume …these strikes have very less volumes unless you are trading only 1 lot
As I’m already collecting 237 and my strike difference is 100, it will not give me loss regardless of NIFTY moves. Can it be good for trading less quantity.
Have you already placed your trade at the above prices ?..because i saw huge difference between BID and ASK…also 14400 and 14500 march diff is only 75
Since the liquidity is very low at these strikes, if you had tried this spread today end of day it would have filled at below prices:
14450 CE: 615 (Bid)
14550 CE: 920 (Ask)
You wouldn’t be making any profit if you create a spread with these prices.
Stay away from illiquid strikes.
very illiquid options, better to avoid them. its ok if you have already got a chance to enter on specified price, otherwise pls avoid illiquid strikes.
i suggest always calculate ROI of any trade before entry on time frame of investment.
suppose, we get a 15k profit on investment of 5 lakhs, which isn’t a good profit if the position held for 2 month, but its better to get 1k profit on same investment for hour/bi hour. in short, in my view every trade should be compared with time.
You will not get 237, the difference in bid/ask is high.
The answer to your question is yes you can carry out the transaction, however the price may not be in your favour.