Hi Team
Kindly help me out with below strategies.
If I buy 22500 ce @385
And another 22500 pe @400
Both above are weekly expiry options purchased for intraday.
Kindly suggest how can I make profit using above 2 positions for intraday and delivery.
Note both position will be bought at the same time.
It is like the Hedge strategy.
i do not think it can be called as hedging. It will be called as hedging when you sell Call of 22600 or lower or sell 22400 PE or future OTM Puts.
If BNF is 22500, then it has to move around 800 points in either direction for you to reach breakeven. For profit it has to move more in the same direction. Even if it stays at 22900, your CE will end in marginal profit but your Put will expire worthless.
I will suggest you to sell 23400 ce, it will be give you 110 points and 21600 pe around 115. So your total loss will be limited to around 550 points instead of 785 points.
This is neutral Strategy called Long Straddle, it will make you profit as long as market makes big move in either direction, profit potential here is unlimited. if it stays within the range you will make loss, max loss will be the premium you paid to buy these options.
You can use Sensibull’s Strategy Builder to measure the pay-off.
Or you can learn more about this Strategy on Varsity.