I’m a newbie to trading and currently learning options and futures. Although it seems obvious I get confused in calculating profit or loss. Assume the following trade and please help me with calculation.
- Sell 1 Lot of ITM USDINR 66.5CE February 26th Expiry at Rs 5.1925
- Sell 1 lot of ITM USDINR 75 PE February 26 expiry at Rs 3.1700
Total premium collected is Rs 8.3625
Now, on expiry if USDINR was at 71.5 how to calculate profit/loss? I read this strategy as short guts strategy and it was said that it is profitable as long as the underlying remains between strikes. But I think it is a loss as both are ITM shorting. Please help.