HLL puts on stock price upticks
THE following are some buy/sell strategies based on Tuesday’s trading in the derivatives segment at the NSE:
Equity options: There are several factors that signal a positive outlook on Satyam in the immediate future. But the stock may find resistance at Rs 210. On the downside, the stock may see support at Rs 170. Given the higher downside, consider buying the August 200 puts. These puts are cheaper than other puts on Satyam. The 200 puts, nevertheless, are trading rich in terms of implied vols. UGG Kids Outlet Consider buying the puts on stock price upticks to reduce your acquisition cost. The option’s delta is 43, which means that the puts will rise 0.43 point for every point decline in the stock price. The puts will lose 50 per cent of its value from the current levels, if the stock moves to Rs 210. air jordan 2012 The puts will, however, gain handsomely if the stock drops to Rs 170. Note that the gains may take at least 10 days to realise. This means that option theta becomes important, as puts will lose value during cheap ray ban outlet this period due to time decay. cheap sale ugg boots uk The loss in option value due to passage of time (theta) is higher than the gain due to positive gamma.
The outlook on HLL does not appear positive. On cheap ray bans the upside, the stock may move up to Rs 182. On the downside, the stock may find support at Rs 160. Consider buying the August 180 puts to bet on the downside. new balance running The 180 puts are trading cheap in terms of implied vols. The option delta is 0.81, which means that the puts will rise 0.81 point for every point drop in the stock price. The trade off between theta and gamma is also very low. cheap ugg boots uk If the discount ray bans stock moves to Rs 182, the puts will lose 80 per cent of their value. If the stock moves to Rs 160, the puts will generate 100 per cent gain. ray ban collection 2013 homme The potential gain, thus, outweighs the potential losses, given the support and resistance levels.
Index options: The immediate outlook on the spot index appears positive. adidas zx Consider buying the August 990 calls. Note that all calls on the Nifty are trading rich, and that the 990 calls are cheapest among them. The option delta is low, but the vega is high. chaussure adidas zx flux A high vega means that the calls may rise sharply for every one per cent increase in the option’s implied vols. nike air max classic bw Since the theta is high, the fake ray bans trade off for buying the gamma is also high. This means that the calls will lose more value due to the passage of time than they will gain value because of positive gamma. If the spot index moves to 940, its support level, the calls will lose 20 per cent.
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