Sell DLF FEB 300 CALL Option at 1.00



Here is a quick trading idea that can deliver 2.26% return in 4 days equivalent to 206% annualized return. The idea is to sell DLF 300 Call which is trading at 1.00 premium.

DLF has had massive run up from 248 level to 281, an appreciation of more than 13%, in 1 week on the back of short covering. The stock touch 52 week high as well. However, considering the PE for the current year and the enterprise valuation of around 70,000 crores, further sustainable upside seems difficult from current levels. 

Based on the above theory one can sell DLF 300 Call at 1.00 premium assuming that the stock will not close above 300 in this series. The trade is for 4 days only as we have the expiry on 28th of Feb.

Total Return from the trade:

Considering one is able to sell the FEB CALL option of DLF 300 strike price at current market premium of 1.00 he can generate following return from this trade:

Assuming 1 lot of DLF (1 lot = 1000) 300 Call option is sold at Rs 1.00
Total premium collected = 1000 * 1.00 = Rs 1000
Total Transaction cost assuming Brokerage cost including STT and other taxes at Rs. 50 per lot = Rs 50
Margin money required: Rs. 42000
Total return = 950 / 42000 = 2.26% in 4 trading days.

Risk: Since the above trading strategy is naked call, if the stock goes above 300 and closes above this level then there will be a loss of Rs.1000 for every Rs.1.00 above 301.



Related Posts Plugin for WordPress, Blogger...

No comments:

Post a Comment



Do you like my blog?

If you enjoy reading InvestorZclub blog, please help spread the word by sharing this site with your friends.