Trading Idea: Sell Nifty 6300 put



After a long while trading idea section is being restarted. Will try to publish one trading idea per month going forward. 

For the month of March 2016, one can sell Nifty 6300 put 1 lot (75) at Rs.15 thereby generating decent return on investment. Since 6300 is a very strong support area, it is highly unlikely that Nifty would close below that level in March series. Implied volatility at 6300 strike is quite high due to budget round the corner.

Total Return from the trade:

Considering one is able to sell the March PUT option of Nifty 6300 strike price at current market premium of Rs. 15 he/she can generate following return from this trade:

Assuming 1 lot of Nifty (1 lot = 75) 6300 put option is sold at Rs 15
Total premium collected = 75 * 15 = Rs 1125
Total Transaction cost assuming Brokerage cost including STT and other taxes at Rs. 60 per lot = Rs 60
Margin money required: Rs. 38000 (approx)
Total return = 1065 / 38000 = 2.8% in 40 Calendar days.

Risk: Since the above trading strategy is naked put writing, if the index goes below 6285 and closes below this level then there will be a loss of Rs.7500 for every 100  points fall below 6285.



3 comments:

Amit Agarwal said...

The premium of Nifty 6300 strike has crashed to 4.5 bucks as on 2nd march 2016

Amit Agarwal said...

The premium is now reduced to Rs. 1.7... One can let it this contract expire as it is highly unlikely for Nifty to breach 6300 level in current series.

Amit Agarwal said...

Needless to say that the put expired worthless. Congratulations to those who took this trading position. For more such trading ideas one can contact me at agrwal_amit@hotmail.com for my monthly / yearly subscription models.

Thanks You
Amit Agarwal
Founder - Author

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