Monday, January 21, 2013

Sell Reliance Industries JAN 960 CALL Option at 3.70

RIL posted good Q3 numbers which received positive response from the investors. However the stock seems to be getting tired at upper levels as it has already run up significantly from 840 odd levels to 920. Fundamentally the stock seems to be reasonably valued at current levels. Also the buyback program is over which was earlier supporting stock at lower levels. Hence considering all these factors one can sell 960 CALL option of the stock at current market premium of 3.70

Considering one is able to sell the JAN CALL option of RIL 960 strike price at current market premium of 3.70 he can generate following return from this trade:

Assuming 1 lot of RIL (1 lot = 250) 960 Put option is sold at Rs 3.7
Total premium collected = 250 * 3.7 = Rs 825
Total Transaction cost assuming Brokerage cost including STT and other taxes at Rs. 50 per lot = Rs 50
Margin money required: Rs. 33000
Total return = 775 / 33000 = 2.35% in 8 trading days.

Risk: If the stock goes above 960 and closes above this level then there will be a loss of Rs.250 for every Rs.1.00 above 963.70

1 comment:

  1. The stock has fallen as expected and hence the call has expired worthless.

    Congratulations to those who executed the above trade.

    Amit Agarwal


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