Saturday, August 27, 2011

Trading strategy - Sell SEP NIFTY 4000 PUT Contract

Traders with one month view can sell september contract of NIFTY 4000 PUT at the current market price of Rs. 21. Though the strategy is a bit risky as it involves naked put writing, but it has lot of inherent safety of deep in the money.

NIFTY is currently at the level of 4750 and has already fallen more than 17% in last one month and is tremendously oversold. Equity markets globally has stabalized in past 1 week and hence our markets should also see a bounce back sooner than later.

InvestorZclub believes that the markets should not fall below 4000 nifty level in next 20 trading seesions and hence traders can pocket entire premium collected while writing the put.

The return from this strategy is:

Assuming trader writes 2 lot of NIFTY (1 lot = 50 NIFTY) at Rs. 21

Total premium collected = 100 * 21 = Rs. 2100
Margin money required: Rs. 20,000

2 comments:

  1. High Volatile situation makes investors jittery to invest at this point of time.

    ReplyDelete
  2. The premium has come down below Rs.5. Book profits..

    ReplyDelete

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