Option traders can consider selling 640 Put option of Reliance Industries (May Expiry) at the current market premium of Rs. 3.00. This trade would generate more than 3 percent return in less than 20 days. However it must be noted that if RIL falls below 637 then there would be loss of Rs. 250 on every rupee fall in the stock for each lot (RIL lot size 250).
Following are the details of the trade:
If one lot of RIL 640 Put is sold at Rs. 3.00 then the return from the trade is as follows:
Total Premium Collected: 250 * 3 = 750.
Brokerage and other charges: Rs. 50
Margin Required: 22,400
Net return : 700/22400 *100 = 3.125%
The premium is down to 10 paise. Morgan Stanley upgraded RIL today to equal weight from under-weight.
ReplyDeleteThe stock is currently trading at 704, far above the price of 640. As expected while giving the trading call, the buyback momentum increased when price approached 680 levels thereby supporting the price.
Congratulation to all the traders who took position based on the above call.
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Author
InvestorZclub