Japanese Stock Market fall of more than 7% and quick appreciation of Yen vs USD on the back of fear of inflation in Japan has led to a very high conviction trade that can generate more than 1.2% return in 5 days.
The trade is to sell 1750 May call option of Maruti at current market premium of 3.2 expecting that Maruti should not cross 1750 levels in next 5 days.The recent month closing high for the stock was around 1742.
Total return from the strategy
Total premium collected = 250 * 3.20 = Rs 800
Total Transaction cost assuming Brokerage cost including STT and other taxes at Rs. 50 per lot = Rs 50
Margin money required: Rs. 61,000
Total return = 750 / 60000 = 1.25% in 5 trading days
Risk: If the stock moves above 1753 and closes above this level then there will be a loss of Rs.250 for every Rs.1 beyond 1753.
Trade went successful, as expected maruti closed well below 1750.
ReplyDeleteCongratulation to all our consultancy subscribers and readers who executed this trade on our recommendation