Expiry Date: Select the required expiry date.
In this case, I have selected Once all the information is selected, you may click on Get Data. The premium price will be displayed then, which you will require for further calculations. Step 3: Populate the data set in Excel Spreadsheet.
Once you have got the Current Nifty Index Price and the Premium data, you can proceed further to calculate your Input-output data as follows in an Excel Spreadsheet. As you can see in the image above, we have filled the data for the Current Nifty index, Strike Price, and Premium.
123 - Options Hedging NO LOSS Strategy Explained with LIVE TRADE
We then have calculated the Break-even point. The Break-even point is nothing but the price that the stock must reach for the option buyers to avoid any loss if they exercise the option.
Options allow for potential profit during both volatile times, and when the market is quiet or less volatile. When you sell an option, the most you can profit is the price of the premium collected, but often there is unlimited downside potential. When you purchase an option, your upside can be unlimited and the most you can lose is the cost of the options premium.
This basically tells you paid options strategies much profit you will make or how much you will lose at a specific Nifty index. Note that in case of options, you are not obliged to exercise them, and hence you are able to limit your loss to the amount of Premium paid.
The formula used in paid options strategies case is the IF function of excel. This is how the formula works: If the Nifty closing price is less than the Strike price, we will not exercise the option.
When getting started with options, it is advantageous to work with strategies that allow you to be confident that you know how to open, manage, and close your positions. That notice is simply a message from your broker telling you that your short option was exercised and that you automatically sold shares at the strike price. Your option position has disappeared once exercised, the option no longer exists and the stock has been removed from your account. The cash will appear when the stock sale settles in three days. You, as the option seller, have no say about whether the option is exercised or not.
Thus, in this case, you only lose the amount of Premium paid At and above the breakeven point, you will start making a profit. You can check the formula used in the image above, in case you want to use it in your Spreadsheet.
Strangles Covered call options strategy A covered call is an options trading strategy that involves writing selling a call option against the same asset that you currently have a long position on. The goal behind the strategy is to increase the amount of profit that you can make from the long position alone by receiving the premium from selling an options contract.
Please note that for each strategy, we will include input data and output data. Input data is your strike price, Current Nifty index, Premium, and Break-even point.
Output data will include the payoff schedule. This generally will give you options forts demo clear picture of how much you will make or lose at different Nifty Closing prices.