Trade Decission
Now I need 3 things.
1. Price of 5200 call option at 5270.30 (this is my entry price)
2. Price of 5200 call option at 5240.70 (this is my stop loss)
3. Price of my call option at 5310(this my maximum target)
Similarly I need the 3 things for the put option.
1. Price of 5300 put option at 5240.70 (This is my entry price)
2. Price of 5300 put option at 5270.30 (this is my stop loss)
3. Price of my put option at 5201(this my maximum target)
Now I will use the following information in the binomial option calculator:
Current price is mid point 5255.50,Strike price 5200
I will input the current option premium (this will be used to calculate the actual volatility in the option and actual volatility will be used to calculated the target and stop loss for the option) 105 when nifty was trading at 5250 on 12th January 2009.
I will choose the call option.
In volatility field I will entry any positive number >50. (This will be used only once for reference to calculate the actual volatility). I have entered 50 Days till expiry will be the number of calendar days. I have entered 17
It has given me the following out put ( I have got 5267.70 and 5243.30 since I am using the Gann angle proportion instead of the Fibonacci proportion. However Gann proportion is more accurate as compared to the Fibonacci proportion)
Buy 5200 ce at 111 when nifty will be at 5267.70 for target 119@5180, 127@ 5293, 144@5316. Since I know nifty in upside can scale to 5310 I will keep my final target below 144. Stop loss for the call option is 88
Now keeping all other information as same I will change the strike to 5300 and will select 5300 put option. This too has given us the information buy 5300 pe at 111 when nifty will be 5243.30 for target 118 @5231-125@5219-139@5195. since I know nifty may scale max till 5200 I will keep my final target below 139. Stop loss will be 92 for this entry.
Currently both strike options at 105 and nifty is at 5250. I will wait for my entry to come in order to initiate the position.
From the above I know to buy nifty 5200 ca at 111 for target 144 stop loss 88 and 5300 pe for target 139 and stop loss 92.
If you wish to buy 2 call and 1 put then your maximum profit at 5310 will be (144-111)X100-(111-80)X50=1750
Max loss (111-80) X100+ (139-111) X50= 1700 at 5200 level. By simulating other option strategy with different strike one can make wonderful money using this calculator.