Make profits on Budget-day by multi-level call put strategy in nifty derivatives.

We all are waiting for the B-day on 29th February 2016 and from the past trends we can see that on Budget day market make the sharp movements. Investors are looking to gain something from these movements but no one can predict markets. Here we know that a sharp movement will be there but we don’t know about the direction. Experts suggest that in this case we should make a multi-level call put strategy to gain some riskless profits.

Strategy:

Buy a Nifty current level plus 200 points call i.e Call at strike price of 7300 (For March Expiry)

Buy a put of same distance i.e. 6900 level put

Total cost will be: 7300 Call=Rs.104

6900 Put= Rs. 108

Rs. 212

Now to reduce this premium cost sell deep out of the money call and put

Sell Call of Strike Price of 7600= Rs.31

Sell put of Strike Price of 6600=  Rs.47

Rs. 78

Net Cost will be: Rs. 212-Rs.78=Rs.134 (plus brokerage)

Now on budget if market moves more than 134 points investor will be able to make profits.

Risk will be when market will not move at all and even in that case investor will be able to cover all the position with minor loss of premium and brokerage cost. There will be no substantial losses.

waiting for the B-day and from the past trends we can see that on Budget day market make the sharp movements. Investors are looking to gain something from these movements but no one can predict markets. Here we know that a sharp movement will be there but we don’t know about the direction. Experts suggest that in this case we should make a multi-level call put strategy to gain some riskless profits.

Strategy:

Buy a Nifty current level plus 200 points call i.e Call at strike price of 7300 (For March Expiry)

Buy a put of same distance i.e. 6900 level put

Total cost will be: 7300 Call=Rs.104

6900 Put= Rs. 108

Rs. 212

Now to reduce this premium cost sell deep out of the money call and put

Sell Call of Strike Price of 7600= Rs.31

Sell put of Strike Price of 6600=Rs.47

Rs. 78

Net Cost will be: Rs. 212-Rs.78=Rs.134 (plus brokerage)

Now on budget if market moves more than 134 points investor will be able to make profits.

Risk will be when market will not move at all and even in that case investor will be able to cover all the position with minor loss of premium and brokerage cost. There will be no substantial losses.