TOP 9 TRADING STRATEGIES IN DERIVATIVES

1. BUY CALL

When market is down, buy just out of money Call.

2. BUY PUT

When market is Up and correction is due, buy Put.

3. BUY FUTURE AND SELL CALL

When you are bullish but at the same time you want to cover any downward.
4. BULL SPREAD

When market is in narrow range, buy IN THE MONEY CALL and sell OUT OF MONEY CALL.
5. CALENDER SPREAD

When you want to take TEJI POSITION for the next month, Sell Current Month CALL and Buy Next month Call.
6. STRANGLE

When you are not sure in which direction the market will go, Buy CALL & PUT of the same strike price.
7. STRADDLE

When results are expected and you do not know in which direction the stock will move, Buy OUT OF MONEY Call and OUT OF MONEY Put.

8. STOCK INSURANCE

Buy Future and Buy PUT to cover down side.

9. SELL CALL & PUT

In the last days of the Contract Period, Sell naked OUT OF MONEY Call & Put.

1. Mukesh expects Teji from now. He buys a Reliance Future @ Rs. 439 and sells Reliance 450 Call (with 450 strike price) at the premium of Rs. 9. At the close of contract period, Reliance was Rs. 462. Could Mukesh make profit? If yes, how much? (Lot Size = 600)
Sr 1 Details Initially Buying Reliance Future Selling Reliance 450 Call Finally Squaring off Reliance Future Loss Due 450 Call Profit -263,400.00 5,400.00 277,200.00 -7,200.00 12,000.00 600 600 462.00 -12.00 600 600 -439.00 9.00 Value Qty Rate

2. Popatlal expects Teji ahead. He buys HLL 180 Call at premium of Rs. 12 and sells 190 Call at the premium of Rs. 8. At the time of settlement end, HLL was trading at 196. Explain Popatlals position. (Lot Size = 2000)
Initially Buying HLL 180 Call Selling HLL 190 Call Finally Due to Buying HLL 180 Call Due to Selling HLL 190 Call Profit -24,000.00 16,000.00 32,000.00 -12,000.00 12,000.00 2000 2000 16.00 -6.00 2000 2000 -12.00 8.00

3. Manubhai expects Teji ahead. He buys a Reliance Future @ Rs. 437 and sells Reliance 450 Call at the premium of Rs. 6. At the close of contract period, Reliance was Rs. 435. Could Manubhai make profit? If yes, how much? (Lot Size = 600)
3 Initially Buying Reliance Future Selling Reliance 450 Call Finally Squaring off Reliance Future Due to Expiry of 450 Call At 435 Profit -262,200.00 3,600.00 261,000.00 2,400.00 600 600 435.00 0.00 600 600 -437.00 6.00

4. Lalu expects Teji ahead. He buys HLL 180 Call at premium of Rs. 11 and sells 190 Call at the premium of Rs. 9. At the time of settlement end, HLL was trading at 191. Explain Lalus position. (Lot Size = 2000)
4 Initially Buying HLL 180 Call Selling HLL 190 Call Finally Due to Buying HLL 180 Call Due to Selling HLL 190 Call Profit -22,000.00 18,000.00 22,000.00 -2,000.00 16,000.00 2000 2000 11.00 -1.00 2000 2000 -11.00 9.00

5. Dhondiba bought a Reliance 450 Call at Rs. 12 and sold Reliance Future @ Rs. 465. What would be his position when Reliance was quoting at Rs. 445/- ? (Lot Size = 600)
5 Initially Buying Reliance 450 Call Selling Reliance Future Finally Due to Expiry of 450 Call At 445 Squaring off Reliance Future Profit -7,200.00 279,000.00 -267,000.00 4,800.00 600 600 0.00 -445.00 600 600 -12.00 465.00

6. Dhakkan sold HLL 180 Call at Rs. 11 and bought HLL 190 call at Rs. 6. What will be his position when HLL is trading at Rs. 189? (Lot Size = 2000)
6 Initially Selling HLL 180 Call Buying HLL 190 Call Finally Due to Selling HLL 180 Call Due to Expiry of 190 Call At 189 Loss 22,000.00 -12,000.00 -18,000.00 -8,000.00 2000 2000 -9.00 0.00 2000 2000 11.00 -6.00

7. Makaiwala sold HLL 180 call at Rs. 6 and HLL 190 PUT at Rs. 7? What will he occur when HLL is trading at Rs. 175? (Lot Size = 2000)
7 Initially Selling HLL 180 Call Selling HLL 190 Put Finally Due to Expiry of 180 Call At 175 Due to Selling HLL 190 Put Loss 12,000.00 14,000.00 -30,000.00 -4,000.00 2000 2000 0.00 -15.00 2000 2000 6.00 7.00

8. Bhikhamchand sold HLL 190 call at Rs. 5 and HLL 190 PUT at Rs. 6? What will be his profit range of rates of HLL? When will he start making loss? (Lot Size = 2000)
8 Initially Selling HLL 190 Call Selling HLL 190 Put Finally Break Even for Call is 195 and for Put is 184. He will make profit when HLL remains between 184 and 195. Profit Range : 184 to 195 10,000.00 12,000.00 2000 2000 5.00 6.00

9. Deepak sells Infosys 4500 call @ Rs. 75 and buys Infosys future at Rs. 4400. What will be his position when the rate of Infosys suddenly falls to Rs. 3800? (Lot Size = 50)
9 Initially Selling INFOSYS 4500 Call Buying INFOSYS Future @ 4400.00 Finally Due to Expiry of 4500 Call At 3850 Squaring Off INFOSYS Future Loss 190,000.00 -26,250.00 50 50 0.00 3800.00 3,750.00 -220,000.00 50 75.00

50 -4400.00

10.Manoj buys Infosys Future at Rs. 4600 and buys Infosys 4500 PUT at Rs. 50. What will be his position when the rate is Rs. 3850? Lot quantity for Infosys is 100. (Lot Size = 50)
10 Initially Buying INFOSYS Future @ 4600.00 Buying INFOSYS 4500 Put @ 50 Finally Squaring Off INFOSYS Future Due to INFOSYS 4500 Put Loss 192,500.00 32,500.00 -7,500.00 50 3850.00 50 650.00 -230,000.00 50 -4600.00 -2,500.00 50 -50.00

11.Pradeep bought HLL 180 CALL at Rs. 12 and sold HLL 190 PUT for Rs. 17, both at a time. What will be his position when HLL is trading at Rs. 185? (Lot Size = 2000)
11 Initially Buying HLL 180 Call Selling HLL 190 Put Finally Due to Buying HLL 180 Call Due to Selling HLL 190 Put Profit -24,000.00 34,000.00 10,000.00 -10,000.00 10,000.00 2000 2000 5.00 -5.00 2000 2000 -12.00 17.00

1. Manali sold HLL 180 PUT at Rs. 6/-. She also sold HLL 190 CALL at Rs. 3/-. What will be her position when HLL is about to close at Rs. 184? (Lot Size = 2000)
12 Initially Selling HLL 180 Put Selling HLL 190 Call Finally HLL 180 Put Expired at 184 HLL 190 Call Expired at 184 Profit 12,000.00 6,000.00 18,000.00 2000 2000 0.00 0.00 2000 2000 6.00 3.00

2. Nitin bought INFOSYS 4400 CALL at Rs. 90/-. He sold INFOSYS 4600 CALL at Rs. 60/-. What will be his position when INFOSYS is about to close at Rs. 4685/- ? (Lot Size = 50)

13

Initially Buying INFOSYS 4400 Call Selling INFOSYS 4600 Call Finally Due to INFOSYS 4400 Call Due to INFOSYS 4600 Call Profit 14,250.00 -4250.00 8,500.00 50 50 285.00 -85.00 -4,500.00 3,000.00 50 50 -90.00 60.00

3. Bhavesh bought Infosys 4400 CALL at Rs. 120/- and Infosys 4400 PUT at Rs. 105. What will be his profit zone? (Lot Size = 50)
14 Initially Buying INFOSYS 4400 Call Buying INFOSYS 4400 Put Finally Due to INFOSYS 4400 Call Due to INFOSYS 4400 Put 14,250.00 -4,250.00 50 50 285.00 -85.00 -6,000.00 -5,250.00 50 50 -120.00 -105.00

Break Even for Call is 4280 and for Put is 4505. He will make profit when INFOSYS remains between 4280 and 4505. Profit Range : 4280 to 4505

4. Rachana sold HLL 180 CALL at Rs. 12 and HLL 180 PUT at Rs. 10/-. What will be her profit zone? (Lot Size = 2000)
15 Initially Selling HLL 180 Call Selling HLL 180 Put Finally Break Even for Call is 192 and for Put is 170. She will make profit when HLL remains between 170 and 192. Profit Range : 170 to 192 24,000.00 20,000.00 2000 2000 12.00 10.00

5. Kishor bought Arvind Mills Future at Rs. 44 and sold Arvind Mills 50 Call at Rs. 3/-. How much profit or loss will he occur when the closing rate is Rs. 38 ? (Lot Size = 4300)
16 Initially Buying ARVIND Future @ 44 Selling ARVIND 50 Call Finally Due to ARVIND Future at 38 ARVIND 50 Call Expired at 38 Loss 163,400.00 -12,900.00 4300 4300 38.00 0.00 -189,200.00 12,900.00 4300 4300 -44.00 3.00

6. Bharat bought SATYAM FUTURE @ 286.00. He sold SATYAM 300 CALL at the premium of Rs. 5/-. He also bought SATYAM 280 PUT at the premium of Rs. 4/-. What will be his position when SATYAM closes at Rs. 292? (Lot Size = 1200)

17

Initially Buying SATYAM Future @ 286 Selling SATYAM 300 Call Buying SATYAM 280 PUT Finally Due to SATYAM Future at close SATYAM 300 CALL expired at 292 SATYAM 280 PUT expired at 292 Profit 350,400.00 8,400.00 1200 1200 1200 292.00 0.00 0.00 -343,200.00 6,000.00 -4,800.00 1200 -286.00 1200 1200 5.00 -4.00

7. Ravindra sold INFOSYS 5000 PUT at premium of Rs. 85/-. He sold INFOSYS FUTURE at Rs. 5300/-. What will be his position if INFOSYS finally closes at Rs. 5050/-? (Lot Size = 50)
18 Initially Selling INFOSYS 5000 PUT Selling INFOSYS Future Finally INFOSYS 5000 PUT Expired at 5050 Buying INFOSYS Future Profit 50 0.00 4,250.00 265,000.00 50 85.00

50 5300.00

-252,500.00 50 -5050.00 16,750.00

8. Ashok bought HLL 130 CALL at premium of Rs. 4.00 and HLL 130 PUT at premium of Rs. 6.00. What will be final effect on him when HLL closes at Rs. 119/-? (Lot Size = 2000)

19

Initially Buying HLL 130 Call Buying HLL 130 Put Finally HLL 130 Call expired at 119 Due to Buying HLL 130 Put Profit -8,000.00 -12,000.00 22,000.00 2,000.00 2000 2000 0.00 11.00 2000 2000 -4.00 -6.00

9. Vijay sold ACC FUTURE at Rs. 238/-. He also sold ACC 230 PUT at the premium of Rs. 8.00. What will be final effect on him when ACC closes at Rs. 219/-? (Lot Size = 1500)
20 Initially Selling ACC Future Selling ACC 230 PUT Finally Buying ACC Future Due to ACC 230 PUT Profit -328,500.00 -16,500.00 24,000.00 1500 1500 -219.00 -11.00 357,000.00 12,000.00 1500 1500 238.00 8.00

21 What have I done, TEJI or MANDI, in the following situations:

1. 2. 3. 4. 5. 6.

When I bought a CALL? When I have sold a CALL? When I have bought a PUT? When I have bought both CALL & PUT? When I have sold both CALL & PUT? When I have sold a PUT & bought a CALL?

7. When I have bought a PUT & sold a CALL? 8. When I have sold a PUT? Answers of Question-21. 1. TEJI 2. MANDI 5. MANDI & TEJI 7. MANDI & MANDI 3. MANDI 4. TEJI & MANDI 6. TEJI & TEJI 8. TEJI