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Anup Menon

INDEX options: Trading interest in index options declined during the week with fewer contracts being traded as compared to last week. Two index call options managed to find a place among the list of the top 10 traded call options. As was the case last week, two index puts also managed to find a place among the list of a top 10 most actively traded puts.

The March 1180 call was the most actively traded index call option. It clocked volumes of around 590 contracts. The option is OTM. It was last priced at 1.95 points. The premium consists purely of time value and works against the buyer. Investors can consider selling the option at current levels. The probability of the trade being profitable works out to around 95 per cent.

An even better strategy would be to consider selling the March 1200 call. It clocked volumes of around 508 contracts. The option was last priced at 0.65 points. It is OTM. The premium consists of purely time value and works against the buyer. Investors can consider selling the option at current levels

The March 1220 put also provides very attractive trading opportunities. The contract clocked aggregate volumes of around 80 contracts during the week. It was last priced at 30 points. It is ITM. At a price of Rs 30, the probability of the option being exercised is very high. Investors can consider buying into the option at current levels. The probability of the trade being profitable works out to around 97 per cent.

Investors can consider creating put spreads buying into the 1220 put and selling any of the following - 140/1160/1180 March puts. Using any combination will lead to a net cash inflow. The probability of the trade being profitable also works out to be higher than 90 per cent for all the positions.

Follow up on last weeks index options recommendations:

As recommended last week, the sell recommendation on the March 1200 call on the index would have been profitable. The contract closed the week at 0.65 points. The contract would have netted around 8.35 points for the seller if he held on through the week. Similarly the recommendation to buy into the 1180 put would have also been profitable. The contract was last priced at 35 points, up by around 13.80 points from last weeks recommendation price. Selling the 1120 put would have also led to a profit of aorund 0.45 points for the investor. Investors who had sold the 1140 put would be out of the money as the contract gained 1.30 points over the week.

Stock Options - Calls and Puts

Among the stock options that were actively traded were contracts on Satyam Computers, Digital Globalsoft, Infosys Technologies and Reliance Industries.

The March 320 calls on Satyam Computers was among the actively traded calls during the week. It clocked volumes of close to 349 contracts. The option was last priced at 0.35 points. It is OTM. The premium consists of purely time value and works against the buyer. Investors can consider selling the option at current levels. The probability of the trade being profitable works out to around 92 per cent.

Investors can also consider selling the March 300 call on Satyam. It clocked volumes of 1875 contracts during the week. It was last priced at 1. It is OTM. The premium consists of purely time value and works against the buyer. Investors can consider selling the option at current levels. The probability of the trade being profitable works out to around 80 per cent.

Investors can consider creating a put spread by selling the 320 put and buying either the 280/300/260 puts. Any combination will lead to a net cash inflow for the trader.

Follow up on last weeks recommendations for individual stock options:

The sell recommendation on the March 320 call option on Satyam Computers would have been profitable by around 3.5 points. Similarly the sell recommendation on the 260 put option would be profitable to the extent of 0.35 points.

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