Options Strategy – ONGC Bull Spread Strategy July 08, 2010
Buy 1 ONGC 1300 July Call Option @ Rs.28.5, Sell 1 ONGC 1350 July Call Option @ Rs.12.05.
Payoff Diagram for Bull Spread Strategy
1,260 1,280 1,300 1,320 1,340 1,360 1,380 1,400
Price of the Underlying Asset
Strategy ONGC Bull Spread Strategy
View Expect ONGC to move above Rs.1350 at or before expiry
Action Buy 1 ONGC 1300 July Call Option @ Rs.28.50, Sell 1 ONGC 1350 July Call Option @ Rs.12.05.
Premium Outflow 16.45 (28.5-12.05)
Total Initial Outflow 4112 (16.45 premium difference * 250 lot size)
Breakeven Point Profitable when ONGC trades at or above 1317 before or on expiry.
Maximum Profit = Rs.8388 if the July series expiry is above 1350, Maximum Loss = 4112 if ONGC
Pay-Off expires below 1300.
Execution Initiate strategy only if the total premium net outflow is less than Rs.17
Costs The above does not include brokerage, funding (IM and MTM) and Impact cost
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