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Wednesday, Apr 17, 2002

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Sell 570 put on Digital Global

Anup Menon

CALL options lost value during the day's trading in the derivatives segment of the National Stock Exchange.

The top traded options were on Satyam Computer and Digital Globalsoft.

  • The April 300 call on Satyam Computer was actively traded. It clocked volumes of 131 contracts. It is OTM. It was last priced at 1.10 points. 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 86 per cent

  • Investors can also consider selling the April 280 call on Satyam Computer. It clocked volumes of around 446 contracts. It was last priced at 3.75 points. It is OTM. The premium consists of purely time value and works in favour of the seller. The probability of the trade being profitable works out to around 71 per cent.

  • The April 280 put on Satyam Computer could be a good choice. It clocked volumes of around 104 contracts. It is ITM. It was last priced at 17 points. The implied volatility on the option is lower than the average statistical volatility. Hence, investors can consider buying the option. The probability of the trade being profitable works out to around 45 per cent

  • Investors can also consider creating a put spread by buying the April 260 call and selling the April 280 put on Satyam Computer. The probability of the trade being profitable works out to around 56 per cent.

  • Options on Digital Globalsoft were also fairly active during the day. The April 660 call was the most actively traded in the family with volumes of around 227 contracts. It is ITM. It was last priced at 24 points. Close to 45 per cent of the premium consists of intrinsic value. Further, the implied volatility on the option is lower than the average statistical volatility of the stock. Hence investors can consider buying the option. The probability of the trade being profitable is around 42 per cent.

  • A better option could be buying the April 630 call on Digital Globalsoft. The option is ITM. It clocked volumes of around 169 contracts. It was last priced at 76 points. The implied volatility on the contract is lower than the average statistical volatility, which is favourable to the buyer. The probability of the trade being profitable works out to around 46 per cent.

  • Investors can also consider trading on the April puts on Digital Globalsoft. The April 570 put was relatively fairly active. It clocked volumes of around 39 contracts. It was last priced at 3.40 points. It is OTM. The premium consists of purely time value and works in favour of the seller. Further, the implied volatility of the option is also higher than the average statistical volatility. Both these factors favour the seller. Hence investors can consider selling the option. The probability of the trade being profitable works out to around 95 per cent.

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