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Friday, May 10, 2002

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Consider selling HPCL 320 call

Anup Menon

THE bulls were relatively active during the day's trading and call options across-the-board gained in value during the day at the derivatives segment on the National Stock Exchange.

  • Options on Larsen & Toubro continued to attract market interest during the day. The May 190 call was active with 113 contracts being traded. Though Wednesday's recommendation of short position would have seen traders losing money, it is still better for traders to sticking on to the position. It was last priced at 2.25 points. Traders can consider selling the option. The probability of the trade being profitable works out to around 81 per cent.

  • As recommended on Wednesday, traders who had bought the May 160 call on L&T would have seen their position gain value. Traders can consider buying into the May 170 call on L&T. It was last priced at 13.55 points. It clocked volumes of 160 contracts. The probability of the trade being profitable works out to around 45 percent.

  • Traders can also consider selling the May 170 put on L&T. It was the most actively traded put contract on L&T with volumes of close to 48 contracts. It was last priced at 0.55 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 88 per cent.

  • Traders can consider engineering a call spread by buying into the May 180 call and selling the May 170 call. The probability of the trade being profitable works out to around 68 per cent.

  • Traders can also consider selling a strangle using the May 200 call and the May 160 put on L&T. The probability of the trade being profitable is around 73 per cent. Traders should note that selling a strangle is a comparatively risky strategy.

  • Alternatively, traders can consider buying a straddle using the May 180 call and put. The probability of the trade being profitable works out to around 68 per cent.

  • Options on oil major HPCL were also active during the day. Traders can consider selling the May 320 call on HPCL. It is OTM. It clocked volumes of close to 138 contracts. It was last priced at 5.55 points. 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 85 per cent.

  • Alternatively, traders can consider buying into the May 280 call on HPCL. It is ITM. It clocked volumes of close to 204 contracts. Close to 80 per cent of the premium consists of intrinsic value. The probability of the trade being profitable works out to around 41 per cent.

  • Traders can also consider selling the May 280 put on HPCL. It was the most active put option on HPCL clocking volumes of around 60 contracts. It is OTM. It was last priced at 3.20 points. The probability of the trade being profitable works out to around 87 per cent.

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