Algo Trading

Algo Strategy : Costless Collar

Please Share

A Costless collar is an options strategy designed to protect a trader’s potential downside. It does this buying a protective put while writing an out-of-the-money covered call with a strike price at which the premium received is equal to the premium of the protective put purchased.

Strategy :

Long Shares Reliance Shares 1000
Sell 4 OTM Call
Buy 4 ATM Put

Note : Premium of Call = Premium of Put

Reliance Share Price : 2660 Quantity : 1000 Shares

SELL OTM Call Strike 2700 : Premium Received Rs. 60

BUY ATM PUT Strike 2660 : Premium Paid Rs. 60

Maximum Profit : (2700-2660 ) X 1000 ( Quantity of Shares ) = Rs. 40 X 1000 = Rs. 40000

Formula for Maximum Profit : Strike Price of Short Call – Purchase Price of Underlying – Commissions Paid

Maximum Profit : When Price of Underlying >= Strike Price of Short Call

Maximum Loss : Commission Paid

ALGO Strategy BULL CALL Spread : Algo Strategy : Bull Call Spread

NSE India Options Chain Website https://www.nseindia.com/option-chain 

finsuranceloaninsurance

Recent Posts

HDFC Bank Buy @ 1637.55 TSL 1616.80

HDFC Bank Buy @ 1637.55 TSL 1616.80 ( Trailing Stop Loss : TSL ) CMP…

1 year ago

Understanding G-Secs: Yield, Interest Rates, Coupon Rates, and Profit Potential

Title: Understanding G-Secs: Yield, Interest Rates, Coupon Rates, and Profit Potential Introduction Government securities (G-Secs)…

1 year ago

Artificial intelligence (AI) has revolutionized Financial Markets

Artificial intelligence (AI) has revolutionized financial markets , particularly in the realm of algorithmic (algo)…

2 years ago

Short Straddle Options Strategy

Short Straddle Options Strategy Theta decay is a concept in options trading that refers to…

2 years ago

Jim Simons the Wizard of Stock Market

Jim Simons the Wizard of Stock Market Jim Simons the is the founder of Renaissance…

2 years ago

Bikaji Foods IPO Detail

Bikaji Foods IPO Detail Primary business of our Company We are one of India’s largest…

2 years ago

This website uses cookies.