Riskless Algo Strategy : Reversal

Riskless Algo Strategy : Reversal is an Algo Strategy which is executed when options are undervalued to the underline Stock or Future Contract.

Strategy : To Sell an Underline Stock or Future Contract and Square off it with a Synthetic Long Stock or Future

Short/Sell Stock or Future Contract and Sell an ATM Put and Buy an ATM Call ( Synthetic Long )

Formula : Underlying Share Price/Future Price -Strike Price of Call/Put – Call Premium + Put Premium

Let me Explain with this an Example : Lot Size NIFTY Index in India is 50

Future Price of NIFTY Index in India : 15810

Strike Price ATM NIFTY Index in India : 15800

Call Premium ATM NIFTY Index in India : 190 ATM 15800

Put Premium ATM NIFTY Index in India : 200 ATM 15800

So According to Formula : 15810 (Future Price ) -15800 ( Strike Price ) – 190 (Call Premium ) + 200 ( Put Premium)

= 10 -190+200 = 20

So Rs. 20 is Riskless Profit

Total Profit Rs. 20 X Lot Size 50 = Rs. 1000 per Lot .

So Now you are ready to execute the your First Riskless Algo Strategy : Reversal

ALGO Software Available :

Greek Soft : https://www.greeksoft.co.in/

Refinitiv : https://www.refinitiv.com/en/trading-solutions/nest-india-trading-platform#

Also See : https://financeloaninsurance.com/algo-trading/

ALGO Member : https://www.myfindoc.com/services/algo-trading