StoxBox
Login

Everything about Max P&L and ROI and Logistics

  1. Learn about Option Strategies
    1. option trading strategies top 18 strategies every investor should know
    2. Bull call spread how Options Trading Strategy Works
    3. What is Bull Call Spread? How to Use Options Trading Strategy for Stocks and Indices
    4. Spreads in Finance A Comprehensive Guide to Mastering Options Trading Strategies
    5. Bull Put Spread Step-by-Step Guide How to Execute Options Trading Strategy with Examples
    6. Call Ratio Back Spread Options Trading Strategy: Explained with Examples
    7. Understanding Call Ratio Back Spread Strategy and the Importance of Time to Expiry and Volatility
    8. Bear Call Ladder Strategy: Tips to Improve Your Share Trading Success
    9. Synthetic Long and Arbitrage Strategies in Nifty Futures with Options
    10. Arbitrage options trading strategy with Examples from Fish Market to Share Market
    11. Bear Put Spread Navigating Bearish Markets to Limit Losses
    12. Bear Call Spread Why Calls can be a Better Choice than Puts
    13. Put Ratio Back Spread Options Trading Strategy to Profit from a Bearish Market
    14. Advanced Options Trading Strategies: Generalization, Delta, Strike Selection, and Effect of Volatility
    15. Long Straddle Options Trading Strategy Maximizing Profits in Any Market Direction
    16. Straddle Options Strategy Understanding Volatility and Overcoming Potential Risks
    17. Short Straddle Options Trading Strategy with examples
    18. Strangle vs Straddle: Which Options Trading Strategy is Better
    19. Long Strangles vs Short Strangles: Which Options Trading Strategy is Right for You
    20. Max Pain how to use options strategy With Examples
    21. Put Call Ratio (PCR) Analysis: How to Identify Bullish or Bearish Trends in the Market
    22. Iron Condor How to use Options Strategy With examples
    23. Everything about Max P&L and ROI and Logistics
Previous lesson
Marketopedia / Learn about Option Strategies / Everything about Max P&L and ROI and Logistics

There are a few important things you need to remember while executing an iron condor –

  1. It is essential for the strike distribution to be even when purchasing PE and CE. In this case, 9800 PE and 10,100 CE have been sold with the protection of 9600 PE and 10,300 CE respectively. The difference between them must be equal – 200 in this instance – rather than one being 100 and the other 200.
  2. The Max loss occurs when the market moves either above 10,300 CE or below 9,600 PE.
  3. Spread = 200 i.e. the difference between the sold strike and its protective strike.
  4. Max Profit = Net premium received. In this case, it is 128.45 (9634/75)
  5. Max loss = Spread – Net premium received. In this case, it is 200 – 128.45 = 71.54.

 

  • ROI and Logistics

The premium of Rs.23,288/- you receive by establishing a short strangle is higher in terms of absolute Rupees than the Rs.9,643/- for an iron condor. However, when factoring in the margin requirement, the Iron condor has a higher return on investment.

The margin required for a short strangle trade is Rs.1,45,090/-, resulting in an ROI.

23,288/1,45,090

=16%.

The margin requirement for iron condor is Rs.44,303/-. Therefore, the ROI is –

9,643/44,303

= 21%

As a trader, focus on the ROI rather than absolute numbers. The margin benefit makes for a tangible difference.

The order of trading plays a crucial role when it comes to an iron condor. To illustrate, this is the process –

  • Buy the far OTM call option
  • Buy the far OTM PUT

The idea here is to first be in a long position before starting a short one.

Why? Having a long option position reduces the margin you must pay for a short option. The system recognizes that risk is minimised, so lower margins are required.

Marketopedia
Learn about Option Strategies
Copy link
Twitter Facebook Linkedin
Previous lesson
StoxBox
© 2021 BP Equities Pvt. Ltd.
All Rights Reserved
StoxBox Instagram
StoxBox Facebook
StoxBox Twitter
StoxBox Youtube
StoxBox Linkedin
StoxBox Whatsapp
Get the app
StoxBox Footer
StoxBox Google Play Store
Products
MentorBox
HotBox
More

*All subscription pricing plans mentioned across the website are exclusive of 18% GST

By signing up, you agree to receive transactional messages on WhatsApp. You may also receive a call from a BP Wealth representative to help you with the account opening process

Disclosures and Disclaimer: Investment in securities markets are subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by BP Equities Pvt. Ltd. Investors should consult their investment advisor before making any investment decision. BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), IN-DP-CDSL-183-2002 (CDSL), INH000000974 (Research Analyst), CIN: U45200MH1994PTC081564. Please ensure you carefully read the Risk Disclosure Document as prescribed by SEBI | ICF

Attention Investors

  1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
  2. Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
  3. Pay 20% upfront margin of the transaction value to trade in cash market segment.
  4.  Investors may please refer to the Exchange’s Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.
  5. Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.

Issued in the interest of Investors

Communications: When You use the Website or send emails or other data, information or communication to us, You agree and understand that You are communicating with Us through electronic records and You consent to receive communications via electronic records from Us periodically and as and when required. We may communicate with you by email or by such other mode of communication, electronic or otherwise.

Investor Alert:

  1. Prevent Unauthorised Transactions in your demat account –> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from CDSL on the same day………………….issued in the interest of investors.
  2. KYC is one time exercise while dealing in securities markets – once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  3. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor’s account.

BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), INZ000030431 (MCX/NCDEX), IN-DP-CDSL-183-2002 (CDSL),
INH000000974 (Research Analyst) CIN: U45200MH1994PTC081564
BP Comtrade Pvt Ltd – SEBI Regn No: INZ000030431 CIN: U45200MH1994PTC081564

For complaints, send email on investor@bpwealth.com

Copyrights © 2022 BP Group All Rights Reserved