zero loss FNO Trading Strategy

Long 1 lot futures contract
Sell 1 OTM Call
Buy 1 ITM Put
With this strategy we can earn monthly up to 12% without risk

Example-

Suppose the Infosys stock is currently trading at Rs.935 on February6 . If the trader is neutral to bullish and he setup this trade by writing the call option of 1020 for Rs2.7 while simultaneously he buys the 1000 put for Rs.67.


Buy 1 Lots of FEB 1000 PUT : 67
SELL 1 Lots of FEB 1020 CALL : 2.7
Buy 1 Lot of infosys Future at Rs.935

If the stock price rally to Rs.1020 or above at expiration date, his maximum profit is Rs.10,250
On the other hand, should the stock price plunge to Rs.900 instead,he has profit of Rs.250
However, should the stock price remain unchanged at Rs.935, while his net profit is still Rs.250
So,he is in profits regardless the movement of the stock.



Position Will be Closed on or Before FEB,2017 Expiry



Maximum Loss Risk Involved in the trade : 0

Maximum Profit Potential : RS.10,350

Return if stock remains unchanged : RS.350



During FEB Expiry


PAYOFF GRAPH









Underlying Value at Expiry Total Profit and Loss




1075 - ₹ 10,350
1047 - ₹ 10,350
1029 - ₹ 10,350
1019 - ₹ 9,925
1010 - ₹ 5,250
1000 - ₹ 575
991 - ₹ 350
982 - ₹ 350
972 - ₹ 350
950 - ₹ 350
900 - ₹ 350

IMPORTANT NOTE
Exclusion of transaction costs during calculation
For ease of calculations, we have not taken into consideration the transaction cost that would be incurred by the investor upon entering the above strategy.
Investors are requested to calculate their brokerage and transaction charges as per applicable to them prior to entering any transaction.
For more previous trades visit blog

zero loss FNO Trading Strategy