22
Aug
11

Time for another quick ratio spread..

On Friday, I sold few Nifty 4200 puts. A fall in the market, along with the fear of it falling even more, sharply increases the put premium. Nifty 4200 September series put premium was ruling at attractive level for me to go ahead and sell it. Although I covered some puts intraday also. As the premiums were quite high, I didn’t buy 4500 put for setting up ratio spread. Once there is some rebound in Nifty from current 4800 levels and put premium fall, I will buy 4500 put. It’s a lesson I have learnt from my previous ratio spread; Sell lower level put when there is absolute panic and buy protection for your sold put when there is some market rebound. Markets are oversold in short-term and Nifty is near its major support zone of 4750-4800, so there will be some rebound early next week. I will cover all my written puts in case of rebound. Overall market is weak and there will be more opportunities down the line.

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