Question: Profit/Loss Calculation in options trading?
Today at the at the first half of trading session I bought State Bank of India 23 Feb Call 2100@ Rs 70/- But in the evening the option price fell and closed at Rs. 65/-, My question is if I want to square off at Loss at Rs 65/- what will be my losses or will there be any thing left over for me after squaring off??
My second question is how much Rs 70/- should rise to break even????
I am very new in stock trading and today for the first time I have invested in stock options. It will be a great help if you could explain the Calculation with examples???
Thanking you in advance!!!!!
Answer:
First of all, jumping straight into options when you are new to even the simple game of stock trading is an extremely risky move as options are totally different from stocks. Read the link below for a free tutorial on the differences.
For your situation, If you sold your option at Rs65, you will lose Rs5 since you bought it at Rs70. Straight forward.
Break even for long call strategy like this is Premium + Strike Price. So your break even should be 2100 + 70 = 2170.
"I am very new to stock trading and.....invested in stock options"
Do you think that wise?
In the UK you have to sign a derivatives risk warning notice that basically says you know what you are doing! You may think this is a bit sissy, but if you have to ask here...........
hi
here if you square off today you will loose 70*125=8750 rs.
lot size of sbi is125
you will loose maximum 8750 in this trade. your Profit limit is un limited.
so wait till expiry. still 20 more days left for expiry
breakeven price is= 2170.
so if sbi moves above 2170 , you will get profit
for eg i-sbi reached 2200 on 17 feb. you will get (2200-2170)*125=3750rs profit
dont worry. . you loss is limited to 8750. wait some more days.
for beginners option trading is very difficult. so learn normal trading, then start option. you can make profits
if u need any help , contact me @ nikhilvtk@gmail.com