The Hindu Business Line : Writing Satyam 240 calls may be more rewarding

ON the last trading day of the week there was mixed trading interest in both call and put options. Most top traded equity calls lost value during the day. As usual Satyam Computers and ACC remained in the limelight during the day's trading. The near maturity contracts on Satyam Computers were among the top traded contracts during the day.

The January 260 Satyam call was the most actively traded contract with volumes of 820 contracts. The option costs around 8.60 points. It is ITM. The probability of the option ending ITM is 61 per cent.

The 240 call was moderately traded with volumes of 106 contracts. The option is ITM. The call was priced at 23.70 points. Investors can consider selling the call. The probability of the trade being profitable is high at 78 per cent.

Among the put options, the contract with a strike of 280 and expiration in January was active with traded volumes of 214 contracts. The option is ITM. Investors can consider selling the put as the probability of the trade being profitable is high at 75 per cent.

Investors can also consider creating a call spread by buying 260 calls and selling 240 calls. This would lead to a net cash inflow. The probability of the trade being profitable is 74 per cent.

Options on cement major ACC was also actively traded during the day.

As was the case on Thursday, the most actively traded contract on ACC was the January maturity 160 contract. The option costs 5.55 points. As was recommended, invstors who had sold the option at near about the previous day's closing price could have cashed in a profit.

The put option on ACC with expiration in January was also actively traded. As was recommended, investors who had sold the put could have booked profits. The put at present costs around 8 points. Investors can consider buying the put. The probability of the trade being profitable is around 57 per cent.

Investors can also consider engineering a put spread using the 160/170 puts. Buy the 170 puts and sell the 160 puts. However, the probability that the trade will be profitable at 51 per cent is not very high.

Trading activity in Nifty index options during the day was relatively low.

The most actively traded index option continued to remain the 1100 call with maturity in January. Total traded volumes stood at 102 contracts.

As was recommended, investors who had sold the 1080 puts could have booked profits on Friday. Investors can consider selling the 1060 calls or the 1100 puts. The call costs 24.10 points and the put costs 22 points. The probability of the trades being profitable works out to 75 per cent and 74 per cent respectively.

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