My Current Trade

I have initiated following trade using Covered call strategy

This trade was initiated on 30 August

I chose TTML as stock for covered call writing for following reasons:

1. I want to own this stock, i am convinced about longterm prospects of TTML & telecom industry

2. TTML has high level of Volatility, giving good premium

3. Options are available for fairly long range strikes.

I Have used a variation of covered call which is sometimes referred as "ratio write"

The position set is as below:

1. Bought 5225 (half lot) of TTML shares for delivery @ Rs 31.95

2. Sold 2 lots of TTML options of 40 Rs Strike @ Rs 0.65


The chart below shows TTML position pay off


We will be comfortable as long as TTML closes below 43.50 by month end. If it remains Below 40, we will pocket entire 13500 Rs premium collected. We will write calls again next month.

Total Money invested in buying calls is approx Rs 168000 while margin blocked for writing calls (2 Lots) is Rs 140000, which has been provided by the limit taken against TTML stock in the portfolio.

This position was initiated on 30th August.

As on today, TTML stock is at Rs 32.50 and the options sold were at 0.30. Hence overall position is profitable.

Keep watching

Abhijit