TCS Q2 RESULT BASED STRATEGIES - OUTCOME
The IT heavyweight is scheduled to declare its results today after market hours. This is the reason I thought of doing a post cum video explaining the basis on which I have created the strategy only for the purposes of tracking and till the time of writing this post and creating the video related to it, I have not taken a position. If I do take, I will let you know in the weekend post.
TCS hit a New All-Time High of 3989 and at the time of writing this post, it is around 3950. I already have other FNO positions on so I do not have spare capital to deploy so this approach.
Please watch the video to know how the strategies performed and what I ended up doing when the scrip fell down by 6%+.
I have chosen to track the following strategies:
Bull Call Spread:
In creating the spread, I have bought 3960 CE and shorted 4000 CE. The details of the cost, pay-off, and the associated risk as well as the capital needed have been explained in the short and crisp video.
In the worst case, there is a loss of 4K and in the best case, a gain of 6K. In my view, this is a good risk-reward considering the fact that there could be wild movements in a scrip post its results and TCS has moved 2-3% in the past around such events.
Outcome:
At 1100hours =
Spread Value When Created = 14
At 1100h = 03
Being a Bull CE spread, the value should have gone up for us to make money
Gain / Loss = -11*300 = -3300
Capital deployed Incl MTM Loss provision = 80,000
ROI = -4%
ATM Short Straddle:
In this, I have shorted 3960 CE as well as PE. the details of the cost, pay-off, and the associated risk as well as the capital needed have been explained in the short and crisp video.
The margin requirement is quite high so even if I create a strategy by EOD, I would not go for this. The Max gain is around 65K and obviously, the loss in unlimited as Options are being shorted. Though one can always keep an SL or exit when the spot reaches a pre-decided level.
Generally, short strategies are useful when the implied volatility is high prior to the event and the position gains as the VIX cools off after the event.
At 1100hours =
Straddle Value When Created = 225
At 1100h = 293
Being a Short Straddle, the value should have gone DOWN for us to make money.
Gain / Loss = -68*300 = -20400
Capital deployed Incl MTM Loss provision = 350,000
ROI = -5.83%
I will post an outcome video as well on 11-10-21 so stay tuned!
Till then,
Keep learning & making money but at all times, please assign topmost priority to your capital and do all that is needed to stay in the game with it!
Best wishes.
Umesh
8-10-21 & 11-10-21
The IT heavyweight is scheduled to declare its results today after market hours. This is the reason I thought of doing a post cum video explaining the basis on which I have created the strategy only for the purposes of tracking and till the time of writing this post and creating the video related to it, I have not taken a position. If I do take, I will let you know in the weekend post.
TCS hit a New All-Time High of 3989 and at the time of writing this post, it is around 3950. I already have other FNO positions on so I do not have spare capital to deploy so this approach.
Please watch the video to know how the strategies performed and what I ended up doing when the scrip fell down by 6%+.
I have chosen to track the following strategies:
Bull Call Spread:
In creating the spread, I have bought 3960 CE and shorted 4000 CE. The details of the cost, pay-off, and the associated risk as well as the capital needed have been explained in the short and crisp video.
In the worst case, there is a loss of 4K and in the best case, a gain of 6K. In my view, this is a good risk-reward considering the fact that there could be wild movements in a scrip post its results and TCS has moved 2-3% in the past around such events.
Outcome:
At 1100hours =
Spread Value When Created = 14
At 1100h = 03
Being a Bull CE spread, the value should have gone up for us to make money
Gain / Loss = -11*300 = -3300
Capital deployed Incl MTM Loss provision = 80,000
ROI = -4%
ATM Short Straddle:
In this, I have shorted 3960 CE as well as PE. the details of the cost, pay-off, and the associated risk as well as the capital needed have been explained in the short and crisp video.
The margin requirement is quite high so even if I create a strategy by EOD, I would not go for this. The Max gain is around 65K and obviously, the loss in unlimited as Options are being shorted. Though one can always keep an SL or exit when the spot reaches a pre-decided level.
Generally, short strategies are useful when the implied volatility is high prior to the event and the position gains as the VIX cools off after the event.
At 1100hours =
Straddle Value When Created = 225
At 1100h = 293
Being a Short Straddle, the value should have gone DOWN for us to make money.
Gain / Loss = -68*300 = -20400
Capital deployed Incl MTM Loss provision = 350,000
ROI = -5.83%
I will post an outcome video as well on 11-10-21 so stay tuned!
Till then,
Keep learning & making money but at all times, please assign topmost priority to your capital and do all that is needed to stay in the game with it!
Best wishes.
Umesh
8-10-21 & 11-10-21
