I had sold and call option of the banknifty at a price of 23300 at the price of the 30rs per Lot and it was an covered call as I have a portfolio against it, Now today as the market opened the price of banknifty reached till 23200 as a result the price of the call that I sold too increased causing me the loss.
What will be the loss if the price crosses 23300
As I am hedged with my portfolio the price of my portfolio will also increase as the price of the bank nifty will increase, at the same time the value of the call will also start increasing and will cause me loss.
Technically I will start making the loss when the price crosses 23330 as I have received the 30 rs premium already when I sold this call option.
But as my portfolio value will also increase I would be in overall profit but I will have the opportunity loss.
What is opportunity loss.
As the loss from the call option is increasing as the price of banknifty is increasing at the same time the portfolio profit is also increasing and hence they both will cancel out each other. This way the oppurtunity that I had that would have increased the value of portfolio is reduced. Overall I am in profit but I would have been in more profit , this situation is opportunity loss.
Where could be the banknifty expiry on 27 Aug
As per my analysis , I feel the banknifty may expire between 22800 to 23400 range, If it expires within this range I may still have a little or no loss from the call option and my portfolio will also be appreciated well.
Market cannot be predicted , the actions can be taken against the moves.
What is my current profit or loss.
As I said my portfolio value has increased but the loss from the call has also increased. Below are the screenshot of them.
In these screenshot it can be seen that my portfolio has appreciated from 3,60,000 rs to nearly 3,80,000 rs where as the call options which I sold at the rate of 30 has increased to 85 causing me loss of 55 per lot. But still the profits are more than the loss and overall I am on a profit.
Conclusion
I will carry forward the positions till the expiry that is till 27 Aug and will decide as per the market scenario if I should book profit with my portfolio too or should I carry it forward too.
What about the september month banknifty positions.
I had sold the 24500 and 25000 call options at the price of 100 each, now I am going to carry forward these positions as well , currently I am in loss in both of them but I will still carry forward them as I feel the banknifty still has a distance to cover to reach to that level.
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