Option Strategy March 2010

It is time to implement our strategy for this month. Our decision to wait till the budget event to get over has really paid well. Now the market is at least 5% above the budget levels.

Before discussing this month strategy here is my post which describes our option strategy

This month I am following a staggered approach when you will only sell options which are worth half of your margin money. Since I am slightly bullish on the market I expect to sell rest of the options as the market goes up from here.

Sell the following call options

March 5200 Call Option at 50Rs – 6x lots


March 5300 call Option at 19Rs – 4x lots (this is optional I had some margin left so I sold this one)

April 5300 Call Option at 74Rs – 6x lots

April 5400 call Option at 45Rs – 10x lots

May 5100 Call Option at 210Rs – 2x Lots

This time the premium is slightly low as most of the market men expect a correction (which is another reason why the market goes up)
 
Tomorrow if the market is up then i plan to deploy another 20% of the margin money by selling higher call options. however if the market goes down then i would wait and just watch these options decay :-)
 

Sulzer India. Will delisting happen?

Sulzer India announced its plan to delist the shares from the stock exchanges. Sulzer, Switzerland-based parent company, an 80% shareholder of the company has proposed to acquire the remaining 20% equity shares of the company through an offer and intention to voluntarily delist the equity shares of the company from all the stock exchanges in India.

Read my initial report about Sulzer India here (Specifically read my Note of Caution section)

The company is offering 870Rs/share as an initial offer to its shareholders which will value the company at around 8 times its expected EPS of 110Rs by FY10 March. The company in 2006 also had tried to delist its shares but failed.

Will the delisting happen this time?

The company is really in a Catch22 situation now. I would say this case applies to most of the MNC’s listed in India who has high promoter stakes. Even though MNC companies want to increase their Indian operations, most of them would like to have greater control in their day to day and financial operations.

Skype-Verizon deal, Death bell for the traditional phone business?

The deal struck by Verizon Wireless with the internet calling service provider Skype is a landmark deal in itself. This is also the starting of a new era of internet revolution in to the mobile space. For the last two decades internet has changed the way people share data and information with each other using computers. Now internet is set to change the way you communicate or talk over the phone.

At some point of time, like how internet transformed many businesses over time it is all set to transform the communication industry. Many people describes it has the start of the end of traditional phone business where powerful operators with their closed network dictated terms and conditions on how you talk and what applications you will have over their network. Yes it is slowly happening the “Internet is killing the traditional Phone business”.

Option Strategy Follow-up (Feb -22)

This is the follow-up of the strategy discussed here.(Maximize Your Returns using Options)
On Jan 29 I have these options in my hand (See the post on Jan 29 here)

4600 Put option at a premium of 70Rs (x number) (breakeven 4530)
4500 Put option at a premium of 35Rs (5x number)(breakeven 4465)
4400 Put option at a premium of 23Rs (10x number)(breakeven 4377)

The current value of these options are given as under

25th Feb is the expiry date of all these options and I expect all these options to expire unexercised (i.e. reach the value of zero). Nifty current value is 4856.

What is the strategy for this month?