Sometimes we may get lucky in stock market options when there is drastic change in market index - during a surge or during a crash . Below chart indicates how NIFTY 50 INDEX put options gave huge profits of upto 2000 percent in a single day when market crashed about 400 to 500 points following a COVID mutant Britian lockdown news on 21Dec20.
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| At spot price 13300 , about 2% change in NIFTY INDEX |
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| At spot price 13200 , about 3% change in NIFTY INDEX |
Analysis
- Out of Money (OTM) put options are the one max benefited with more than 1000% profits compared to the ATM ones by the end of day.
- So if we are expecting a trend reversal it makes sense to initiate a ATM and OTM call for max profits with minimal premiums.
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