A Beginner's way to trade options.

[Smart_trade]

Amit, thank u very much for starting this thread on options.
best wishes
I request the senior member to enlighten the meaning of IN THE MONEY,NEAR THE MONEY,DEEP IN THE MONEY, OUT OF MONEY, DEEP OUT OF MONEY AT THE MONEY in call option & put option
With regards to all of you
drvm

I will explain with an example.Suppose Nifty is at 3700 and 3700 calls and puts both will be at the money as the underlying nifty is very close to the strike price.

Now suppose makret goes up and nifty becomes 3750 so the 3700 strike price calls will be Rs 50 in profit and so they are called In the moneyas calls give us a right to buy....But what happens to the 3700 puts ? the underlying had moved away in adverse direction so it has become out of money options.

Now suppose the market goes down to 3650 so 3700 calls will be out of money and 3700 puts will be in the money.....

When the underlying moves too much away from the strike price then deep in the money and deep out of money comes into picture. In our example suppose Nifty goes to 4300 then 3700 calls will be deep in the money and 3700 puts will be deep out of money contracts

Best Wishes,

Smart_trade

 

[Smart_trade]

Sir

how much money is required for option

For buying options you have to pay the premiums and that depends on the contract,volatility,strike price etc but at the money options in Nifty were available at about Rs 150 premium....so for mini nifty options buying you will require about Rs 3000 to 3500 to be paid as premium.

Dont think of selling options as you appear to be new in options...

Best Wishes,

Smart_trade

 

[sibumajumdar]

For buying options you have to pay the premiums and that depends on the contract,volatility,strike price etc but at the money options in Nifty were available at about Rs 150 premium....so for mini nifty options buying you will require about Rs 3000 to 3500 to be paid as premium.

Dont think of selling options as you appear to be new in options...

Best Wishes,

Smart_trade

If Minifty Options (Lot 20?) are available , are they have volume and liquid enough to play on regular basis? Where Prem rates can be seen. Pl guide.Thanks.

SM

 

[santhosh44]

I am expecting a 200-300 Nifty points move on Monday opening....either up or down....

Premiums are high because of major event of election result .

ST

ST, As am posting this msg sgx nifty is trading @ 4111 may cool off a bit by indian markets opening time. i hold both straddle (at 3700) and strangles(3400PE, 3900CE) .. now am confused about our exits .. do we set the target price or trailing SLs when market open ? Or wait until we get a clear idea abt the direction its heading to, using our pivot breakout (60 min or miniflow) methods.. Ur views?

 

[Smart_trade]

ST, As am posting this msg sgx nifty is trading @ 4111 may cool off a bit by indian markets opening time. i hold both straddle (at 3700) and strangles(3400PE, 3900CE) .. now am confused about our exits .. do we set the target price or trailing SLs when market open ? Or wait until we get a clear idea abt the direction its heading to, using our pivot breakout (60 min or miniflow) methods.. Ur views?

The trend is clearly up...no doubt about it....we set trailing stoplosses and hold the position.....we may rollover the position ie sell 3700 call which is deep in the money and buy 4200 call to maintain our bullish stance and pocketing some gains

ST

 

[TFL]

I have bought 3700 call and put both...put is hardly 10 Rs now...but in call,I will try to sell around Rs 600-650....if I donot get a trade in that range,I will sell NF against the call and hold everything till expiry....

ST

PS : sorry for off topic post

I too hold the same and was looking to square off today. But as you said the put is 10 or 15 now...My first thought was to sell CALL and collect almost all the expenses of put and call (My entry was like that) and hold the PUT, as there is no loss even it expires worthless. Now looking for a better strategy here...

Can you explain a bit regarding when and why you are selling NIFTY FUT and what you are looking at expiry.

 

[Smart_trade]

Hari,

I have bought the straddle for election results swing...so the purpose is over...I will try to book the profits today.... Let the mkt start trading if NF trades say at 4200 that means it is in the money by Rs 500. I will add Rs 80 to Rs 100 for time premium and try to sell 3700 call at 580-600 and pocket some time premium...

Alternatively will sell NF against the call but that is second option.

May consider rolling over to 4200 or 4300 calls

ST

 

[santhosh44]

May consider rolling over to 4200 or 4300 calls

ST

Volatility will be there anyway for some more days but as its already 18th of the month, won't it be good to consider short straddles ?

 

[santhosh44]

ST, were u able to close the positions? I could not . Now is it sure that tomorrow it will open above todays closing?

 

[TFL]

ST, were u able to close the positions? I could not . Now is it sure that tomorrow it will open above todays closing?

I too failed to execute...

santhosh, No one can make sure of that. We may even hit lower circuit tomorrow if any bad occurs. So the question is invalid!