Help from option senior player
- Thread starter ss16021981
- Start date
ONLY simple q how to do positional trading in option as option primium dicrease day by day
every time i take any positional trade & i cannot succed so pls help me
every time i take any positional trade & i cannot succed so pls help me
Quit a confusing avatar name
Here my answer : 88974637bss 89 30-- Abub00987KlllU876301- jjjj --896784Ok, no more jokes. For positional option trading you best take long term options like 60 days and more. In India a bad deal, as the volume on such strikes are a joke, means no volume.
What dose's this mean ? Change your strategy to short time options with a strict stop loss. If you do not have any idea about MM, you should not trade or you read this thread :http://www.traderji.com/risk-money-management/257-what-money-management.html#post945
If there are more question after your read this thread, we are here.
DanPickUp
Am assuming you are buying options to take positional trades. And hence losing money.
Best way to take positional trades with options is to write options. The time value decay works in your favor.
So lets take an example: For Jan 11 series, you expect market will not rise beyond 6200 i.e. 6200 is going to be resistance level.
You write call option for Jan 11 6200 series, which if done in first week of series i.e. 1st to 7 jan, will net you higher premium.
Let's assume it is at Rs. 150. Now you net : 50X150 => 7500 for one lot
If your positional strategy is correct, and you wait till epiry or near expiry, the 6200 level is not breached and the value of option will decrease.
Even if the 6200 level is breached during the later days, the option would have lost time value. Hence, you'll still be in profit or no loss even if u have to close due to wrong position.
Consider opposite of it: Had you brought call option, you would have paid Rs. 150 and would have waited for nifty to cross 6200.
The value of your option would have decayed significantly if say post 15th Jan nifty is even above 6100.
So for positional strategy play: Write options
For intraday/Swing strategy plays: Buy options
Best way to take positional trades with options is to write options. The time value decay works in your favor.
So lets take an example: For Jan 11 series, you expect market will not rise beyond 6200 i.e. 6200 is going to be resistance level.
You write call option for Jan 11 6200 series, which if done in first week of series i.e. 1st to 7 jan, will net you higher premium.
Let's assume it is at Rs. 150. Now you net : 50X150 => 7500 for one lot
If your positional strategy is correct, and you wait till epiry or near expiry, the 6200 level is not breached and the value of option will decrease.
Even if the 6200 level is breached during the later days, the option would have lost time value. Hence, you'll still be in profit or no loss even if u have to close due to wrong position.
Consider opposite of it: Had you brought call option, you would have paid Rs. 150 and would have waited for nifty to cross 6200.
The value of your option would have decayed significantly if say post 15th Jan nifty is even above 6100.
So for positional strategy play: Write options
For intraday/Swing strategy plays: Buy options
dear friend,
Most of us didn't know about the features of option segments.But option is very useful to big trader like- fII or other big investors, moreover , they take position in option to hedge their position in future or equity .Or can say that option is use for as a INSURANCE to future or equity. In simple word , whenever you buy or sale a stock/index future , then option buying gives hedge to the future contract or gives insurance to the contracts against wrong trade in future contracts.If you buy a naked option, then its your luck or prediction which will give you profit or loss. thanking you.
Most of us didn't know about the features of option segments.But option is very useful to big trader like- fII or other big investors, moreover , they take position in option to hedge their position in future or equity .Or can say that option is use for as a INSURANCE to future or equity. In simple word , whenever you buy or sale a stock/index future , then option buying gives hedge to the future contract or gives insurance to the contracts against wrong trade in future contracts.If you buy a naked option, then its your luck or prediction which will give you profit or loss. thanking you.
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