How to invest 40 lakhs in equity, FnO, commodities etc. Part 2

[Anillal]

I agree :thumb: This was more of an INTUITIVE trade

Anyway I profit-booked the 6000 CE writing at 4.50/- so a neat profit of 4.5 points today INTRADAY

Next time I will not touch these OTMs but could not resist it today.

It seems sir that you went for OTM out of habit because you got so used to buy them to double or triple the money therefore I would say it was more of an IMPULSIVE trade than INTUITIVE.

 

[Anillal]

Dear ST,
If you would not have been paper trading uptill now, you would have become a billionaire by now.

Very funny.

 

[Reggie]

Sexy Trader,

Just sharing my views, just so that you have a healthy perspective on trading risk.

It seems easy to make money selling options, but risk have to considered as well. I see writing options as selling earthquake insurance. You can collect premium money, year after year. However if you are not protected, one bad day can wipe out the previous 10 years of profit along with the capital.

Victor Niederhoffer was one of the most successful trader (he managed the portfolio of George Soros as well) over a long period of time making regular income selling puts. However one bad year was enough to not only wipe off all his profits accumulated over a decade of trading, but he was bankrupt and had to sell his house as well (ofcourse due to his large short positon that otherwise gave him excellent income)

Some people consider selling options, as collecting pennies in front of a running locomotive. And I think that is true.

One post on options that I had written to TJ. It is an interesting read.

http://www.traderji.com/general-trading-investing-chat/70607-amazing-comeback.html

Also recommended are two books 'The Black Swan' and 'Fooled by Randomness' by Nassim Taleb. Both deal with trader's exposure to risk.

From the way the markets are behaving, I'm just going to SELL options INTRADAY all this month.....

I figured out this is the safest thing to do for me :thumb: I will NOT keep any positions open beyond INTRADAY

I dont think markets are going to get any better....more or less!

 

[Anillal]

Sexy Trader,

Just sharing my views, just so that you have a healthy perspective on trading risk.

It seems easy to make money selling options, but risk have to considered as well. I see writing options as selling earthquake insurance. You can collect premium money, year after year. However if you are not protected, one bad day can wipe out the previous 10 years of profit along with the capital.

Victor Niederhoffer was one of the most successful trader (he managed the portfolio of George Soros as well) over a long period of time making regular income selling puts. However one bad year was enough to not only wipe off all his profits accumulated over a decade of trading, but he was bankrupt and had to sell his house as well (ofcourse due to his large short positon that otherwise gave him excellent income)

Some people consider selling options, as collecting pennies in front of a running locomotive. And I think that is true.

One post on options that I had written to TJ. It is an interesting read.

http://www.traderji.com/general-trading-investing-chat/70607-amazing-comeback.html

Also recommended are two books 'The Black Swan' and 'Fooled by Randomness' by Nassim Taleb. Both deal with trader's exposure to risk.

It is all very well sir but I am afraid the doomsday picture associated with selling options is basically peddled by the professional sellers. And forgive me for saying so you are just recycling it. We hear time and again how one unlimited risk or black swan kind of happening can bury a option seller and other nonsense. I think only the ones who never sold options talk such talks. Consider this cooly. Do we have corresponding figures telling us how many option buyers lose compared to option sellers? I guess ratio must be 100 to 1 if not 1000 to 1. It is a propaganda to keep the sellers an exclusive club because with proper nominal SLs option selling is the least dangerous way to make money out of the market. Besides the example that you gave must be from stoneage of trading. In the age of NOW and RKSV traders do not wait to get out if position is not going in their favour. Besides suppose if I sell 5600CE then given all the charts available all around would I wait to liquidiate it if I see position going against me? My SL would be exactly like option buying but with an added advantage of premium decay on my side.

 

[Anillal]

Sir of course you are a very knowledgeable guy, but if you are looking of some live example - Here is me - Got crushed by roller in 2008 Jan - because i had sold many naked puts day before that fateful day. Of course, I was as stupid as anyone can be, and I was trading with icicidirect

I guess you are misplacing the blame sir. The investors and the ones long on the future lots must have been crushed as well. Call buyers would also have been crushed to some extent but I can not be sure of that as given the the low price and false promise of limited risk buyers tend to buy in truckloads compared to the option writers, so I guess the buyers collectively lost more than the writers. All in all why blame option writing particularly for the loss sir? Blame goes to that day's unexpected turn of the events which is part and parcel of stock market hence position sizing and money management are so very important. And by the way you know memory of such accidents is also the main reason why people fall for highly dangerous daytrading to relatively safer positional or swing.

 

[GTji]

Hey ST,
When you make money people don't believe you and when you lose money, people start giving you advice :lol:. Don't get influenced by anybody, just do your own thing:thumb:.

 

[SexyTrader]

Deleted...

Hahaha you deleted your comment but I read it....

Do you think I can paper-trade ? NOPE I cannot...I rather not trade then

I trade what I feel, of course I break rules sometimes...coz I like it...as long as I dont lose money, there is no problem right ? :thumb: I never lose capital coz I love the SLs for that!

 

[SexyTrader]

Sexy Trader,

Just sharing my views, just so that you have a healthy perspective on trading risk.

It seems easy to make money selling options, but risk have to considered as well. I see writing options as selling earthquake insurance. You can collect premium money, year after year. However if you are not protected, one bad day can wipe out the previous 10 years of profit along with the capital.

Victor Niederhoffer was one of the most successful trader (he managed the portfolio of George Soros as well) over a long period of time making regular income selling puts. However one bad year was enough to not only wipe off all his profits accumulated over a decade of trading, but he was bankrupt and had to sell his house as well (ofcourse due to his large short positon that otherwise gave him excellent income)

Some people consider selling options, as collecting pennies in front of a running locomotive. And I think that is true.

One post on options that I had written to TJ. It is an interesting read.

http://www.traderji.com/general-trading-investing-chat/70607-amazing-comeback.html

Also recommended are two books 'The Black Swan' and 'Fooled by Randomness' by Nassim Taleb. Both deal with trader's exposure to risk.

I agree to what you say :thumb: But SELLING options has many other advantages if one understands the common-sense behind all the technical jargon....I know that the price that cannot be achieved by this expiry is the BEST option to sell.... Thats basic formula for me....

Rest I just follow the news and all of that is bleak, so SELLING options at a higher strike price thats unachievable by expiry is pretty safe with a STRICT SL for me :thumb:

 

[SexyTrader]

It seems sir that you went for OTM out of habit because you got so used to buy them to double or triple the money therefore I would say it was more of an IMPULSIVE trade than INTUITIVE.

Hahahaha maybe

But now that I have discovered SELLING OPTIONS Intraday in a nice way, I will make sure to SELL options than buy them.......of course with STRICT SL

Now I have started SELLING options INTRADAY.....buying options is so boring

 

[a1b1trader]

Today, for the first time perhaps...I'm realizing the JOYS of writing an option :thumb:

INTRADAY today started writing the 5800 PE of Nov series at 150/- and booked-profits at 135/-

Writing options is FUN, I realized that today

Hi ST
I have a few queries
1. How many lots you wrote
2. What was the gain per lot (excluding brokerage etc.).
3. How much margin money you paid/blocked per lot.
Thanks