How to make money by writing CALL option just before exiry

[srikanth_kandalam]

Lol from me this time...

I mean ... one man's meat is another's poison.

Here he is (Abhin), seeking the best strategy for shorting calls, and u recommend shorting puts. (Well u r the expert, so u know best)

One thing for sure ... all this 'living on the edge' really provides some excitement in our ( otherwise drab ?) lives , eh .. what say, guys ?

AGILENT

A naked PUT is nothing but a Covered Call ( Equivalent) Implied volatility being hardly tells you the direction the market is headed- it just tell you - if it is at extreme levels- that there is an anticipation of movement.

 

[munde_77]

Interesting factoid , Ashish.... wonder if u can give some reference so one can read more on this topic

AGILENT

Agilent , what do you think about of writing covered calls?

Many experts say writing covered calls ... are profitable most of the time.

we should write covered call on index or less volatile scrips.

We should try to write in the money covered calls in bearish market so that the profit may be less but protection will be more.
When we are in bullish market we should try to write out the money market covered calls so that the profit may be more and risk will be less.

When we are in neutral or sideways market we can write at the money covered calls.
I an not sure i am right....

Experts please elaborate and share your experiences on covered so everyone can benefit from this site.

Experts Please come forward and help us.

 

[raghoo]

hi there
i am new to this sight ,week back ie on 15th of january i sold 1000 nifty put option of 28th jan 10. at price of rs11.8 what is your advice

 

[bajajdipesh]

Hi Raghoo,

Which strike price put you sold?

hi there
i am new to this sight ,week back ie on 15th of january i sold 1000 nifty put option of 28th jan 10. at price of rs11.8 what is your advice

 

[naharchetan]

If you sell a 3000 p at 116 your risk begins at 3000-116=2884.

Anywhere above 2884 at expiry you gain.

Why the discomfort to short puts ????

At least you know the max you could loose and that would be if the nifty hit Zilch, 0 , which we know is not possible.

Hi

If in the above example Nifty closed at 2900; how is the profit calculated? is it 16*50(lot size)?

And to enter in to such a trade; usually what kind of margins do brokerage firms ask for?

And last question; if we know that we will not incur any loss until 2884 is reached in this case; can we not sell a put of lets say 2000 or 2100 which we can be sure enough that Nifty will not touch in 2-3 days?

 

[naharchetan]

And also how would selling a Call option work then?

 

[naharchetan]

If you sell a 3000 p at 116 your risk begins at 3000-116=2884.

Anywhere above 2884 at expiry you gain.

Why the discomfort to short puts ????

At least you know the max you could loose and that would be if the nifty hit Zilch, 0 , which we know is not possible.

Sorry for asking so many questions so in this example will the contract be auto squared off on expiry?

 

[naharchetan]

You got that right !

All the best

Hi please can you advise how you arrived at the figure 100 here? do you actually mean 116??

 

[aces27]

Hi Guys ,

Was reading this thread. Old it may be.

Been in options for some time.
Simply Buying and Selling Quick at higher Premium.


This is definitely an interesting concept , with only a few days left to expiry
we can have better predictions.



My Observations :
1.Buying PUT is different from Shorting Calls ,
On worthless expiry , you can make money while selling calls as long as below the
Strike Price , whether movement is upwards or downwards.
For PUT only if the market moves downward , and it would be difficult
to sell towards the end.


This can be tried on Stock Options as well and not just Index.
?

1.How much margin (approximate) is required to sell option margins

2.From experience - is it possible to enter the trade lets say
2 - 3 days before expiry.

Ieda being to increase certainity , even if amount is small.
We can always multiply , it on different stocks.



Can experinced people agree that 80% options expire worthless.
Then we have found somethind certain , and as high as 80% probability , in the stock market.

Now to improve the certaininty and earning strategy.

 

[Capricorn]

Hi Guys ,

Was reading this thread. Old it may be.

Been in options for some time.
Simply Buying and Selling Quick at higher Premium.


This is definitely an interesting concept , with only a few days left to expiry
we can have better predictions.



My Observations :
1.Buying PUT is different from Shorting Calls ,
On worthless expiry , you can make money while selling calls as long as below the
Strike Price , whether movement is upwards or downwards.
For PUT only if the market moves downward , and it would be difficult
to sell towards the end.


This can be tried on Stock Options as well and not just Index.
?

1.How much margin (approximate) is required to sell option margins

2.From experience - is it possible to enter the trade lets say
2 - 3 days before expiry.

Ieda being to increase certainity , even if amount is small.
We can always multiply , it on different stocks.



Can experinced people agree that 80% options expire worthless.Then we have found somethind certain , and as high as 80% probability , in the stock market.

Now to improve the certaininty and earning strategy.

That is a much publicised half truth. I think Danpick up has posted an article on this somewhere in this forum . So before u fall into this trap do your research.

Premiums in the last week of expiry are abysmal and risk the same, not a favourable R/R.