Low Risk Options Trading Strategy - Option Spreads
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Check such specific questions with your broker, as they not all calculate on the same basic. Best you ask him, if he has a margin calculator in his trading platform he offers to the public or if he has a tool in his home page, which you can use to calculate the margins for your trades.
In a nut shell: The money you have to put on the table for your long nifty 5400 call minus the money you get for your short 5300 call plus some risk model factors = Margin which you will have to give as safety to your broker.
In a nut shell: The money you have to put on the table for your long nifty 5400 call minus the money you get for your short 5300 call plus some risk model factors = Margin which you will have to give as safety to your broker.
Hello Traders at Traderji,
I am new to this website and this is my first post so don't know if this is right way to ask a question on here.
I recently was introduced to options trading by my broker, who spoke about it briefly without getting into much details. It seemed like a lucrative and attraction investment so I tried to do some research on it online. I understand the basics of it and how one can gain or lose using this instrument on the contract expiration date. However, I fail to understand how to trade options on intraday level.. there is not much written on the web about this. So please if you could help me with my concerns:
1. How is profit and loss calculated on intraday basis for an index option
2. To garner any gains, again on intraday basis, is it necessary to be in the money or hit the strike price.
3. As you are aware, the cost of buying an index option is quantity times the premium, which is also the maximum loss that investor can incur however is it constant or variable like the profits. As in, if the strike price is not hit then I lose the full risk amount (premium times quantity) irrespective of its proximity to the strike price, or rather a percentage of it lost.
Kindly be generous in your response as I am very new to the trading and would highly appreciate every bit of information that you may pass.
Thank you,
Ricky Archer
I am new to this website and this is my first post so don't know if this is right way to ask a question on here.
I recently was introduced to options trading by my broker, who spoke about it briefly without getting into much details. It seemed like a lucrative and attraction investment so I tried to do some research on it online. I understand the basics of it and how one can gain or lose using this instrument on the contract expiration date. However, I fail to understand how to trade options on intraday level.. there is not much written on the web about this. So please if you could help me with my concerns:
1. How is profit and loss calculated on intraday basis for an index option
2. To garner any gains, again on intraday basis, is it necessary to be in the money or hit the strike price.
3. As you are aware, the cost of buying an index option is quantity times the premium, which is also the maximum loss that investor can incur however is it constant or variable like the profits. As in, if the strike price is not hit then I lose the full risk amount (premium times quantity) irrespective of its proximity to the strike price, or rather a percentage of it lost.
Kindly be generous in your response as I am very new to the trading and would highly appreciate every bit of information that you may pass.
Thank you,
Ricky Archer
dear,
i am planning to take below trade...
buy NF Call 5200 @ 61.35
Sell NF Call 5300 @ 30.10
Sell NF Put 5000 @ 60.25
Buy NF Put 5100 @ 93.00
as per this call, there is one problem with it...problem is P/L ratio...it not good
pls. find below the P/L pic.
gurus pls. suggest me some corrections to this trade and reverse the ratio.
tnx,
i am planning to take below trade...
buy NF Call 5200 @ 61.35
Sell NF Call 5300 @ 30.10
Sell NF Put 5000 @ 60.25
Buy NF Put 5100 @ 93.00
as per this call, there is one problem with it...problem is P/L ratio...it not good
pls. find below the P/L pic.
gurus pls. suggest me some corrections to this trade and reverse the ratio.
tnx,
you got very interesting setup, just curious, have you taken the trade?
,according to your set up nifty must expire below 5000 or above 5300,to make max profit of max 36RS
buy NF Call 5200 @ 61.35 now 11.5 so loss -49.85
Sell NF Call 5300 @ 30.10 now 2.3 so profit 27.8
Sell NF Put 5000 @ 60.25 now 28.29 so loss +31.36
Buy NF Put 5100 @ 93.00 now 68.30 so profit - 24.71
according to my calculation you are sitting on loss of 15 points as of today
and will make loss of max 62 points if nifty expires between 5100-5200
however,
my question is it possible to minimize your loss during expiry by introducing new strategy
in to the plan like you already made (27.8pts out of 30.1pts) by selling5300CE
why keep waiting to exit on october5300CE and instead use the money to sell november 5300CE
as the call is 55.90pts now
please kindly respond
Ricky welcome to the world of trading. To answer ur questions
1. Yr P&l is always given by (sell price-buy price)*qty.
2. As underlying moves, price of all option chain will move. ITM , ATM or OTM strikes move at different pace depending on mkt condition e.g. In trending mkt OTM are better whereas in dull sideway mkt Itm are favourable. This also depend on whether u r taking long or shor positons. This is where knowledge of option pricing will help you.
In absence of that u r better off starting with Itm strikes.
3. Hitting of strike price doesn't matter to intraday player. It affects the settlement. For intraday, movement of premium is more important. Some strike premium moves faster then others so spend time in understanding option Greeks like delta and gamma first and then other greeks.
I am assuming that u know what trading is and how to trade profitably. Otherwise first work improving yr trading.
Happy trading
1. Yr P&l is always given by (sell price-buy price)*qty.
2. As underlying moves, price of all option chain will move. ITM , ATM or OTM strikes move at different pace depending on mkt condition e.g. In trending mkt OTM are better whereas in dull sideway mkt Itm are favourable. This also depend on whether u r taking long or shor positons. This is where knowledge of option pricing will help you.
In absence of that u r better off starting with Itm strikes.
3. Hitting of strike price doesn't matter to intraday player. It affects the settlement. For intraday, movement of premium is more important. Some strike premium moves faster then others so spend time in understanding option Greeks like delta and gamma first and then other greeks.
I am assuming that u know what trading is and how to trade profitably. Otherwise first work improving yr trading.
Happy trading
Hi
As far as I understand: You have now 450 Dec 5400 calls and made some loss.
Usually, you should take your loss and analyze what you did wrong. There are always new opportunities to take new positions.
If you not want to take the whole loss, you should reduce your amount of positions and if market starts to move again in your direction, you start to add.
If you take out 50% of your positions now, you should add only when you are at zero loss with the remaining live positions.
If you not want to do this, then you wait at least, until you made half of the loss back and then start to add. Calculate this a bit and play the different numbers and then write down your targets and numbers. Keep this as a simple trading plan and follow it as you wrote it down.
May even place limit orders for the positions you want to add at certain levels.
Important: For the positions you keep in the market, you must fix a stop loss.
By the way, here a thread about averaging:
http://www.traderji.com/risk-money-management/61195-types-averages.html#post599036
As you will see, I am not really a fan of it, but Columbus finally pointed also to the risk of doing it.
Be careful and take care
DanPickUp
As far as I understand: You have now 450 Dec 5400 calls and made some loss.
Usually, you should take your loss and analyze what you did wrong. There are always new opportunities to take new positions.
If you not want to take the whole loss, you should reduce your amount of positions and if market starts to move again in your direction, you start to add.
If you take out 50% of your positions now, you should add only when you are at zero loss with the remaining live positions.
If you not want to do this, then you wait at least, until you made half of the loss back and then start to add. Calculate this a bit and play the different numbers and then write down your targets and numbers. Keep this as a simple trading plan and follow it as you wrote it down.
May even place limit orders for the positions you want to add at certain levels.
Important: For the positions you keep in the market, you must fix a stop loss.
By the way, here a thread about averaging:
http://www.traderji.com/risk-money-management/61195-types-averages.html#post599036
As you will see, I am not really a fan of it, but Columbus finally pointed also to the risk of doing it.
Be careful and take care
DanPickUp
My first actual bull call spread today...
LICHSGFIN buy 240 call @ 6.00
sell 250 call @ 3.10
Max profit 7100 if expiry above 250 and max loss 2900 if expiry below 240. CMP 237
Can I get the same max profit if price of underlying goes above 250 before expiry.. say next 4-5 days...?
How to get the probable call price at a particular date and particular price.
e.g. What will be the price of 240 call if underlying goes to 250 in next 4 days..?
LICHSGFIN buy 240 call @ 6.00
sell 250 call @ 3.10
Max profit 7100 if expiry above 250 and max loss 2900 if expiry below 240. CMP 237
Can I get the same max profit if price of underlying goes above 250 before expiry.. say next 4-5 days...?
How to get the probable call price at a particular date and particular price.
e.g. What will be the price of 240 call if underlying goes to 250 in next 4 days..?
Last edited:
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