Low Risk Options Trading Strategy - Option Spreads

[AW10]

That was Linkon's Style. He try to push down / up breakeven as much as possible in intraday for his less carrying position with comfort. :clapping:

you are right Prahlad. I know, that is Linkon's way of trading. And he is damn good in squeezing small profit and accumulating them to big numbers.

(I admire him for that, cause I can't do that. Tried, failed and gave up).

Happy Trading

 

[gurprB2J]

Gurpreet, (correction, you are not in Mr.Ghosh's thread but in AW10's thread).
Coming to your question - if we don't understand a particular market condition and have no proven strategy to play it,, then best way is to stand on the side.
Let others do what they want to do. Market will open 2nr/3rd March. And it will be less volatile to play then.

Prudent traders know this very well and Patience is one of most desired attribute for successful trading. So better to demonstrate that.

If you still want to participate the roller coaster ride without understanding the tricks of smart market players then you can keep shuffling buy call/ buy put as per your strategy.
I generally don't recommend that type of trading.

If your trade duration is > few days then 4800-4900 bearish put spread (buy 4900 put, sell 4800 put ) is available at 172 - 128 = 44 rs. cost. Potential max profit is 100 if market goes below 4800. i.e. 100 rs of reward for 44 rs of risk. giving u almost reward risk ratio of 2.3 to 1. If you are aggressively bearish on the market, then 4700-4800 put spread is avaiable at 129 -94 = 35 rs. giving you RRR of 100/35 = 2.8 to 1.

These speads will not give u roller coaster ride but probablity is of more then doubling your risk amount is lot higher. If you take one contract, you will be risking 44*50 = 2200 rs to make the max profit of 100*50 = 5k. If you have bigger risk appetite, take more contracts. My suggestion is never to put more then 2 to 3% of your account size on one trade. i.e. if you have acct of 1Lac, then 3% is 3k. i.e. u should take max 1 to 2 contract. That wil still give u possible return of 5 to 10%

Hope you are able to see the opportunities as per my trading relaxed style. Think in terms of reward/risk, think in terms of probability.. and let others do what they want to do.

Happy Trading

sir first of all i m sorry for my mistake and i edited my post with your correct name.i m really very sorry
Secondly thanks for your prompt reply .Its once again clear my vision and now i prefer to wait and watch for appropriate opportunity due to limited experience and limited money.
with regards

 

[linkon7]

you are right Prahlad. I know, that is Linkon's way of trading. And he is damn good in squeezing small profit and accumulating them to big numbers.

(I admire him for that, cause I can't do that. Tried, failed and gave up).

Happy Trading

My grey area is patience and the strong urge to take break even to very safe levels... Its something i'm trying to work on.

I have difficulty with sticking to the initial plan and always look for ways convert one position into another.

like right now, i'm contemplating converting the 5100-4900 spread to a short 4800 call and short 4900 put early morning tomorrow. 5100 is very jumpy and dont like holding that. Tomorrow's open will dictate the next line of action.

dont really know if its the wise thing to do...

 

[nayarock]

Difference b/w Long CALL & Short PUT

Hi Seniors
I am new to Options world.
From many doubts, this is one doubt.
When a Traderji is Very Bullish, then he will go for either Long CALL or Short PUT, what is the difference between them, in both cases he is expecting Bullish.
please explain
Thanks

 

[trader.trends]

Re: Difference b/w Long CALL & Short PUT

Hi Seniors
I am new to Options world.
From many doubts, this is one doubt.
When a Traderji is Very Bullish, then he will go for either Long CALL or Short PUT, what is the difference between them, in both cases he is expecting Bullish.
please explain
Thanks

nayarock

The difference is credit and debit. When you are long call you shell out money to buy the call it is a debit trade. When you short a put, you get the money first with a margin block. This is a credit trade. In a long call, the time decay works against you, in a short put time decay works in your favour. After a week if the underlying is at the same price, the long call will have lost money whereas the short put would have gained money. Just some differences.

The main difference is trading psychology and trading philosophy.

Just decided to add one more to that. Option buyers can live on fantasies of maximum gain. Options sellers live in the real world of fixed gain. As you start trading in options you will realise the myth created by broking houses, paid analysts etc of unlimited profit potential of buying options with small money and limited losses. Limited losses means 100% of investment in most cases. The other major difference is professional sell hedged options and amateurs buy naked options in most cases.

 

[karin_jack]

Karin, for bullish/ bearish views, u can very well use right spread strategy.
For sideway market, spreads will not give u profit but just limit your loss due to timedecay., i.e. will limit your loss.

You can virtually make unlimited number of spreads 4700-4800, 4800-4900, 4700-4900 etc. You can make then with both Calls or both puts, you can also use same quantity of contracts or use some type of ratio (ratio spreads),
you can use different expiry (calender spreads).. So choice is virtually unlimited.
To identify them use Reward to Risk ratio along with probabilty of market reaching your max breakeven point, and max profit point.

Hope this helps.

thnks for rply....

 

[nayarock]

Re: Difference b/w Long CALL & Short PUT

nayarock

The difference is credit and debit. When you are long call you shell out money to buy the call it is a debit trade. When you short a put, you get the money first with a margin block. This is a credit trade. In a long call, the time decay works against you, in a short put time decay works in your favour. After a week if the underlying is at the same price, the long call will have lost money whereas the short put would have gained money. Just some differences.

The main difference is trading psychology and trading philosophy.

Just decided to add one more to that. Option buyers can live on fantasies of maximum gain. Options sellers live in the real world of fixed gain. As you start trading in options you will realise the myth created by broking houses, paid analysts etc of unlimited profit potential of buying options with small money and limited losses. Limited losses means 100% of investment in most cases. The other major difference is professional sell hedged options and amateurs buy naked options in most cases.

Thank you trader.trends for your reply.

 

[SwingKing]

AW10 took me 2 hours to go through the 58 pages of this wonderful thread.

Whew !!! Am tired now. Need a drink or two

Awesome thread. Got through without getting bored.

I'll try and post regularly in this thread. Hope that's fine.

Tc.

 

[AW10]

Hey Raunak. Your have great reading speed (and I think, your broadband speed has also contributed to it).

You are most welcome on this thread.

Take 2 extra drinks and enjoy the evening.

Happy Trading.

 

[karin_jack]

hey guys option erosion was expected..... but did u guys saw near 4890 odds.....?? was that normal....