Low Risk Options Trading Strategy - Option Spreads

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sibumajumdar

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sibumajumdar

Sibu SIr i know u r elder to me amost my Dad's age . but sir it doesn't pay to say thank u to everybody for every post .

again its ur personal choice and i do not have any concern ..just noticed that and mentioned it .

regards
abigbull ..
Dear abigbull, When someone put queries in this Forum & experts/seniors clarify, we learn from both if we read between the lines. Therefore, both deserve thanks cause they share without any REWARD. Some times i feel guilty cause i have nohting to offer to this informative FORUM from my side . U also deserve thanks for putting querries & showing concern for a person of your father's age. God Bless U & happy trading.....SLM uncle.
 
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sibumajumdar

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Mr AW10, On Budget day around 2.45pm (Nifty@4950) bot Bullcallsprd of 4800(221)/4900(156) with max risk of 65 & max gain of 35. Plz reply to undernoted points.....

1) was it wise to buy it on volatile day.

2) Was there better combination.

3) Its prospect in coming days. When to book profit/loss. ( I have not much clear mkt views.). I mean how to handle it to the best result.

Your clarification will give me confidence cause u know iam yet to complete your Thread.

Thanks in advance......SLM uncle
 
Hy

You say it is not very useful. It is useful.

It is a way to find out, what is to expensive at the moment and what is cheap.

As I was writing :

Look at the strike price and then look at the option prices. They must be all perfectly in line.

--------If they are not they will be overpriced or under priced.---------

If overpriced sell them and if under priced buy them.

It also gives you an idea where the market can move to.

I know, it is work to calculate and then to look at all this prices.

DanPickUp
I was not saying that put-call parity is a bad thing to look.

In 2008 ,Sebi has allowed to securities firms and their clients from directly connecting their computers to the stock exchanges for automating trading.

After that our firm's(GS) and also few more big firm's large number of orders placed are using the direct market access route. Of this, as much as 95% are orders that use algorithms.

I am a algo trader and We can access tick data .5-.75 second faster then normal terminal. Our code tries to find the arbitrage situations continuously, So if our code finds any arbitrage, could automatic eaten by the spread.

But from the last two year, Indian markets acting so efficient, that is there is hardly any arbitrage opportunities across indices or stock. Even our algo code does not make much money. That's why now we are focusing mainly on statistical arbitrage.

Put-call parity is the most basic arbitrage and you will not find this type opportunities in the market any more.Don't take otherwise. I hope you understand I was not trying to prove you wrong. I was simply explaining Indian markets efficiency.
 

sibumajumdar

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well sibumjdar you bought bull call spread you gain is 35 and risk is 65 brek even point is 4862 so if market will go lower than that you will in losse and if it satay 4909 level you will be in max profit till expiry.hope this will help
Dear Sumit, Little clarification plz. What basis u came to the figure 4862 & 4909. Plz elaborate for my understanding. Thanks...SLM uncle
 

sibumajumdar

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Hy pkusingh

Interesting post. Thanks for your explanations and thanks for explaining Indian markets efficiency.

It is the same in the states. The markets are very efficiency and finding over and undervalued priced options is difficult.

What I do in general. I compare the price moves from one option to the other ones. There are always options, which cost less and if the market moves, they bring the bigger profits compare to other priced options and are less risky.

DanPickUp
Mr DanPickUp, How to differentiate high & low priced options. Is it possible to find it at a glane by learner like us. If yes, then how. Thanks...SLM uncle
 
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