Low Risk Options Trading Strategy - Option Spreads

[darkstar]

Hi

AW10 is the man for you. He trades the Nifty and he is familiar with numbers and possibility's there.

If you read regular in this thread you will be able to make your first credit spreads live in Nifty.

I some times only will put in my two cent in this thread.

I a nut shell : Options are options. If you understand them in general on the Nifty, you also can trade other markets. You then only have to understand the different way, some market works.

If you want to learn more about options, you should regularly read books
about it.

One book I already recommended, is from Guy Cohen. It is called : The bible of option strategies.

Also AW10 has recommended books from Guy Cohen and he has also recommend software, you could use for analysing strategies on Nifty.

Take care

thank you sir for recommandation of this book by cohen

 

[rrmhatre72]

Hi All,

What is the support level for Nifty today?

 

[DanPickUp]

Hi

It was a good teaching lesson, what happen yesterday in the market.

This quick drop in the Dow and I also see the nifty went down to around 4980.

I realised again, how important it is to have placed orders in advance by the broker for such events.

You will be filled and depending on the strategy you placed, you are in big profit instead in a big loss.

I have to say, I was not in a trade at that moment and I really feel, I missed a big opportunity.

Take care

 

[aamitmishraa]

Hi, AW10,

First of all thanks a ton for this wonderful post.
I want to make a request, plz guide me some website or book from where i can learn from scratch about options.

 

[AW10]

at a time, Accenture stock was traded at 1 cent yesterday.. NYSE is going to screen and find out what went on between 2 to 3 pm NY time yesterday. I guess, some algo trading program of big bank went out of control. Lets wait for more news on that.

 

[AW10]

Hi, AW10,

First of all thanks a ton for this wonderful post.
I want to make a request, plz guide me some website or book from where i can learn from scratch about options.

amit, just a few posts back, I have replied to same question.
Plz check out 4th or 5th post of this thread to find answer of your question.

Happy trading

 

[DanPickUp]

at a time, Accenture stock was traded at 1 cent yesterday.. NYSE is going to screen and find out what went on between 2 to 3 pm NY time yesterday. I guess, some algo trading program of big bank went out of control. Lets wait for more news on that.

Some big boy sold the shares.

One guy made a typing mistake. Instead of using a M for millions he used the B for billions.

And then the mess started.

 

[jaywings007]

Hi AW10,

Its always great to read your posts.. even any point of time... any thread... thanks for your writing....

I have few queries, pls reply at your convenience,

1. generally all trading portal/ software provides only best five buy or sell orders. can we find all the pending order any where? say 20-50-100... so on.?

2. OI for options are very well understood... that writing increases the OI. but how to evaluate the OI for future..and estimate market movement accordingly. it can be long or short...?

3. generally I go for short stangle (in the money) with total credit of approx 400 points of nifty. can you please suggest how to get good pricing of option while entering.. any stratagy pls?

4. generally all sites and portals provide option calculators. I never been able to understand the actual application of it. what should be the volatility to be considered? I read often 30%.. i.e 0.3 its OK? can you please alobrate the application of it as a whole.?

I think I have thrown so may questions.... but pls try to reply at your time....

 

[AW10]

Some big boy sold the shares.

One guy made a typing mistake. Instead of using a M for millions he used the B for billions.

And then the mess started.

What ? Can't belive this ?
And if it is really true, then I think, the CEO of that Big Bank/ Big fund should be Gifted to Greece People along with IMF funds.

How can a big boy, don't have a risk mgmt system to control such trades that allows a trader to trade 1000 times of his usual limit (type Billion for Million).

Were they giving typing trading to trader or what ?

Anyway, let SEC / NYSE figure it out.. while we enjoy our trading.

Happy Trading

 

[DanPickUp]

Hi jaywings007

Question Nr 3 was :

""generally I go for short stangle (in the money) with total credit of approx 400 points of nifty. can you please suggest how to get good pricing of option while entering.. any stratagy pls?""

Hi

You say you go in general for short strangle. A short strangle means, that your market outlook is in general for a sideways market. You also expect the market to have a low volatility. Is this correct ?

If not, you trade the wrong strategy.

Short strangle are traded from advanced traders, because the risk which is taken, is uncapped. Are you an advanced trader ?

If so, what is unclear for you or what do you mean by : get good pricing of option while entering ?

You sell calls and you sell puts to have a short strangle.

Some sell with limit orders and some prefer with market orders. It is all after you how you want to trade. For your question is no best or worst.

There is only a clear trading plan or your guts. What do you prefer ?

The trading plan includes a stop/loss, where you clearly in advance know, how much money you maximum are willing to lose on that options, in case the market is not going to do, what you expect.

Take care

( By the way, a short strangle is made out of otm options and what here is discussed, is in pro language a short guts, because jaywings007 uses itm options )