Edit : I just see, that AW10 has given some answer to your post. AW10 and me just crossed with our posts. Next time I call him and ask, What do you answer at the moment :lol:
Hello AW10 Sir
I hope u remember me... Sir i have been trading for last month in options only and have traded with lots of strategies... after a month i would say that for a intelligent and safe trader Spreads are the best strategy to trade in options.. but sir sometimes reason like patience one needs in spreads and profit in beginning being small in spreads has diverted me to other strategy but still in end i come back to spreads.. so sir thank you for sharing ur knowledge in this thread with us.
today i was holding a bearish spread it was today in gain of Rs 1300 and i squared it off and took the profit. still there was around 1200 of profit to be taken in it left. I felt that market will make recovery in coming days. so i bought a bullish spread
bought 5000 call @ Rs48 and sold 5100 call @ Rs18
Max risk = 30 pts
Max profit = 70 pts(at 5100 level)
breakeven point 5030
Now seeing FTSE close weak and DOW trading weak i feel that i was impatient today and should have continue holding the bear spread...wat d u think sir ?
one more thing i wanted to ask was how does volatility or voloume of a particular option effects its price
How come 4700 put is trading at Rs 23.5 and 5100 call is trading at Rs 19.35?
is it because sentiments are bearish and most people are writing 5100 call?
Hi
First :
I wondering why you no more trade other strategies ?
You say :
"""i would say that for a intelligent and safe trader Spreads are the best strategy to trade in options"""
That is your view, never forget that. Other traders, which successfully trade other option strategies, have a far more different mind about, what is the best way for ( Intelligent ) option traders !
As you also say :
"""Now seeing FTSE close weak and DOW trading weak i feel that
i was impatient today
and should have continue holding the bear spread...wat d u think sir ?"""
Is it you, which is weak or is it the strategies you tried to trade but not implemented in the right way, because you did not understand what the strategy means ?
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Second :
Your question is a basic beginner question.
If you are an option trader, you MUST know the impact of the volatility !
It is called the options greek.
Volume has no impact of the price of an option.
By trading credit spreads, your long position and your short position will in general move the same way the vola doe's.
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Third :
"""How come 4700 put is trading at Rs 23.5 and 5100 call is trading at Rs 19.35? is it because sentiments are bearish and most people are writing 5100 call """
As I do not trade nifty options, this has to be answered by a trader which trade this market.
( The answer is here : Where is spot nifty price and how far away is your put and your call from that spot price ? )
If markets are bearish, then there are sometimes situations, where the puts are over priced. The option dealers know their risk and they want to save them self's with higher prices. It is like your car insurance : At the moment you fill out your papers to get the insurance, the company will check your answers and then decide, there is more risk or less risk. If the risk is less you pay less and if for them the risk is higher, you pay more. You can apply the same way of thinking to the options dealers, which make the prices of the options.
Take care
DanPickUp
