My Daily Options Trading Diary

[praveen taneja]

It is not that funny. As I have already mentioned vikas doesn't have enough margin to sell options he can only buy. So I want to know if smbhai is bullish or bearish.

mkt going up n OI rising in even 4900 put suggest put writing at higher levels in oct series too so it doesnot matter what me SM n u think mkt will go up n will come down when FII want
last week FII invested 3000 crore not for us they invested to switch bad stocks in good hope u understand what i mean:thumb:

 

[lazytrader]

(10 chars complaint)

Trading options to win, options perception and deception. I have not read either . Just heard that these are good. First is very basic, plain english. Second is detailed hard core theory.

 

[lazytrader]

mkt going up n OI rising in even 4900 put suggest put writing at higher levels in oct series too so it doesnot matter what me SM n u think mkt will go up n will come down when FII want
last week FII invested 3000 crore not for us they invested to switch bad stocks in good hope u understand what i mean:thumb:

I didn't understand, to tell you the truth I don't understand many of your comments.

 

[AW10]

The reason, I feel buyers go for OTM, that to far OTM is the same as people choosing mutual funds with lower NAV except that options are a completely different ball game. We think that cheaper is better. You can get away doing that with stocks and MF's not options. Reasons are completely psychological/lack of understanding. With options theory has no substitute. Unfortunately I know all about it 'cause I used to do the same thing. :lol:

Anyone interested in trading options should read up as much as possible. It really helps.

LT, in my view, this type of human behaviour and thought process is one of the main reason why they loose in stock market. You are right, the reason for this is more psychological and then lack of knowledge.
Trading in OTM options, is one of top mistakes that novice options trader make. Options trader are pulled towards this cause, they are cheap (satisfies ego that they are getting bargain), and they give great % return (again gives them kick that they can generate % return which even Warren Buffet or George Soros can't generate).

But if one knows them well, they they are great tool to enahance your returns and manage the risk.

In my trading, I buy OTM options and let them expire worthless (like today my 5200/5300 calls have gone worthless).. but they were there to protect my 5100/5000 Short Calls against that paid lot more.
To enhance return, I supplement my spread positions created as contrarian trade, or at early stage of trend.. and then add OTM options as market confirms the trend direction.
Spreads don't give great return, but in the whole process, the risk doesn't go out of conrol.

Hope this helps
Happy Trading

 

[sagar55]

Till 23/09/2009



As you can see I have lost my entire capital, and closed all my positions today. :annoyed:

This was a very good learning experience, apart from the pain of losing money. Here are my key take away.

1. Never average down, or never bet on a losing deal.
   
2. Not everyday is a good day to trade, when its not... stay out you stupid.
   
3. NEVER take naked options positions overnight, cover them by putting hedge or close them by end of day. Reliance is a BIG sucker who sucked it all with their Stake Sale.
   
4. I did not have proper money management, I was just BETTING & BETTING.
   

Conclusion

I am defeated once again, but not out of the battle field.. not yet!

If you fall down just pick yourself up and dust yourself off... and start walking again... soon you will learn to RUN

Hi Vikas,


The primary mistakes option traders make when they buying naked calls and puts are
Relying solely on market timing to trade options
Always buying out-of-the-money options hoping for the big score
Buying options when implied volatility is high

First part: we should combined various indicators to improved probability of our directional call and reduce the noise.
Indicators based on Price: EMA,Stoch, RSI
Indicator based on Price & Volume: MFI
For trend: ADX (strong or weak)

Second part:I totally agree with AW10 & LT.

Third part: It happened with you in Reliance.

Besides we should also do money management and risk management as you stated. Afterall survival in market is more important than concentrating on profit.

Sagar

 

[findvikas]

I do agree with all the comments, and I thank you all for trying to teach me a lesson. Which NOW I learned

Sagar.. I agree, Reliance just sucked me up... if this loser was to come out and close above 2185 then I would have above 1.25L in my account ... anyways.. reality is too far from IF and "BUTTS" :rofl:

 

[sagar55]

I do agree with all the comments, and I thank you all for trying to teach me a lesson. Which NOW I learned

Sagar.. I agree, Reliance just sucked me up... if this loser was to come out and close above 2185 then I would have above 1.25L in my account ... anyways.. reality is too far from IF and "BUTTS" :rofl:

Vikas,
If you see the pattern of QIP happened in last few months, the stocks consolidate after QIP issue for few trading days. The QIP issue price was acting as resistance for few days and then stocks move up/down as per its strength. For example, Unitech (corrected to 62, Issue-81), HDIL(corrected to 180, QIP-240),Renuka(corrected to 128, QIP-138) etc.
From experience, I can say that Reliance has to cross its 2125 (sellinng price of its promoter) decisely for few trading session, then only we should bet on it.

If Reliance corrected then Nifty will also effect accordingly, because Nifty cannot move northward without its eledest family member (Reliance).

Sagar

Sagar

 

[praveen taneja]

I didn't understand, to tell you the truth I don't understand many of your comments.

:rofl::rofl::rofl:
Main khud bhi nahi samajh pata

 

[lazytrader]

I do agree with all the comments, and I thank you all for trying to teach me a lesson. Which NOW I learned

You got that all wrong....
Everyone is trying to learn something themselves....
...from others mistakes :rofl:
Who would want to lose that much money in the market to learn? :lol:

Everytime you teach someone something you learn something yourself. Try helping someone out once in a while you'll see.

 

[simu2004]

In my trading, I buy OTM options and let them expire worthless (like today my 5200/5300 calls have gone worthless).. but they were there to protect my 5100/5000 Short Calls against that paid lot more.
To enhance return, I supplement my spread positions created as contrarian trade, or at early stage of trend.. and then add OTM options as market confirms the trend direction.
Spreads don't give great return, but in the whole process, the risk doesn't go out of conrol.
Happy Trading

Hi AW10,

On above strategy, what would you suggest for this expiry ?

Regards