Nifty Futures Trading Part 2 (Positional)

[kapil123]

I had given order for squaring 4000 Put at 225..Now since market is closed will the same order emain in queue or I will have to place t again...CMP is 221

It will remain in queue

 

[lalpar]

Sqaured PUt at 225 and also positional short at 3896..

Now long at 3896 without any options position

 

[moneygurukul]

hi moneygurukul,

let me better understand what you mentioned with an e.g there is a good uptrend in 60 min till 4300 and later in the hourly we get a LH-LL pivot break around 4200 then according to what you said we should write 4200 call with s/l placed a immediate PH right.... Im trying to convey something similar in the given situation instead of writing the call and take unlimited risk why cant i buy a 4200 put instead and stay with it till the trend reverses itself on the 60min .... By doing this we make more money than wrting with limited risk .

First of all, in this scenario I would prefer writing options of 4300 strike (recent high) with a stop-loss above 4300. As against selling futures, certainly it will have a lower risk and thus lower probable reward.

About buying vs. selling options, If the trend is not fast, you may loose money on puts due to time decay. If the trade originates in the last 7-10 days of the month, writing call has a higher probability of success than buying puts. With writing calls, the risk is unlimited only if we wait for expiry. We can go ahead and exit the trade with s/l in a manner similar to used with futures trading. Further, if the s/l is hit after a few days of writing options, we will gain theta for that period and thus the loss value may be lower than that those encounterd in case of put buying.

All these are probable scenarios and options being non-linear derivatives, change in any of the parameters may make look one strategy better than the other during different times of the trading career.

Further, if the fundamental fact that returns are proportionate to the risk taken by a trader is accepted, then writing options can not be unlimited risk & low return trading strategy as against limited risk & high return trading trategy of buying options. What the option writer gives up by earning limited return is compensated by the high probability of success.[Payout=Probability*Return]

Also by counter trend i mean buying a call around 3800-4000 and buying a put around 4500-4600 only if we see a reversal in prices around this level ... else we stay with the trend on the 60min always.
Friend again im just trying to clarify my view point and mean no offences to the way anyone trades . As buying nifty options and writing some stock options is less risky for me but for you and mita writing nifty options might be less risky and this could be because the preception of risk and the style of trading changes from people to people due to their trading experiences in the past....

By counter-trend I mean initiating trade near to the resistance/support level (Horizontal level/trendlines/retracements/pattern boundaries) in the direction opposite to the current trend. That will mean buying call on support in a falling market and buying put on resistence in a rising market. We do not wait for pivot breakout in these cases and also do not initiate the trade on pivot breakout. However, in except in certain exceptional circumstances, our trade should be in the direction of next higher periodicity trend . For example, buying puts when market is touching 4500 in hourly chart as the trend on higher periodicty was down.

Besides all these, certainly the portfolio size and risk-taking capacities of the individual trader are very important factor in deciding for/against buying/writing options.

 

[mitasatyajit]

 

[Czar]

Logically If you see all world market have broken thru, maybe a miracle here, but Its against the odds, It may hold for a few hours / days to create an illusion...

As suspected...

 

[lalpar]

Hi Czr,

What do u say can we see 3600 nifty this month ..

I feel Markets have been oversold in short term...The fall is being uni directional...No Support at all

 

[renu daga]

will this triple bottom hold!!!

and hold to throw agin / or pull

renu

 

[lalpar]

Since its a third attempt to fallblow 3800 I am not in a position to say what wll happen..usually third time it shld be a FREE FALL to 3700 levels

 

[Czar]

Still Lalpar no signs of bottoming, only after a decent pull back on hourly can we judge further downside...

 

[lalpar]

is trading stopped..there is no transaction thats been showing!!! what is happening