NIFTY Options trade : Why and what-if...

[anayash]

What doe's that mean: Option are best written?

I guess he means that the best way to trade options is to "Write/Sell" them!

 

[DanPickUp]

I guess he means that the best way to trade options is to "Write/Sell" them!

My friend

That is like telling shooting a gun makes noise.

If some body comes up with such comments, he has to be specific in it.

When and under what circumstances is selling options best.

 

[LivetoTrade]

No.

Put call ratio doe's not talk in details about how many options are sold or bought. Just the volumes which are traded in calls and puts.

And by the way: What doe's that mean: Option are best written?

Please correct me if I am mistaken.

Selling/ Writing Options at the right time, also gains due to time decay.

 

[LivetoTrade]

My friend

That is like telling shooting a gun makes noise.

If some body comes up with such comments, he has to be specific in it.

When and under what circumstances is selling options best.

Again, my assumption as to when this happens is during indecisiveness in the market movement.

For example, in December 2011, the second half, the market was limited to a move of 250 points in both directions.

Values of both CEs and PEs were eroded to Rs 0.05 by expiry.

Gain due to time decay.

 

[DanPickUp]

4800 Put :
Here is a screen-shot of the historical data.

Was priced at 261, and I assume it was shorted anticipating the market upmove.

Note, on Dec 27th price was at 119, and turn-over is high, so assumption is that some of them were covered.

Today, Jan 4th, price touched low of 112.7, turn-over is high, and price has closed well not just over the day-low, but also in positive.

Hi

That is an interesting screen shot.

Guess it is from this link:

http://www.nseindia.com/live_market...t=OPTIDX&date=-&segmentLink=17&segmentLink=17

How long now are you analyzing this turnovers ?

DanPickUp

 

[LivetoTrade]

Hi

That is an interesting screen shot.

Guess it is from this link:

http://www.nseindia.com/live_market...t=OPTIDX&date=-&segmentLink=17&segmentLink=17

How long now are you analyzing this turnovers ?

DanPickUp

Dan, Yes, I gather data directly from NSE and the link specified by you is correct.

I am learning for a little over a month now. Observation has been for longer duration though.

 

[DanPickUp]

Dan, Yes, I gather data directly from NSE and the link specified by you is correct.

I am learning for a little over a month now. Observation has been for longer duration though.

Hi

Good idea and keep up with it. :thumb:

I use to write down in a book the changes in OI on the different strike levels from any market I trade at the moment.

I then analyze when this OI shows up and that gives me an idea, where market can move.

Your turnarounds can be used the same way. Now I learned some thing new from you.

Thank you

DanPickUp

 

[sudris]

Hi LT

Your screen shot is what I meant. Add some more information to what ever information you have and combine it. Uprise of the calls in price is one information and now comes the combination of information:

Put Call Ratio is one way to do so through an other option indicator. You also can use option volatility as an indicator. If there is a change in Implied Volatility in the calls, this also can give some hints about what may comes next.

As indicators on the chart and time frame you trade, you can use Pivot levels or Standard deviation or Fibonacci and compare this levels with the option strike levels which have changed the most in price.

As told: Combining information to have some kind of a better chance to be right in what we plan to do.

Further good trading

DanPickUp

Hi Dan,

If it is not too much to ask for, could you please come up with an illustrative example with actual calculations involving change in PCR, change in IV, change in premiums of Calls/Puts?

the basic idea is to understand interpretation of the combinations.

Thanks

 

[columbus]

The effective zone continues to be 4600~4900 ,with 3 strikes on PUT side
and 2 strikes still OPEN.Barring premiums less than Rs.10, in CALL window
we have 22M options and PUT window we have around 28M options (Approx).
So bias is still NEGATIVE.

 

[columbus]

Today we another saw another Narrow Range ,with 52 points.
Did not see fireworks usually associated with inflation day.
Food inflation turning NEGATIVE is perplexing.If it were so ,markets would have
cheer it in a BIG way.