NIFTY Options Trading by RAJ

[jagankris]

That is silly. Market makers don't always make money. When they realize they are wrong market makers do square off their losses. If they don't, they lose money just like anyone else.

If you don't believe me watch the movie - "Rogue trader". Its a true story about a guy who was a market maker with extremely deep pockets. He did go bust simply because he didn't accept he was wrong.

Hedging a long position never involves selling puts. That's completely ridiculous whether it is from a retail perspective or a market makers perspective.

Market makers don't always make money :rofl: :rofl: :rofl:
Don't criticize some one just quoting a movie.And you can be more polite in expressing your views.

Their day trading volumes are much higher than their over night positions which are Direction neutral.

Why not hedging involves selling puts ?
One can sell the equity write puts at a much lower strike with the intention of buying at a lower price.

 

[Relish]

Yes I can understand the pain. I initially had the account with ICICIDirect. After I opened the account with Zerodha only I understood how much I have been loosing with ICICIDirect. So all the best for quickly opening the account in Zerodha. Let me know if you need some help with Zerodha

Unfortunately not. But I intend to do it after the upfront brokerage I have paid is used up. I have just started looking at such low cost brokerages. In fact, I was not aware of the existence of Zerodha till I joined Traderji

Smc is also implementing Minimum RS20 brokerage. Only purpose for information. I am using them. This is what i got from them by mail.

 

[jamit_05]

@Raj

I am not preaching that Futures have more profit. It is never a question of Greed. My point is, for every Rs.1000 of risk taken, I get better value in Futures. And most of the simpler techniques of options can be applied in Futures as well.

@NiftyTradingIndia

I agree that option writers are making a bundle. They are a special bunch too. They have liquidity to sell options at every strike, at every minute. And they get paid in Time Decay. It is their game, they set the rules and they set the spreads. They are bound to win. I don't think, selling options is meant for retailers. Buying probably is.

 

[jagankris]

@RAj,

1) 5600PE Volume 107,297 > COI - 96,000.
What does this indicate ?

2) The below data is calculated considering NIfty from 5500 to 6400.

PCR 1.040395511

But Change in PC OI - 0.65

Call OI addition - 2,857,300
PUT OI addition - 1,861,250

Does this indicate Bearish call writing or Bullish Call addition ?

TIA.

 

[healthraj]

@RAj,

1) 5600PE Volume 107,297 > COI - 96,000.
What does this indicate ?

2) The below data is calculated considering NIfty from 5500 to 6400.

PCR 1.040395511

But Change in PC OI - 0.65

Call OI addition - 2,857,300
PUT OI addition - 1,861,250

Does this indicate Bearish call writing or Bullish Call addition ?

TIA.

5600PE Volume 107,297 > COI - 96,000 - When Volume is more than COI, then normally as per my understanding you can GO Long on this 5600PE. Accordingly if you see 5600PE which opened at around 21 closed at 26.2.

PCR - I normally use it as a indicator for Reversal. If you see a PCR of say 1.25-1.3. Then you can see profit booking. Same is true if PCR is around .75

NIFTY ended as Bearish on Friday.

 

[healthraj]

@Raj

I am not preaching that Futures have more profit. It is never a question of Greed. My point is, for every Rs.1000 of risk taken, I get better value in Futures. And most of the simpler techniques of options can be applied in Futures as well.

@NiftyTradingIndia

I agree that option writers are making a bundle. They are a special bunch too. They have liquidity to sell options at every strike, at every minute. And they get paid in Time Decay. It is their game, they set the rules and they set the spreads. They are bound to win. I don't think, selling options is meant for retailers. Buying probably is.

Amit,

Thanks for your inputs. I am sure it helps. Around the same time last year, you are actively trading in Options. Anything that we can learn from it except the low returns compared to Futures.

I will leave the Futures Vs Options for people to choose their own.

 

[healthraj]

For those of you who want to find out the actively traded strikes in Stocks - Top Options in Stocks

http://nseindia.com/content/fo/fomktwtch_OPTSTK.htm

For those of you who want to find out the actively traded strikes in NIFTY- Top Options in NIFTY

http://nseindia.com/content/fo/fomktwtch_OPTIDXNIFTY.htm

For those who want to take Naked positions can have a look at the above links before taking your positions.

 

[jamit_05]

Amit,

Thanks for your inputs. I am sure it helps. Around the same time last year, you are actively trading in Options. Anything that we can learn from it except the low returns compared to Futures.

I will leave the Futures Vs Options for people to choose their own.

There is learning every step of the way. In the time while I put part of my risk in options, I realized that there is a negative edge when one sells naked options. This experience gave me an opportunity to compare an Options trade with a Futures trade LIVE... as it happened. Hence, I hv a strong opinion about the issue.

I have taken a few trades in recent times as well. But, every attempt to trade options was met with stiff competition.

My next attempt is going to be, to sell NF options but against a Futures position which is already in profit. Lets see what lessons that teaches me.

I wish you complete success in trading options. And will chip in, if I am eligible.

 

[DanPickUp]

I have to say that this is a good thread on option trading. I do not agree with all what is posted, but that is not your problem.

I may mention that many market makers are mainly sellers of options. But they hedge there positions, as they are not willing to take the full risk. As they can trade really huge volumes, they live from the spreads they get in there hedges.

Please move on with the good thread / DanPickUp

 

[healthraj]

I have to say that this is a good thread on option trading. I do not agree with all what is posted, but that is not your problem.

I may mention that many market makers are mainly sellers of options. But they hedge there positions, as they are not willing to take the full risk. As they can trade really huge volumes, they live from the spreads they get in there hedges.

Please move on with the good thread / DanPickUp

Thanks Dan for your words. Messages from experts like you assures me that this thread is going in the right direction. Please help this thread whenever you feel that we are not going in the right direction.