NIFTY Options Trading by RAJ

[Option.Trader]

Hi Bro,

Ya I agree,I think we should consider the time decay if some one is plaing May option in march or april,I think may options should be thought in may only!Those who wana pay for time decay can buy!But ya selling options may be a good Idea as time decay will be on sellar's side but buying ,no way.correct me if I am wrong.

Selling options when there is chance of nifty swinging 400 points is like signing a death wish, there will be no place to hide when you are wrong and limited points to gain when you are right.. Play it safe

 

[Relish]

Hi how do you interpret OI of 5900Put around 70lac & 6000Put around 92Lac where 62000Call hovering around 65lac last few session?

I did't see so much OI 92lac in recent few months. Is it showing there will be sudden move either side or only upside probability?

 

[Option.Trader]

Hi how do you interpret OI of 5900Put around 70lac & 6000Put around 92Lac where 62000Call hovering around 65lac last few session?

I did't see so much OI 92lac in recent few months. Is it showing there will be sudden move either side or only upside probability?

Yes, 92l is unusually high. As per data expiry lies between 6000-6100, either way 6110 holds the key, if nifty manages to close above it, higher levels are possible. On options side chgoi getting higher in 6300-6400 calls would be favourable to bulls, until then playing in the range. But one thiing is interesting, when 6000 pe reached 70l OI, it was trading at 121, so writing would have already given you 50% profit. It would be good to test the average returns of writing an option once OI reaches 70l

 

[bapu4]

@Bapu

Did you read my post in dept before you made the above post? If not, then read it again and you will have your answer. In option trading there are easily a few dozen of different kind of strategies. Now where/with which strategy would you begin if I would ask you to show any elaboration with example?

Hi Bro,
I cudn't understand after reading your whole post thats why I requested you!
Tx

 

[Somatung]

Hi Bro,
I cudn't understand after reading your whole post thats why I requested you!
Tx

@Bapu: Ok, here we go:

Nifty spot @ 6029.90

You think market will go down. Now you can choose many different ways to play/trade options and non of them is the only correct or only wrong way. The final profit, how ever it occurs, will be a product by handling the implemented trade the right way.

Simple example on plain vanilla option trading without considering any complex option strategy:

First way you can do: You sell one call at the money 6050/Feb for 102.00. So your maximum profit you can have is 102.00 in 15 days. Your maximum loss could be your stop loss you have on this short call if the stop loss level is executed. If you are not executed, and this can happen when a market really fast moves, you can be in hell. That's why I wrote: Could be.

Second way you can do: Instead of selling the call, you can buy a put in the money 6100/MAR for 138.90. MAR is choosen to give the market more time to move in the direction you expect and to protect you from possible, bigger time decay loss in case market first moves against you. Your option then would get first atm, may even otm and that would mean a higher time decay loss, as the intrinsic value would be out of the option. On the other hand: If market moves in your direction, itm options will quicker gain profit compare to atm and otm options, as the delta is higher and more related to the real delta of the underlying (Nifty)

If market now quickly moves downwards, your call should loose quick in value, (means profit for you) or your put is increasing quick in value (means profit for you). So who is correct or who is wrong?

To make it very clear: At this moment I not even started to spot on the way how such trades can/could be handled according to market moves = Trading knowledge is needed and will make the different outcome of this two example trades, which easily can be traded in the real market.

Just to say: If market is bearish, the itm put has a great chances to bring good profit, even the market first moves slowly down with a few pull backs to the up side. Even those pull backs to the upside can bring profit at any time and this profit is added to the final outcome of the whole trade. How? Trading knowledge and how to handle such trades. As you now more as clearly should understand: There is no absolute correct or absolute wrong for any strategy/market. There is only trading experience/knowledge which will bring the final outcome/profit in any choosen trading methodology/strategy.

 

[bapu4]

@Bapu: Ok, here we go:

Nifty spot @ 6029.90

You think market will go down. Now you can choose many different ways to play/trade options and non of them is the only correct or only wrong way. The final profit, how ever it occurs, will be a product by handling the implemented trade the right way.

Simple example on plain vanilla option trading without considering any complex option strategy:

First way you can do: You sell one call at the money 6050/Feb for 102.00. So your maximum profit you can have is 102.00 in 15 days. Your maximum loss could be your stop loss you have on this short call if the stop loss level is executed. If you are not executed, and this can happen when a market really fast moves, you can be in hell. That's why I wrote: Could be.

Second way you can do: Instead of selling the call, you can buy a put in the money 6100/MAR for 138.90. MAR is choosen to give the market more time to move in the direction you expect and to protect you from possible, bigger time decay loss in case market first moves against you. Your option then would get first atm, may even otm and that would mean a higher time decay loss, as the intrinsic value would be out of the option. On the other hand: If market moves in your direction, itm options will quicker gain profit compare to atm and otm options, as the delta is higher and more related to the real delta of the underlying (Nifty)

If market now quickly moves downwards, your call should loose quick in value, (means profit for you) or your put is increasing quick in value (means profit for you). So who is correct or who is wrong?

To make it very clear: At this moment I not even started to spot on the way how such trades can/could be handled according to market moves = Trading knowledge is needed and will make the different outcome of this two example trades, which easily can be traded in the real market.

Just to say: If market is bearish, the itm put has a great chances to bring good profit, even the market first moves slowly down with a few pull backs to the up side. Even those pull backs to the upside can bring profit at any time and this profit is added to the final outcome of the whole trade. How? Trading knowledge and how to handle such trades. As you now more as clearly should understand: There is no absolute correct or absolute wrong for any strategy/market. There is only trading experience/knowledge which will bring the final outcome/profit in any choosen trading methodology/strategy.

Hi Bro,
I don't think I am capable to handle such long distance calls,In fact most of us can not ,I think I would prefer to stay away whrere market is too much unpredictable.
By the way I have bot Feb-300 PE @ .4 of Tatasteel now how do you sugget to handle me this ,actually I bot it y'day at 3-15 thinking that result is to-dayand will be announced during mkt but then I learnt that it is in the evening mean while its spot is quoting above 391,can you suggest how to handle? There are some mining issues which may cause proble for the price for further rise,more over generally when the results not during the mkt hrs than they are not expected to be good but this is all experience its not law its the judgement which may go wrong too.Your comments pl.
TX

 

[Somatung]

Hi Bro,
I don't think I am capable to handle such long distance calls,In fact most of us can not ,I think I would prefer to stay away whrere market is too much unpredictable.
By the way I have bot Feb-300 PE @ .4 of Tatasteel now how do you sugget to handle me this ,actually I bot it y'day at 3-15 thinking that result is to-dayand will be announced during mkt but then I learnt that it is in the evening mean while its spot is quoting above 391,can you suggest how to handle? There are some mining issues which may cause proble for the price for further rise,more over generally when the results not during the mkt hrs than they are not expected to be good but this is all experience its not law its the judgement which may go wrong too.Your comments pl.
TX

@Bapu

You have mentioned this yesterday in the "Day Trading Futures" thread. Today Tata Steel closed at a level of 389.75. Which chart time frames did you look/consider before you made your buy decision? Ask this your self and answer it to your self.

If the chart not was the reason to buy your puts, then it may was this: Aha, it is cheap, (0.4) so I buy it. Investment is only 120.00 and I can make a fortune if market really falls. If this was the reason then you have done only half of your work. Why? You have to consider the option Greeks and not only the possible fall of the market. As Rockyrobust clearly told: A pure speculative trade and nothing else.

If Tata Steel should be at 299.00 (To become a tiny bit profitable) in 15 days, volatility in the market according to India Vix would need to rise at least 22% from today on. How many times did you experience such a rise in 15 days in the past in India Vix?

Nerveless: If you have in the coming 15 day some money with this absolute speculative trade, take the profit and that's it. Learn to trade in a way the figures/charts and other tools/odds start to be in your favor. If you are able to manage/learn this, then you will be able to survive in option and future trading in the long run. Good luck and be sure that your learning time not runs out of time and of money. I mean, you still can play your little games you did with this option trade, but never start to do it with bigger money until you are really deep in knowledge about what you do in trading. Guess you have deep knowledge in your job, so the same is requested here.

 

[Option.Trader]

@Bapu

You have mentioned this yesterday in the "Day Trading Futures" thread. Today Tata Steel closed at a level of 389.75. Which chart time frames did you look/consider before you made your buy decision? Ask this your self and answer it to your self.

If the chart not was the reason to buy your puts, then it may was this: Aha, it is cheap, (0.4) so I buy it. Investment is only 120.00 and I can make a fortune if market really falls. If this was the reason then you have done only half of your work. Why? You have to consider the option Greeks and not only the possible fall of the market. As Rockyrobust clearly told: A pure speculative trade and nothing else.

If Tata Steel should be at 299.00 (To become a tiny bit profitable) in 15 days, volatility in the market according to India Vix would need to rise at least 22% from today on. How many times did you experience such a rise in 15 days in the past in India Vix?

Nerveless: If you have in the coming 15 day some money with this absolute speculative trade, take the profit and that's it. Learn to trade in a way the figures/charts and other tools/odds start to be in your favor. If you are able to manage/learn this, then you will be able to survive in option and future trading in the long run. Good luck and be sure that your learning time not runs out of time and of money. I mean, you still can play your little games you did with this option trade, but never start to do it with bigger money until you are really deep in knowledge about what you do in trading. Guess you have deep knowledge in your job, so the same is requested here.

Nicely said, now if we can debate on some strategies that would be enriching to everyone

 

[Somatung]

Nicely said, now if we can debate on some strategies that would be enriching to everyone

Please go on: You are first and nothing more to comment from my side. Just answered the questions and if you feel I not should do this, then please let me know and thatldo.

 

[Somatung]

Nicely said, now if we can debate on some strategies that would be enriching to everyone

@Option.Trader

I am waiting for your enriching to everyone. As the OI now was discuss for a hounder t/thousand times since the thread started, would appreciate if you now come up with some kind of strategy which was not discussed in the past here in the forum anywhere. Not that I think this thread is out of actuality, just responding to your valuable post. Discussing some thing new really would enrich everyone. Would recommend you to open a new thread and start with it instead jumping around the same place day by day by day by day by day and not do any thing about what you ask for/mention.