NIFTY Options Trading by RAJ
- Thread starter healthraj
- Start date
- Tags nifty options chain raj oat
premkumar
Most of the time, I trade from computer that does not have multiple screens and so I keep alt-tabbing back and forth.
NSE Option Chain page has so much data that it overwhelms me and everytime i look at it fresh, I feel I am wasting time to locate the column I want to see. During actual trading, I forget what I was looking at
Earlier, I used to download the page in excel but for some reason, refresh to that gets blocked intermittently by NSE
Most of the time, I trade from computer that does not have multiple screens and so I keep alt-tabbing back and forth.
NSE Option Chain page has so much data that it overwhelms me and everytime i look at it fresh, I feel I am wasting time to locate the column I want to see. During actual trading, I forget what I was looking at
Earlier, I used to download the page in excel but for some reason, refresh to that gets blocked intermittently by NSE
Hi Dprikka
One first thing: Do only trade what you understand and do not trade what you do not understand.
I do not know what kind of experience you have in option trading nor do I have any clue about what kind of option trader you are (Directional-,Strategical-, Back spread-, Time decay-, Delta Trader and so on). All those definitions are used for option traders and not about future traders. If you already would have a problem to understand those terms of definitions, then I would recommend you to work once through my thread about option trading. http://www.traderji.com/options/66266-option-trading-danpickup.html#post639903 It is basic stuff about option trading.
Now coming to your question about using that IV information in our option trading. Simple answer: For some option trader IV is of little value/use as they do scalp trading or only very short time intra day option trades. In that case they not even look at IV.
For other option traders IV is a measurement to know about there risk they have on there specific option legs. Those are in general strategically option traders who plan there trades/ideas they want to implement in the market.
A third group are those traders which want to sell high IV options and prefer to buy low IV options. They use volatility skews on options to find miss balances between them and to see if they are over or under priced according to the fair value. Pro Option Matrixes offer such tools.
I will make a simple example which spots to the strategically option traders. Let's have a look at a Short or long Strangle, because this you can trade in your markets. First check the HV of the underlying. If it is low then choose the long strangle and if HV is high, then choose the short strangle. Let's assume HV is low and we choosed the long strangle. To keep it simple I will talk about a trade which is implemented at once and not by leg in. Now we look at our option matrix, for example here: http://tinypic.com/view.php?pic=xfrl8k&s=5 and we have to decide about the option strike levels we want to choose for those long strangle. We can go for a delta neutral long strangle, we can go for a price equal play on the legs in this long strangle or we can go for an IV play on the legs from this long strangle.
Delta play: For example the 1550 call and the 1500 put. Both have the same distance to the actual future strike level, so delta is the same on the plus and minus side (Call is plus delta and put is minus delta). But as we see the IV of each option leg, we get to know that the risk will be higher on the put leg compare to the call leg, as the put leg has a higher IV. It is also clearly reflected through the higher price the put leg has.
Price neutral play: Here we choose the 1550 call (5.20) and the 1485 put (5.60). Risk again higher on the put leg as the IV is far above the IV from the call leg.
IV play: If we want to have that risk equal on each side we not can choose the long strangle instead we have to choose a long straddle as only the 1525 call and 1525 put have more or less the same IV. The call has an IV of 12.1% and the put has an IV of 12.5%.
Enjoy your Sunday / DanPickUp
One first thing: Do only trade what you understand and do not trade what you do not understand.
I do not know what kind of experience you have in option trading nor do I have any clue about what kind of option trader you are (Directional-,Strategical-, Back spread-, Time decay-, Delta Trader and so on). All those definitions are used for option traders and not about future traders. If you already would have a problem to understand those terms of definitions, then I would recommend you to work once through my thread about option trading. http://www.traderji.com/options/66266-option-trading-danpickup.html#post639903 It is basic stuff about option trading.Now coming to your question about using that IV information in our option trading. Simple answer: For some option trader IV is of little value/use as they do scalp trading or only very short time intra day option trades. In that case they not even look at IV.
For other option traders IV is a measurement to know about there risk they have on there specific option legs. Those are in general strategically option traders who plan there trades/ideas they want to implement in the market.
A third group are those traders which want to sell high IV options and prefer to buy low IV options. They use volatility skews on options to find miss balances between them and to see if they are over or under priced according to the fair value. Pro Option Matrixes offer such tools.
I will make a simple example which spots to the strategically option traders. Let's have a look at a Short or long Strangle, because this you can trade in your markets. First check the HV of the underlying. If it is low then choose the long strangle and if HV is high, then choose the short strangle. Let's assume HV is low and we choosed the long strangle. To keep it simple I will talk about a trade which is implemented at once and not by leg in. Now we look at our option matrix, for example here: http://tinypic.com/view.php?pic=xfrl8k&s=5 and we have to decide about the option strike levels we want to choose for those long strangle. We can go for a delta neutral long strangle, we can go for a price equal play on the legs in this long strangle or we can go for an IV play on the legs from this long strangle.
Delta play: For example the 1550 call and the 1500 put. Both have the same distance to the actual future strike level, so delta is the same on the plus and minus side (Call is plus delta and put is minus delta). But as we see the IV of each option leg, we get to know that the risk will be higher on the put leg compare to the call leg, as the put leg has a higher IV. It is also clearly reflected through the higher price the put leg has.
Price neutral play: Here we choose the 1550 call (5.20) and the 1485 put (5.60). Risk again higher on the put leg as the IV is far above the IV from the call leg.
IV play: If we want to have that risk equal on each side we not can choose the long strangle instead we have to choose a long straddle as only the 1525 call and 1525 put have more or less the same IV. The call has an IV of 12.1% and the put has an IV of 12.5%.
Enjoy your Sunday / DanPickUp
You have also attached a pdf there on the same but somehow link is not there at rapidshare now. Can you please share the same pdf on delta here? Many thanks.
Thought of the day - On a day when the VIX Is low shouldn't the options sells more expensive than theoretical value since VIX might go up. Why is it the other way.
View attachment 19432
Looks like 6250 - 6350 will be the range for the week
Last edited:
The Christmas sale is still ON for the calls. 6400 - 6700 calls being heavily ( In spite of nifty going down and premium discounting ) written and 6300 put being heavily written.
View attachment 19432
Looks like 6250 - 6350 will be the range for the week
View attachment 19432
Looks like 6250 - 6350 will be the range for the week
The more I see your posts, I feel there is so much learn. Thanks as always :thumb:
The Christmas sale is still ON for the calls. 6400 - 6700 calls being heavily ( In spite of nifty going down and premium discounting ) written and 6300 put being heavily written.
View attachment 19432
Looks like 6250 - 6350 will be the range for the week
View attachment 19432
Looks like 6250 - 6350 will be the range for the week
:clapping:
Sell 6500 call for a low risk returns. ITM probability of 6500 call is 21 %
any one to :argue:
View attachment 19433
Last edited:
6500 is History in this Series...Lets not dream about it in this series
:clapping:
Sell 6500 call for a low risk returns. ITM probability of 6500 call is 21 %
any one to :argue:
View attachment 19433
:clapping:
Sell 6500 call for a low risk returns. ITM probability of 6500 call is 21 %
any one to :argue:
View attachment 19433
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