As you are trading pairs but you are not selling the pair together you either sell call or put first and then wait and then sell the other leg of the pair....what is your criteria as to what to sell first and then wait and when to get into the other leg....please explain
and second do you always sell options or you do this pair trading by buying options also...if yes then when and how you place yourself into position...buying both at the same time or how....please explain whenever you have free time.
Thanks in advance
Ravinder
Hello Ravinder,
Will give my reply acording to my understanding after the market close today.
Thank you
Hello Ravinder,
When I start a pair trade I first take that positon which is go in the extrime, I men that say if the nifty index suddenly raise fast than I will sell CE first because I think that the nifty index will not raise more from there. So I think that the nifty index will 1) not go up raise more OR 2) It remain there only.
So if it remain there for some time and not correct down side I will then sell PE in after some time. And many time like my thinking, the nifty index will corract for some points and the price of PE will became more, so than after this small correction in nifty index I will than sell PE. I do the shame thing if the nifty index fall down side fast, than I will sell PE first and then after sometime, if the nifty index baunce than I sell CE after some time. If the niffy index do not baunce than I immedatly sell CE and so I has a pair positon.
I more do sell options pair because I earn time decae points by sitting with the positon. But I also do buy option pair some time, if I thing that there nifty index will go in one directon for more points.
Thank you and best of luck for tomorrow.
