Option Basic Guidance Needed

[kk.trade]

Hi Everyone,

I'm fairly new to traderji and I've been blown away by the knowledge that is shared everyday though this wonderful forum. Thanks to everyone.

I'm still in my kindergarten days when it comes to trading, so allow me to ask a few basic question in options trading. Your help in adding to my understanding would be greatly appreciated.

Here are a few doubts I have:

1. When it comes to trading options with the sole intention of closing the position before expiry (without having to exercise), would it matter to look at how far the expiry of that option is?

For e.g. If I'm bearish on Pantaloons in the short term and am looking at a bearish day tomorrow, would I be better off buying an Feb Put option or a March put option.

2. How important is it to study Options greeks while trading options? When studying greeks, we have to input volatility of the stock and the interest rate. Where do we get this typically. I saw that the NSE derivatives quote section gives you 'implied volatility' of the underlying stock. could that be used?

3. How is Open Interest and change in open interest interpreted before buying an option.

I think that's all for now. thanks in advance.

Regards
KK

 

[DanPickUp]

Hi Everyone,

I'm fairly new to traderji and I've been blown away by the knowledge that is shared everyday though this wonderful forum. Thanks to everyone.

You are very welcome here.

I'm still in my kindergarten days when it comes to trading, so allow me to ask a few basic question in options trading. Your help in adding to my understanding would be greatly appreciated. Here are a few doubts I have:

Most here do not like spoon feeding. So get used to do a lot of homework by your self. You best will go on here by posting the specific questions in the specific threads.

1. When it comes to trading options with the sole intention of closing the position before expiry (without having to exercise), would it matter to look at how far the expiry of that option is?

For e.g. If I'm bearish on Pantaloons in the short term and am looking at a bearish day tomorrow, would I be better off buying an Feb Put option or a March put option.

As you intend only to gamble on short time frames with options, your personal choice and your risk appetite. To understand what would be the different by going long the Feb put or the March put would need to talk about risk and the greeks. That would be a repetition again and again from what was posted in serious threads here. See the answer in your next question.

2. How important is it to study Options greeks while trading options? When studying greeks, we have to input volatility of the stock and the interest rate. Where do we get this typically. I saw that the NSE derivatives quote section gives you 'implied volatility' of the underlying stock. could that be used?

Your really have to study the Option Greeks. You will find more than enough about it in the following threads:

http://www.traderji.com/options/66266-option-trading-danpickup.html#post639903

http://www.traderji.com/options/305...ading-strategy-option-spreads.html#post333541

http://www.traderji.com/options/77467-muinalis-way-learning-how-trade-options.html#post750996

3. How is Open Interest and change in open interest interpreted before buying an option.

It was also asked and answered in the following thread more then once.: http://www.traderji.com/derivatives/72840-trade-options-data-part-2-a.html#post713330

I think that's all for now. thanks in advance.

Never mind and take care.

Regards
KK

Good trading / DanPickUp