Option Buy Recomendations

[ghosh_ak34]

Hi Ghosh Sir,

Thanks for your prompt response.
---------------------------------------------------------------
Sir, if you remember, you had guided me a formula for nifty options :

"For options to be successful, the nifty, if you are a nifty trader, should move in a
particular direction steadily either up or down. When to buy option is a common question and there could be many answers to this. Normally, what I do I am sharing it here. First find last weeks support (S1)and resistence level (R1). R1 ~ S1 = 300 to 400 points.

P = (Weeks High + Weeks Low + Weeks Close)/3
S1 = 2P - H
R1 = 2P - L

If (R1 - S1) >= 300 then,
Buy call at S1 and put at R1.
else
Do not trade at all.
-----------------------------------------------

I had tried to work on that, kindly guide me if i am right or wrong ,
I have taken the figures from last week.

------------------------------

4957+4801+4870/3

4876

s=2x4876-4957=4795
R=2X4876-4801=4951

4951-4795=156
156>300

-------------------------

Sir, kindly correct me if i am wrong, in case if i am right,
then, r1-s1 is less 300, so in this case should we not trade at all,
or buy call or put ?

Kindly guide.

Awaiting your quickest response,

Thanks & Regards,
Optionstrader


ghosh sir,

kindly also guide, since i have bought 2 lots of nifty call at 160,
is it also possible, that if i trade in the same call, i mean,
buy the same call at lower levels, i.em 111 and sell it at 125,
and trade 2-3 times like this, can i reduce the buying price or average ?
Is is ok to do this ?

Awaiting your response,

Thanks & Regards,
Optionstrader

Dear Optiontrader,

Yes, I remember the option strategy that I posted earlier, its safe and the successful strategy to work with as I tried and tested by me. I still recommend the same to others.

It all depends on trader's mindset. If you think you can withstand in more volatle market then, you can shrink the R1~S1 depending on your need. But R1~S1 below 300 is mostly volatile and choice is yours whether you can manage the same.

Yes, you can always average your call. But its better to see the trend first. When market is choppy like now then buying at money calls is a better option.

Hope this helps.

Regards

 

[optionstrader]

Hi Ghosh Sir,

Thanks for the info and guidance.


Thanks & Regards,
Optionstrader

 

[jace48]

Dear Ghosh sir,

A small OT question. I went long on minity @ 4620. Question is how can I hedge my position. Unless I am sure about direction. Should I buy a 4600 Put or 4700 Put.

Thanks..!

 

[optionstrader]

Hi Ghosh Sir,

I bought today Nifty 4600 call at 124 only 1 lot.

Is it ok ? What should be the stop loss in this case ?

Sir, kindly guide, for example, if nifty 4600 call goes down,
for example to 70, so if i buy 1 lot again at 70,and sell it at
100 ( if it goes up ), and still hold i lot that i had bought at 124,

would it be called profit of 30 points ?

can i do it 3-4 times, if it is called profit ?

then will it reduce the buying price of the call bought at 124 ?

or shall i still hold it till my average price is met ?

Awaiting your response,

Thanks & Regards,
Optionstrader

 

[ghosh_ak34]

Dear Ghosh sir,

A small OT question. I went long on minity @ 4620. Question is how can I hedge my position. Unless I am sure about direction. Should I buy a 4600 Put or 4700 Put.

Thanks..!

Dear Jace48,

Hedging is done to prevent a trader from a loss which might incur when trader is not sure of the direction and has taken a position. One question, what prompted you to go long @4620, any self technical analysis, news or just emotional move? You need to understand and answer these questions to yourself.

Now, since you have taken a long position w/o being sure of what could happen, you need to hedge it by taking either a put or exit your long with a SL , say with a loss of 30 points.

Under these kind of volatility its better to go for at money puts, in case you want to hedge your long positions.

Regards

 

[jace48]

Dear Jace48,

Hedging is done to prevent a trader from a loss which might incur when trader is not sure of the direction and has taken a position. One question, what prompted you to go long @4620, any self technical analysis, news or just emotional move? You need to understand and answer these questions to yourself.

Now, since you have taken a long position w/o being sure of what could happen, you need to hedge it by taking either a put or exit your long with a SL , say with a loss of 30 points.

Under these kind of volatility its better to go for at money puts.

Regards

Sir..

To cut the story short. On 4 June my system gave me long signal at 4685 which I took early in morning since I do not have intraday access, only to suffer loss. Again it showed me buy @ 4550 but did not trade since I do not take position same day I suffer loss. On 5 June I took Long at 4620 based on previous day result since minifty was convincingly trading above 4620. EOD I was @ 56 points profit.

My system is tactical and I know that in long run it would be pretty good but what I need to strategy to protect my position/reduce loss when I take fresh position since initial stop loss level as given by my system is pretty wide.

Today since I was not sure what direction market will take I took a short position at 4653 and covered before 3:00 effectively hedging my position.

Currently I am still at around 6 points profit after deducting all expenses I am worried about monday since I still have an open position.


While I was waiting for you reply I came across
Synthetic Long Call which seems to precisely what I am looking.

Please guide me further.

Thanks..

 

[optionstrader]

Hi jace48,

Could you please tell me, what does this mean :
" my system gave me long signal at 4685 "

do you use any software for generating the signals ?
if yes , could you please tell me which software it is ?

Awaiting your response,

Thanks & Regards,
Optionstrader

 

[optionstrader]

Hi Ghosh Sir,

I have calculated the S1 & R1 for this week, kindly guide me if i am wrong :

4908+4536+4627/3

4690

s1=2x4690-4908=4472
R1=2X4690-4536=4844

4844-4472=372
372>300

Sir, does this mean , that i can buy call at around 4450 or 4400
and put at 4800 or 4850 ?

Kindly guide for the earlier post also.

Awaiting your response,

Thanks & Regards,
Optionstrader

 

[ghosh_ak34]

Sir..

To cut the story short. On 4 June my system gave me long signal at 4685 which I took early in morning since I do not have intraday access, only to suffer loss. Again it showed me buy @ 4550 but did not trade since I do not take position same day I suffer loss. On 5 June I took Long at 4620 based on previous day result since minifty was convincingly trading above 4620. EOD I was @ 56 points profit.

My system is tactical and I know that in long run it would be pretty good but what I need to strategy to protect my position/reduce loss when I take fresh position since initial stop loss level as given by my system is pretty wide.

Today since I was not sure what direction market will take I took a short position at 4653 and covered before 3:00 effectively hedging my position.

Currently I am still at around 6 points profit after deducting all expenses I am worried about monday since I still have an open position.


While I was waiting for you reply I came across
Synthetic Long Call which seems to precisely what I am looking.

Please guide me further.

Thanks..

Dear Jace48,

Its not easy to guide you unless you share your system.

I hope you have either back tested your system or have paper traded or traded with small money for 3 months ,to test your system. If the result is positive then, okay. No system in the world could give you only profit always. If a system is giving more than 60% times, profit consistenetly then, I will say its a fairly decent system.

Always keep a stop loss whenever you trade or hedge your positions. If you do not know how to hedge your positions, taken based on your system, then, maintain strict SL.

Regards

 

[ghosh_ak34]

Hi Ghosh Sir,

I bought today Nifty 4600 call at 124 only 1 lot.

Is it ok ? What should be the stop loss in this case ?

Sir, kindly guide, for example, if nifty 4600 call goes down,
for example to 70, so if i buy 1 lot again at 70,and sell it at
100 ( if it goes up ), and still hold i lot that i had bought at 124,

would it be called profit of 30 points ?

can i do it 3-4 times, if it is called profit ?

then will it reduce the buying price of the call bought at 124 ?

or shall i still hold it till my average price is met ?

Awaiting your response,

Thanks & Regards,
Optionstrader

Dear Optionstrader,

You can easily calculate the profit. But the problem with most people is that they could not take the loss and try to average it again and again thinking that one fine day they will be in profit. I will say its a wrong strategy. What I will do in case I am at loss, I will book loss(at my SL)a nd exit it. Will look for another trade rather.

Regards