Option Buy Recomendations

[stockBond]

Dear chaitanyagoa,

When market is going up with no. of days to expiry is away. Then, one could following startegy:

Buy at money or near money call and write OTM call.

For example:

Buy 2lots Nifty 4900 Call and write 5000 call Nov. series

But if you think up trend but not much steam is left or expiry is nearing. Then, one could go for following strategy:

Write an OTM call near resistence and write an OTM put near support.

For example:

Write Nifty 5200 Call 1 lot and Write Nifty 4600 put 2 lots Nov. series.

Will prefer last one because chances of constant move up is less and I can eeat the premiums.

Regards

Ghosh Sir

2nd strategy is good when "expiry is nearing" but how near ?
say Nov expiry is on 26th then should we write OTM options now (11th) ?

 

[ghosh_ak34]

Dear Friends,

For Nifty Future traders who would like to trade as per trend check strategy posted in 1st post of the thread, Nifty levels for tomorrow are as under:

Resistence at 4935
Support at 4818

If you go short 1 lot then, buy 1 lot at money or near money call and if you go long 1 lot then, buy 1 lot at money or near money put to hedge. Reco. to trade as per trend strategy posted in 1st post of this thread.

Regards

 

[chaitanyagoa]

Hi Ghosh ji,
Sorry for this question.. but pls help me..STOPLOSS.
I have gone through threads which explain this stop loss funda...
But i dnt understand how to use it..to start with i ll tell u my experience with it..
I tried using stoploss on some scrip sometime back..i bought it at 60.
it moved till 66.. in order to protect my profit i placed a stop loss at 65.. it went to 67.. 68.. i changed my stop loss to 66..67. suddenly it moved back..it came to 67.5.. i cahnged my stoploss to 66.. then to 65. As i was looking at something else, it fell below 65 and my order was executed. Then it started moving up and the next week it reached 80 levels. Was this procedure correct. Because of this i missed much of my profit. Please explain STOPLOSS with an example.
I often see ppl say trailing stoploss, tight stoploss.. what do they mean?
I have a 4900CE@33. One of our friends in the forum asked me to hold it with tight stoploss.. how to use stoploss for this? TIA..

Hey Shravan,

That is not a good way to Put in a Stoploss.....

Let me see if i can explain this with the same as your trade.......

When u bought a stock/call/put etc..... at 60 and since the market is showing bullishness u can keep a 5-6rs stoploss.....

when u bought it for 60 then your stoploss shud be 55/56 NOT 59.... By keeping at 59 you are not giving the stock any room to move in....... Any slight variations can generate the stoploss....

When the stock has raised to 66 then keep your stoploss as Breakeven(price+brokerage).... then let it move upwards..... this way u will give the stock the space to move and also u will not incur any losses if the market comes down.....Incase the Stoploss get hit , ucan always re-enter....

I normally keep a SL of 10 points below the Spot price...... It all depends on your risk appetite...........

 

[ghosh_ak34]

Ghosh Sir

2nd strategy is good when "expiry is nearing" but how near ?
say Nov expiry is on 26th then should we write OTM options now (11th) ?

Dear stockBond,

Will consider 20th of the month and after as near to expiry.

Regards

 

[ghosh_ak34]

Dear Gosh sir,

I followed your first thread and it is very informative thanks; as per the thread; I arrived at the following

Week's high (last week) = 4836.2
Week's low (last week) = 4538.5
Week's close (last week) = 4796.15

Then P = 4723

thus R1 = 4908 and S1 = 4611

If the market was in a bullish trend this morning; was I right in buying a Call options of 4600 (2-3 lots) and buying one PUT option of 4900?

Apologies; I just wanted to make sure that I understood the concept correctly

Best regards,

Chetan

Sorry forgot to mention that the difference between the R1 and S1 here is 297; however assuming it was 300 or above 300 then does the above move hold good?

Chetan

Dear Chetan,

Your calculations are correct and understanding is correct.

Regards

 

[naharchetan]

Great thanks Mr Ghosh

 

[stockBond]

Dear stockBond,

Will consider 20th of the month and after as near to expiry.

Regards

Dear Ghosh sir

Since selling option requires huge margin to be blocked.
So now is it not advisable to buy one sided option (say SUZLON PUT option as nifty turned back from 4940 retracement level and now according to eliot waves targets are 4500-4400 and SUZLON being weak stock will fall more than nifty)

 

[VJAY]

Dear Gosh sir,

I followed your first thread and it is very informative thanks; as per the thread; I arrived at the following

Week's high (last week) = 4836.2
Week's low (last week) = 4538.5
Week's close (last week) = 4796.15

Then P = 4723

thus R1 = 4908 and S1 = 4611

If the market was in a bullish trend this morning; was I right in buying a Call options of 4600 (2-3 lots) and buying one PUT option of 4900?

Apologies; I just wanted to make sure that I understood the concept correctly

Best regards,

Chetan

Dear ghosh sir,
Is it correct as in bold part.....so whenever we took position we hedge it with another position?here in the mirning as per strategy market in bullish so he will buy call option.....then why hedge with put?.....so his profit will block if market going to up....allready we put s/l for the position ...

 

[ghosh_ak34]

Dear ghosh sir,
Is it correct as in bold part.....so whenever we took position we hedge it with another position?here in the mirning as per strategy market in bullish so he will buy call option.....then why hedge with put?.....so his profit will block if market going to up....allready we put s/l for the position ...

Buy interday call or puts as per trend. and hedge by eod if you want to keep position open overnight.Please read the 1st post again. There is no need to mention this everytime this specifically please.

Regards

 

[ghosh_ak34]

Dear Ghosh sir

Since selling option requires huge margin to be blocked.
So now is it not advisable to buy one sided option (say SUZLON PUT option as nifty turned back from 4940 retracement level and now according to eliot waves targets are 4500-4400 and SUZLON being weak stock will fall more than nifty)

Dear stockbond,

Its about once choice and TA to trade in stocks or nifty. One can buy interday options in stocks provided liquidity is there and its supported by TA.

Have given an example of Nifty. Doesn't mean strategy is valid only for Nifty. Unless and until I am very sure of stock option that I could trade on, I prefer to trade in Nifty as liquidity is quite good.

Regards