Option Buy Recomendations

[TraderJunkie]

Hi TJ,

I am working on this since last two months.

I observed that if you catch it as soon as market is opened in the morning then possibility of getting good price is much more.... I use following criteria to buy it.

I keep last day's closing price of straddle/stangle in your mind while taking trade. If opening is at same level of yesterday's closing then buy straddle at < or = to yesterday's price of straddle.

In case if i do not get at that price then wait paitiently for same or do not take trade on that day..

Another thought about stradle/strangle.

My thought is that at the opening since volatility is high, we might not get a good price. The stradle/strangle would work best when the IVs are stable to low and then move higher.

So if we buy the straddle/strangle say when NIFTY is stuck in a 10 point range for 20-30 mins boht the PUT and CALL IVS are stable and hence we get a neutral price.

But if we buy at the opening , the IVs are so high that we end up paying a higher price either for the PE or CE , depending on a gap up or down opening.

Please correct me if I got this wrong.

 

[rrmhatre72]

Another thought about stradle/strangle.

My thought is that at the opening since volatility is high, we might not get a good price. The stradle/strangle would work best when the IVs are stable to low and then move higher.

So if we buy the straddle/strangle say when NIFTY is stuck in a 10 point range for 20-30 mins boht the PUT and CALL IVS are stable and hence we get a neutral price.

But if we buy at the opening , the IVs are so high that we end up paying a higher price either for the PE or CE , depending on a gap up or down opening.

Please correct me if I got this wrong.

Dear,

You may be right from theoretical concept... What I was telling you, was my practical experience....

I grab trade within first two minutes of start of market... you need to be nimble... Plan should be properly worked out... What to buy first? Call or put....

Check out on your own & perhaps you may see what I am trying to say...

 

[DanPickUp]

I have a question for Ghosh Sir.

In your opening post you say, you don't believe in hedging. Why do you say that ? I am running long stradle strategy right now and it seems that hedging does not work all the time.

For example the hedge would have worked on friday if one bought a 5800 CE and PE, but wont if one bought a 5700 CE and PE.

I think its critical to pick the right ITM or OFM calls/put for choosing a hedging strategy.

Any thoughts ?

Thanks,
TJ

Hi

Here a little mind blower for high volatile markets : Sell the future and and buy two calls at the money. Best for high volatility. What do you have now ? An other kind of long straddle. Why ? Future is 100 delta short and two long call atm is 100 delta long. Risk is capped and max reward is unapped :lol:

DanPickUp

 

[TraderJunkie]

Yup Dan - its the same outlay , just at a higher cost since a future is involved

 

[TraderJunkie]

Dear,

You may be right from theoretical concept... What I was telling you, was my practical experience....

I grab trade within first two minutes of start of market... you need to be nimble... Plan should be properly worked out... What to buy first? Call or put....

Check out on your own & perhaps you may see what I am trying to say...

Yes I know what you are saying.

I have been trying to do this live too, and my strategy is to 1st look at IVs, try to make a sense if IVs are going to regress back to mean (meaning that volatility will increase )..and then buy put-call at a relatively calmer time of the day.

This also gives a better time to buy the put or call, or call or put - any sequence since the IVs are lower.

 

[munde_77]

Hi

Here a little mind blower for high volatile markets : Sell the future and and buy two calls at the money. Best for high volatility. What do you have now ? An other kind of long straddle. Why ? Future is 100 delta short and two long call atm is 100 delta long. Risk is capped and max reward is unapped :lol:

DanPickUp

Hi Dan,

I have bought one lot future and bought 2 lot put.........:thumb:

 

[DanPickUp]

Yup Dan - its the same outlay , just at a higher cost since a future is involved

Hi TJ

You did not get the point, did you ?

Why do you think should I post a strategy like that now at this moment after your post ?

DanPickUp

 

[DanPickUp]

Hi Dan,

I have bought one lot future and bought 2 lot put.........:thumb:

Hi munde

Are you clear about how to handle this trade ? It is the opposite of the other one MM is done, as it is a debit buy. I hope, you know the Greeks for this strategy and I hope, you did not implement this strategy yesterday because of time decay !

Just a few points to watch over. Give me a PM in case you get in trouble.

DanPickUp

 

[ghosh_ak34]

I have a question for Ghosh Sir.

In your opening post you say, you don't believe in hedging. Why do you say that ? I am running long stradle strategy right now and it seems that hedging does not work all the time.

For example the hedge would have worked on friday if one bought a 5800 CE and PE, but wont if one bought a 5700 CE and PE.

I think its critical to pick the right ITM or OFM calls/put for choosing a hedging strategy.

Any thoughts ?

Thanks,
TJ

Dear TJ,

Its not that I do not believe in hedging. I do believe in hedging, it all depends on intraday volatility, in case I am taking intraday trade.

If I am getting a clear trade up or down then, will prefer not to hedge my position, yes, will maintain SL. In case I am carrying my position next day, will do so after hedging only.

Nowadays, market being volatile, its important to hedge once postion while taking any trade.

Regards

 

[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:

Resistance at 5770
Support at 5530

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 check strategy posted in 1st post of this thread.

Regards