Option trading strategies that i hope will work.

[AW10]

Usually everyone (on tv or by brokers) ask to buy one put and one call .So I used to buy one put and on call and lost most of the time, but now a days I do opposite. Sell one call and sell one put.These strategies are best in range bound market. If volatile avoid. By doing opposite I am gaining overall.

Sell PE 2600 76 Sell CA 2900 64
So the breakeven will be on dowside 2460 and on upside 3040
Usually I make money like this only. Any comments welcome

Short strangle (selling a call and a put) is one of the profitable strategy when mkt is range bound. Like any Short option strategy (selling option), risk management is important otherwise, I have seen people loosing 1 yrs of earning in 1 trade.

So take care of risk managment. For that purpose, u can buy far out of the money option by paying small amount from the premium that u have collected.. It will not reduce the risk to Zero but will certainly limit it.

Happy Trading

 

[detrich]

Dear ppl,

I have read current blogs and I have seen somebody talking abt selling options contract. Well theoritically it is very sound Idea. But it is not feasible. I have tried it. At the start of this thread u will find that I had started by selling a OTM nifty call and buying a put. I was very bearish abt the market. When it turned out that I was correct. What was my total profit??? Mere 9500 and the whole thing in margin costed me arnd 50,000 . Instead of this I could have simply shorted a two Nifty Fut which would have costed way less than this whole circus. So remeber when ur trading in option ur already speculating on thing which has no instric value of itself. Time decay is another factor. So plz do not speculate with options. You will only end up burning your good money.

 

[vaj]

Hi,

Can CE and PE contract can be sold before expiry?
if so then what does:European style Options which may be exercised only on the
expiration date says?
American style Options which may be exercised at any time
prior to their expiration?

Thanks in advance

 

[munde_77]

You are right.

 

[munde_77]

Short strangle (selling a call and a put) is one of the profitable strategy when mkt is range bound. Like any Short option strategy (selling option), risk management is important otherwise, I have seen people loosing 1 yrs of earning in 1 trade.

So take care of risk managment. For that purpose, u can buy far out of the money option by paying small amount from the premium that u have collected.. It will not reduce the risk to Zero but will certainly limit it.

Happy Trading

You are right , managing risk is very important otherwise what we earned in six months or a year we may lose in just a fortnight /month

 

[AW10]

Hi,

Can CE and PE contract can be sold before expiry?
if so then what does:European style Options which may be exercised only on the
expiration date says?
American style Options which may be exercised at any time
prior to their expiration?

Thanks in advance

In Indian market, NIFTY options are european style i.e. they can't be excercised before expiry date. But stock options like option no RIL, Infy stock are american style. For those stock option, the option buyer can excercise them at anytime before the expiry.

In either case, the settlement is done in Cash. That means, even if stock option is excercised, the buyer will get the net profit from after settlement as cash. He/she won't get stocks in DMAT acct.

Happy Trading.

 

[stockBond]

Usually everyone (on tv or by brokers) ask to buy one put and one call .So I used to buy one put and on call and lost most of the time, but now a days I do opposite. Sell one call and sell one put.These strategies are best in range bound market. If volatile avoid. By doing opposite I am gaining overall.

Sell PE 2600 76 Sell CA 2900 64
So the breakeven will be on dowside 2460 and on upside 3040
Usually I make money like this only. Any comments welcome

In that case, initially there will be cash inflow. So do I need money in my a/c for short-sell ? If so how much ?

 

[terminator_123]

In that case, initially there will be cash inflow. So do I need money in my a/c for short-sell ? If so how much ?

You will need to provide margin money when shorting calls or puts... it depends on your broker... i pay around 13k using geojit...
It's better to have a little more ...

 

[stockBond]

You will need to provide margin money when shorting calls or puts... it depends on your broker... i pay around 13k using geojit...
It's better to have a little more ...

Plz explain the process of shorting. How much money should be in a/c before I short-sell in icicidirect? Does that money get blocked until I square-off ?

 

[stockBond]

my current startegy is as follows.


Selling Nifty Call-4100 which will cost me-28700+280(brokerages and taxes etc)=28980+20500(as a safety hatchet incase my margin is eaten up).CMP of this contract is 128. So atleast i expect to get 5000-6000 out of this.Because I am expecting this contract to expire worthless.

Buy a Nifty Put-4000 @ 185.20*50= 9260+150=9410.
Total Investment-28980+9410=38390.
I expect Nifty to go down below 3600 mark.

So let us wait and watch how this pans out. This was carried out day before yesterday.
and it clicked

Plz explain the process of shorting. How much money should be in a/c before I short-sell in icicidirect? Does that money get blocked until I square-off ?