Option trading with DanPickUp

[sherbaaz]

Hi Dan,

few months back i asked about how to calculate option price viz a vie index value.

well after that i tried for some time to follow wht you replied, but my work load was so much that i was not able to follow it.

couple of days back i came across an option calculator. for me its good as it is doing what i want it do (dont have much knowledge about option as it is been discuss here)

i downloaded it from here:

http://www.trader-soft.com/software/free-option-calculator.html

it may be very basic for you. but can you please tell me what value should i put in volatility. I am getting approx value of option to the mkt by putting 14% (from where i got this 14 i also dont know it just the value of volatility index(VIX) on the day i tried it). another thing what value should i put in dividend and interest rate?

kindly help.

regds,
S

 

[DanPickUp]

Dear Sherbaaz

By what ever numbers you will use: You never will get a 100% right price. Accept that. Bid ask spread is always there and traded and if you give some room to that fact, then you will be filled with your price. Some times a bit better and some times a bit worse, but in average you will have fair filled.

Volatility: You have to use the actual Standard Volatility from the underlying of the option you want to trade.

Dividend is for stock options. If you trade Nifty options, no dividend. Just 0 and other wise the dividend the stock payed last time or which is expected.

Interest rates are all over the world very low. Just check what the the different National banks pay and if you trade Nifty, you take the number your National bank pays on interest rates.

Good trading / DanPickUp

 

[MANISH_DAMANI]

Dan this not a question -Let me take your question again: If delta is at 0.7 or 0.9, should I sell options here?
My motto to ask on this is how to use greeks to enter trade . lets take real example day before yesterday as per technicals I am expecting bank nifty to give some pull back upto 11500/11643/11719 in few days. already gone upto 11413 in cash. Broader range currently for me for few days is 10782.5- 11700 or above. Downside I am not expecting below 10700. I wanted to made a bull put spread for wider range of say 11700 put I short it opens 570 made a high of 583. say i have write it near 550 and buy a put of 10700 at the rate say near 70. MY total credit is 550-70=480.its made a low of 387.95-49.05=338.9. means profit of rs 141.10 in this spread. fall in OI of 11700 and 10700 put increased with it fall . Means as per O I also my judgement could be right. but how you deal with this option greeks if you where at my place- View attachment 18719 . ?

secondly if market comes upto 10700 or below then what will be my maximum risk, As my both puts in the money loss in put written is compensated by put bought which is in money. And get some time decay benefit on expiry. I am asking you this just for the reason what will happen if it expires near 10700/11000 in both case.

currently profit in spread is approx 221. Long put- 26.95. Short put 292.40.:thumb:

 

[ananths]

Hi Dan,
I tried this spread strategy from the begining of this month. It worked extra ordinarily well so far. I could earn more than 10% already. My direction of the trade was not always right...in such cases I added another leg to the spread as mentioned in our earlier conversations and I could get my desired profit and exited ...I'm enjoying my trade!!!!
I think I succeded beause of patience and disciple in trade...I never traded it when I thought market is not in my favor. I did trade only 5 times out of 14 trading sessions.
One thing I noticed is we should plan before entering a trade...especially the levels..if you think the market is going in other direction we need to add a leg to the spread. For this we need to know the break out levels. Thanks for your support.
Cheers, Ananth

 

[DanPickUp]

http://www.youtube.com/watch?v=cXy9HoWX0es

 

[timepass]

I could earn more than 10% already.

Is that 10% of the capital employed in this trade or 10% of the total trading capital ?

 

[gmt900]

Are there nifty option strategies having good risk reward ratio, which can be tried during the expiry week?

 

[DanPickUp]

Are there nifty option strategies having good risk reward ratio, which can be tried during the expiry week?

Hi Gmt900

Option trading near or at expiration.

One very profitable strategy you could try, if it is ok with your personal risk profile, are call ratio spreads. The strategy must be understood in dept before trading it. So nothing for quick gain hoppers, as this is advanced stuff. Do it with otm options just above the actual underlying price. If you never traded it in your market, do test it first. And as told: First understand the strategy in dept and the risk you will face and only after you feel save, you do it with real money. Be assure about the margin you face in your market, as this strategy involves short legs (One long leg and at least two short legs).

If you expect a huge rise in vola, you could also try the long atm straddle. Here you have no margins, as both legs are long. Your choice.

Good luck and good trading / DanPickUp

 

[DanPickUp]

Hi

As I see that many of you have more and more questions to option strategies and some times struggle to get an idea what should be traded, I highly recommend you to read certain books or at least one high valued book about it.

I have given already some ideas in the past. One more idea I like to post here is the book from George Jabbour and Philip Budwick. The title of the book:

The option trader handbook. Strategies and adjustment.

The book really gives a deep and profound knowledge about option strategy trading. Strategies are explained in every detail with all the analyzing pictures. The explanations will make it easy for you to create any trading plan you need for that certain option strategy. Very, very profound and if you are interested in knowing how to become a pro with option strategies, you must read such books.

Good trading / DanPickUp

By the way: Did you listen to the video presented three posts back? She made the change as a person in the age of over 40 from a normal working woman to a super trader woman. Great story and all my respect to such women. :clapping:

 

[timepass]

Hi

As I see that many of you have more and more questions to option strategies and some times struggle to get an idea what should be traded, I highly recommend you to read certain books or at least one high valued book about it.

I have given already some ideas in the past. One more idea I like to post here is the book from George Jabbour and Philip Budwick. The title of the book:

The option trader handbook. Strategies and adjustment.

The book really gives a deep and profound knowledge about option strategy trading. Strategies are explained in every detail with all the analyzing pictures. The explanations will make it easy for you to create any trading plan you need for that certain option strategy. Very, very profound and if you are interested in knowing how to become a pro with option strategies, you must read such books.

Good trading / DanPickUp

By the way: Did you listen to the video presented three posts back? She made the change as a person in the age of over 40 from a normal working woman to a super trader woman. Great story and all my respect to such women. :clapping:

Dan, this book ??

Here's the link, the link is about 1 foot long, and the book is 255 pgs. Just saw the cover. Maybe will read it at leisure.

http://cdn.preterhuman.net/texts/un...d Trade Adjustments.[2004.Isbn0471567078].pdf