I use mainly ITM options for trend following. I am not an expert on various option strategies. The idea of this thread was to look at option basics and understand it in a different way.
So the thread is open to discussions as I said before to all
So the thread is open to discussions as I said before to all
Thanks for a lovely thread. Many famous traders use options for swing trading. However, for doing that, one should be comfortable with trends.
Suppose you are holding a long call. What is your approach if the market falls? Do u use stop losses or do u hedge? I am new to TA and not comfortable taking trend positions. Plus, I am not comfortable following herd mentality.
Just to illustrate, I would not buy an ATM option if the underlying is not in a strong trend. For a VIX of around 22 (guess this is the nifty mean), for near month option, time decay will be around 3-3.5 rs per day at the start of the series (decay will increase as expiry nears). Considering a delta of 0.5, underlying will have to move by at least 7 points daily (more for near term expiry) all the while maintaining volatility to maintain the option value.
Please advise if this is correct thinking.
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