Pattern Trading [Actual trading, not educational]

[rammmeo]

thanks bhai..

i guess this site is similar to screener site like rupeeking

sure, i would go through the site and analyze some of the picks there, whenever i get time.

I liked your crompton call and bought a 120 PE yesterday.
today also it is going down , but the value of PE is going down
any idea why it may be so and how to find out such options ?
i had bought at 3.15 and now its at 2.6. value of underlying has went down by 2 % since i bought it yesterday ..
thanks...

Prashanth

i just saw the stock
i trade in options only so this is wht i think is happening with ur put
yest when u would have bought the put the stock price would have been around the same level as it is just now but as market yest was having sharp cuts all puts where fetching gnd money.
and the other reason is tht expiry is also nearing so there is not much of a volume like nifty . This is basic prob with stocks options tht if stock does not move in desired direction quickly than price decay eats away the money
u can see this DLF also yest 210 put was 10.75 when stock was 210
today stock is 207.5 still 210 put is 8
seniors kindly plz correct me if i am wrong somewhere

 

[prst]

i just saw the stock
i trade in options only so this is wht i think is happening with ur put
yest when u would have bought the put the stock price would have been around the same level as it is just now but as market yest was having sharp cuts all puts where fetching gnd money.
and the other reason is tht expiry is also nearing so there is not much of a volume like nifty . This is basic prob with stocks options tht if stock does not move in desired direction quickly than price decay eats away the money
u can see this DLF also yest 210 put was 10.75 when stock was 210
today stock is 207.5 still 210 put is 8
seniors kindly plz correct me if i am wrong somewhere

yup you are right.

yesterday when i bought, the price was around 126 levels, and now the price is around 122 levels.
I agree with time decay eating away the price, but I didnt expect it to affect it so much in one day.
Initially I thought its issue with In the Money put and out of money put ( depending upon whether strike price being already hit or not).
but after looking at dlf, (where strike price of 210 was already crossed), i think that is not only issue.
expiry being one week away seem to be the main issue.

 

[rammmeo]

yup you are right.

yesterday when i bought, the price was around 126 levels, and now the price is around 122 levels.
I agree with time decay eating away the price, but I didnt expect it to affect it so much in one day.
Initially I thought its issue with In the Money put and out of money put ( depending upon whether strike price being already hit or not).
but after looking at dlf, (where strike price of 210 was already crossed), i think that is not only issue.
expiry being one week away seem to be the main issue.

wht i do tackle this kind of situation is tht
if i feel stock price is gona fell than instead of buying a put i sell a call
i only do this if a week is left in expiry and tht to i am dame sure abt the movement but the prob with this is tht by doing this our profits gets limited and risks gets unlimited
see this with is wht would have happen if u would hv sold the call
crompton 120 call closed yest at 28.2 and right now the price is 6 this way u can bring time decay on our side

 

[prst]

wht i do tackle this kind of situation is tht
if i feel stock price is gona fell than instead of buying a put i sell a call
i only do this if a week is left in expiry and tht to i am dame sure abt the movement but the prob with this is tht by doing this our profits gets limited and risks gets unlimited
see this with is wht would have happen if u would hv sold the call
crompton 120 call closed yest at 28.2 and right now the price is 6 this way u can bring time decay on our side

is there a restriction on selling an option that we should cover it on same day?
how is the risk unlimited?

Update: I just now squared off my Crompton PE at 3.5.
profit of around 350..

 

[rammmeo]

is there a restriction on selling an option that we should cover it on same day?
how is the risk unlimited?

Update: I just now squared off my Crompton PE at 3.5.
profit of around 350..

no i dont know of any such restriction on selling options and u hv not to cover them the same day they r just like normal options

risk i unlimited in the sense tht eg when crompton was 126 call was 28 but if crompton keeps on increasing so do our call keeps increasing . as we have sold the options we will be in loss and as much as stock inc call inc and there is the prob.

anyone having solution to this prob .

gnd for u covered the put as tomo it would dec more as of time decay

 

[sunny_cool]

Prashanth

I personally want to suggest you not to trade in options...Not even in reversing the options to take benefit of time decay....specially in these kind of options where volume is less...

But in this case I think you make a wrong decision in selling the [email protected] should have wait for tomorrow also as Nifty is also not in good mood...lets see wt wil happen tom.

thanks bhai..

i guess this site is similar to screener site like rupeeking

sure, i would go through the site and analyze some of the picks there, whenever i get time.

I liked your crompton call and bought a 120 PE yesterday.
today also it is going down , but the value of PE is going down
any idea why it may be so and how to find out such options ?
i had bought at 3.15 and now its at 2.6. value of underlying has went down by 2 % since i bought it yesterday ..
thanks...

Prashanth

 

[prst]

Prashanth

I personally want to suggest you not to trade in options...Not even in reversing the options to take benefit of time decay....specially in these kind of options where volume is less...

But in this case I think you make a wrong decision in selling the [email protected] should have wait for tomorrow also as Nifty is also not in good mood...lets see wt wil happen tom.

yes bro,
i think i should go for selling futures for a short call or equities for a long call.

 

[sunny_cool]

Follow up on open positions :-

APPOLO TYRE :- Out of position in loss, as script was not moving in our direction & market is in negative direction.

CROMPTON :- Following it with trailing SL.

 

[PGDIMES]

even am against using options.
I guess most of the time we'll be losers, if we use options.
if we should profit in options, then the underlying value should increase/decrease in our direction immediately.
that is a tough call to make.
equities are better for long calls and futures better for short calls.

But the truth is... Options trading is highly mathematical and challenging... There is nothing new in futures trading (at least in stock options... Commodities have different features and I'm not a trader in commodities... But have read somewhere that Bruce Kovner once lost good amount by doing calendar spreads in commodities)... It's actually the same as trading stocks except the leverage part and the short trading (in case you are trading in India)...

Options trading is an universe in itself... 90% of the options remain valueless at expiry... Most of the big traders trade options... Be it Jesse Livermore, Jim Rogers, P.T. Jones or Steve Cohen... Options give more flexibility to complex trading strategies... It's one of the most potent weapons in the hands of the knowledgeable traders... But it's better to know one's weapons before firing them (or there are chances of backfire ).

 

[PGDIMES]

is there a restriction on selling an option that we should cover it on same day?
how is the risk unlimited?

Update: I just now squared off my Crompton PE at 3.5.
profit of around 350..

If you draw a risk(pay-off) profile of naked short options, it's similar to that of short/ long positions in the same stock/stock futures upto the strike price.