Picking up nickels in front of steamroller!!

[jvblogger]

Hi,

Pls let me know if we can keep option open without squaring off at expiry?
I see you have sold many options but only few were baught back.
I was under impression that every option position should get squared off on last day of contract expiry.

Also let me know what was your investment for above trade? I mean how much capital was blocked at any given point?

1) no need to square off if the options is OTM . means if it expires worthlessly.
2) i think to write all those options need minimum 7 lacks .

Sadiq has explained correctly!!

However, as to the capital, it is not in hard cash but my long term equity holdings are used as collateral.

So, there is two-way appreciation in investment.

 

[p81]

Dear Sir,
What broker you use? and what are the f&O charges. I use Reliance money they charge Rs 100 per lot.

 

[jvblogger]

Dear Sir,
What broker you use? and what are the f&O charges. I use Reliance money they charge Rs 100 per lot.

My broker is Angel, and I am satisfied with the services. So far I have paid Rs. 50-00 per lot, now I have prepaid brokerage charges, which will be in tune with Rs.30-00 per lot. Around 40% savings in brokerage.

Angel use ODIN Diet which is good client-side software. Also the back office of Angel is quite detailed.

 

[jvblogger]

JVblogger,
your thread heading is very apt. From my personal experience when i wrote naked puts in Jan'2008 scarred me very badly. In fact, I also got scarred in May'09 with my naked calls(but only little hurt). In sum, i would say that one event which has probability of 1/1000 if occurs can take away your years of profit. Especially selling puts So, I would say something like covered options is less riskier and can still make you money. I would say that the trick is to make enough money before you get caught in that once in a few years event. Till then, you can happily count your money in bank.

I have titled the thread to keep me aware all the time about what I am doing.

I am sure you have learnt that once in few years event takes of all the profit , from your experience. Kindly share your experience

 

[rrmhatre72]

Sadiq has explained correctly!!

However, as to the capital, it is not in hard cash but my long term equity holdings are used as collateral.

So, there is two-way appreciation in investment.

Hi,

I have account with ICICI & recently I have opened account with RK global also.

ICICI is having margin ~28k/lot & RKG has also indicated ~27k lot.
How much margin is getting blocked in your case?

Anyway I have started with ICICI.
5500CE sold @17.5 & 4800PE sold @19
Considering ICICI brokrage my net position is having premium as 31.5(17.5+19-5brokrage)

 

[p81]

In Reliance the margin for nifty is around 16 thous. On the R k global website it is written 'Minimum 50% cash margin and rest in form of NSE approved shares with 30% hair cut', which i did not like. In reliance u can full fill 100% margin buy collateral shares.

 

[jvblogger]

Hi,

I have account with ICICI & recently I have opened account with RK global also.

ICICI is having margin ~28k/lot & RKG has also indicated ~27k lot.
How much margin is getting blocked in your case?

Anyway I have started with ICICI.
5500CE sold @17.5 & 4800PE sold @19
Considering ICICI brokrage my net position is having premium as 31.5(17.5+19-5brokrage)

Thanks for according the request.

Keep strict stop loss of premium of Rs.30 if any side of the premium reaches around Rs.30-00.

With Angel, around Rs. 16,000-00 is blocked for 1 lot of NIFTY, that too on the collateral of my equity with Angel.

Open position for July'10 series.

Symbol Ser/Exp Strike Qty Premium
NIFTY 29-Jul-10 5600 CE 100 18
NIFTY 29-Jul-10 5500 CE 200 25.55
NIFTY 29-Jul-10 5400 CE 100 34.5
NIFTY 29-Jul-10 4800 PE 400 17.5

I had sold 8 lots of 4200 PE (sold against 54-55-5600 CE) of average Rs.25 in early June, which I have already squared off for Rs.4-00.

July expiry is quite long period so I have not entered so many trades yet.

Further the global market is dwindling slowly, so downside is to be strictly watched and at the same time Indian markets show good strength , so that makes the market completely unpredictable.

 

[rrmhatre72]

Thanks for according the request.

Keep strict stop loss of premium of Rs.30 if any side of the premium reaches around Rs.30-00.

With Angel, around Rs. 16,000-00 is blocked for 1 lot of NIFTY, that too on the collateral of my equity with Angel.

Open position for July'10 series.

Symbol Ser/Exp Strike Qty Premium
NIFTY 29-Jul-10 5600 CE 100 18
NIFTY 29-Jul-10 5500 CE 200 25.55
NIFTY 29-Jul-10 5400 CE 100 34.5
NIFTY 29-Jul-10 4800 PE 400 17.5

I had sold 8 lots of 4200 PE (sold against 54-55-5600 CE) of average Rs.25 in early June, which I have already squared off for Rs.4-00.

July expiry is quite long period so I have not entered so many trades yet.

Further the global market is dwindling slowly, so downside is to be strictly watched and at the same time Indian markets show good strength , so that makes the market completely unpredictable.

Thanks Buddy.
Pls let me be clear on SL concept.
If one side is hit with SL of 30 then only that leg will get squared off & another leg will be naked? OR I will have to sqare of both the legs at a time?

 

[jvblogger]

Thanks Buddy.
Pls let me be clear on SL concept.
If one side is hit with SL of 30 then only that leg will get squared off & another leg will be naked? OR I will have to sqare of both the legs at a time?

I use premium collected from both side as the stop loss meter. As in your case, you have collected total Rs.31 from both side. Therefore, I would square of the loosing option in case if premium of 5500 CE or 4800 CE reaches the level of Rs.30-00. So I have zero-tolerance to loss.

You are quite correct that if I square off one leg then I will have another leg naked. However, in my little experience if one side premium has increased then the premium of the other side would be negligible.

However, considering recent volatility and long period of Jule series, it might be possible that the market may bounce back within few days leaving too many days to expiry, in that case you should considering squaring off both the legs to avoid downside risk.

However, there are other strategy like squaring off the losing position and at same time selling higher OTM option, but I would not suggest to do such thing, right now as you are just beginning with option selling.

Regards,
JV

 

[cool_kk]

Hi,

I have account with ICICI & recently I have opened account with RK global also.

ICICI is having margin ~28k/lot & RKG has also indicated ~27k lot.
How much margin is getting blocked in your case?

Anyway I have started with ICICI.
5500CE sold @17.5 & 4800PE sold @19
Considering ICICI brokrage my net position is having premium as 31.5(17.5+19-5brokrage)

Hello

This thread looks awsome so far,I am novice to selling But liking the idea of it.

I have buy put @ 5600 for july @ 270 and yesterday sold it for 340 so profit of 3k But this trade done was too risky without any coverage so might not be that good. I don't want to wait for more profit so squared off.


Can you explain the trade you mentioned, you need to block 56K/2lot as margin.
I guess margin changes with time, I was checking on icici margin calculator.
total margin for your trade(2lots) coming to be 36k, I may be wrong as I put the rate against quantity
please correct me if I am wrong.

Also, if market is volatile, icici will require you to increase the margin otherwise it will auto square off closing one leg ?

Also if market is range bound you will get--> 31.5 *50=1575 rs profit.

Few questions if any one can explain

1) If premium of one leg goes low in one leg i.e In our favor can we sell off that leg and make more profit keeping other leg open.

2) how does it work at expiry, it means keep your premium and trade will auto close.

3) Suppose if it breaks one leg at stop loss price and bounce back ? what is the max loss we are seeing here.
If we have to look in markert all the time as I am in different time zone can't look all the time.

Thanks
cool kk