Picking up nickels in front of steamroller!!

[cool_kk]

Hi JV,

I tried one order with this strategy.

Well I am crossing my fingers as everyone says selling is risky.
Hope it goes well.

I haven't done my study for stoploss and limit order.
I end up calling icici to understand how to place the limit/stoploss order.

To my surprise: In FNO icici doesn't provide facility GTD(good till date option).

I need to place daily stop loss and limit order.

my trade is for August:
I sold 5500 CE@ 58
I sold 4600 PE@28

I added these two and put my stop loss @ 86.
I don't understand much about limit price, I put 95.
Is it ok for this trade or should I increase or decrease it.

Also my stop loss price of 86 got rejected in 4600PE@28.

Error:
*"The order price is out of the days price range--The order price is out of the days price range"

Is it normal or icici broker thingy.

Any suggestions welcomed. Also jv I will need your help in closing this trade.
Whatever profit/loss, I would like to limit it.

I assume, If I put daily stoploss and limit order, I will be safe.
Please correct if I am wrong.

Thanks
cool_kk

 

[cool_kk]

Hi JV,

I tried one order with this strategy.

Well I am crossing my fingers as everyone says selling is risky.
Hope it goes well.

I haven't done my study for stoploss and limit order.
I end up calling icici to understand how to place the limit/stoploss order.

To my surprise: In FNO icici doesn't provide facility GTD(good till date option).

I need to place daily stop loss and limit order.

my trade is for August:
I sold 5500 CE@ 58
I sold 4600 PE@28

I added these two and put my stop loss @ 86.
I don't understand much about limit price, I put 95.
Is it ok for this trade or should I increase or decrease it.

Also my stop loss price of 86 got rejected in 4600PE@28.

Error:
*"The order price is out of the days price range--The order price is out of the days price range"

Is it normal or icici broker thingy.

Any suggestions welcomed. Also jv I will need your help in closing this trade.
Whatever profit/loss, I would like to limit it.

I assume, If I put daily stoploss and limit order, I will be safe.
Please correct if I am wrong.

Thanks
cool_kk

Vow, premium starting going up to 61


icici show trigger price @ 4650


NIFTY-26-Aug-2010-4600-PE Sell 50 0 0 0 4,650.00 28.50 Add Margin
Square Off
16,100.00 0.00 0 %


icici show trigger price @ 5449

It means by order will auto trigger at this price ? If so why is it so ?

OPT-NIFTY-26-Aug-2010-5500-CE Sell 50 50 0 0 5,449.10 61.10 Add Margin
19,250.00 0.00 0 %




Thanks

 

[rrmhatre72]

Try to put this way!!

How do you decided the way you drive your vehicle?

With your intuition? or perhaps watching TV!!

To drive you need to understand the how to apply accelerator and brake, need to be able to read and understand road signs/indicator, need to know the traffic density which depends upon on any particular time of the day, whether forecast and still after knowing all things you need to be awaken and vigilant while driving even when you are driving on your daily routine road from your office to home!!

So any trading by watching tv is really bad idea.

Viewing stock chart is not that difficult.

Here I view the upper and lower band the market.

I have used 2 years weekly chart with Bollinger Bands. Which gives decent idea of upper and lower band of possible market movement in coming weeks.

You can view the chart here http://www.icharts.in/charts.html.

Too good example JVB.
Appreciate if you can share some technical basics with practical examples as above. May be series of 8-10 write ups....

 

[rrmhatre72]

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)

Hi JVB,

Today 5500CE is @18.5 & 4800PE is at 7.35. Net is 25.85. in profit now...
today Marekt moved up. I feel this position will not hit stop loss of 30 till Market cross 5350-60.
If market moves up further tomorrow then do you advice to square of 5500CE & sell 5600CE call?

Also advice if this is right time to go for next month's pair?
e.g Aug 5600CE @38 & 4700PE @31 Net will be Rs69-5brokrage = 64.

 

[sadiq]

deleted.

thanks

 

[sadiq]

Deleted
thanks

 

[cool_kk]

Hi JV

no reply ?

thanks

 

[sadiq]

I am not sure that I got what you wanted to convey.

I am not fearless. However, I am not fearful also.

I do not recall if have described by first logic and object behind option selling.

My object behind option selling is to generate a consistent income using my long-term equity portfolio as collateral.

Generally equity shares remain ideal and only appreciation is in increase of market price and negligible dividend, if any.

And share prices do not always go up but goes down as well, and sometime goes down anywhere between 30-90% (depending upon your purchase price and the quality of share).

In such down period , such as during 2008-09, one naturally thinks that what if I had invested the capital in FDR or other safe investment, where returns might be 7-10 % but the capital would not have been washed away.

At that time I started toying with idea to get 12-15% return annually (!!) , and that too consistently as if the capital is invested in FDR/Govt. Bonds.

So after playing with different strategies, option selling suited my trading profile and personality.

Here are few advantages/reasons why I find this strategy suitable for me.

1) Use my equity portfolio as collateral
2) Expected return 24% annually (have changed after seeing the strategy working)
3) 0 loss tolerance, so once the profit a of an expiry is pocketed , I do not use that profit as the cushion for next month. Therefore premium collected in given month is total loss I would bear.
4) More importantly I access stock market during working hours.
5) Not confident on my technical analysis skill
6) Selling far OTM give sufficient time to square off the loosing option (so far, it has happened so)


So, basically I am not trading while option selling, I consider as investment, and I am not dependent upon the profits generated through it. I can stay away from the market if I am not comfortable.....

and these are few reasons why I am not afraid to pick up nickels in front of the steam roller.

However, I have all respect for the market, and despite all my diligence I may come under the steam roller some day. And if so, the mistake would be mine not of the steamroller (the market).

Many do not find option selling exciting as with buying and hitting jackpot and initial months you will find it dull and boring. But once the trade cycle is in motion and premium earned, you may enjoy it.

So, consider whether the strategy is suitable to your personality, needs, emotions.

Good night
JV

What u said above is completely fine to me too also and off course to most of the guys too who wish to make some money in the market.

I wrote some options this month and let me update you by end of the month its outcome if you preferred.
The only thing scaring me is a market crash. which usually happen with out any notice and that is the day we will be under the steam roller . our hedging methods and quick decisions will decide which one is under the steam roller- whether it is head or tail .

Thanks.

 

[jvblogger]

Hi JV

no reply ?

thanks

Sorry I have been busy for last two days, probably tomorrow is also handful day. I do intend to respond once I get into my routine.

Thanks for your patience.

 

[jvblogger]

Too good example JVB.
Appreciate if you can share some technical basics with practical examples as above. May be series of 8-10 write ups....

Too good ?... hmmm!!

I do not consider myself at good at technical analysis. But still have a look at charts daily.

Some chart patterns are easy to understand, some are confusing and difficult. Which I had posted seemed easy to read.

I will enjoy participating in chart-reading as well.