PUT and CALL options
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@Aditya
If you just want to take a trade, then all the math is not needed and you go for the itm options, as delta is higher.
That at least is posted and told in most Indian forums.
But this is just the pure gambling way and in most cases a way with market orders and no limit orders, as it is done mostly on the emotional side and on some TA.
There is a far better way to gamble and that is doing it through tape reading. I do not know many who gamble that way, but if you want to gamble, then that is one of the better ways to do so. And by the way: I do not say the best, but a better way.
I fully support Ashus view and comment about the subject. Professinal option matrixes give you the edge to test and to see at glance what the option greek numbers are. That does not take any time to analyze when you do it all the time. Could post more on that subject, but most of you do any way not use such matrixes, so will stop here on the matrix subject.
For positional trading, it is quit important to work with formulas, math and very defined prices. It is not so difficult to predict if vola will go up or down. And at the moment it comes to real trading, means placing orders in the market: You most of the time will not get the highest vola or the lowest vola price with your options as you most of the time not will get the absolute top or low with your future prices. That is a fact and nothing to think much about. (Bid and ask and some where in between you place your orders / common sense)
So finally: If you want to jump in to an option trade just like that, that is yours and most others option traders choice, as most have no deeper knowledge and understanding how to do it in other ways. It is what most option traders do with the hope to nail the trade and make a quick gain. Nothing else with no plan behind it. Pure emotional greed and hope built on TA patterns.
May I ask you: How many have you seen trading like that and standing the fight for a long time? How many post here there trading diary and how many of them are successfully fighting the market with that behavior?
Take care / DanPickUp
If you just want to take a trade, then all the math is not needed and you go for the itm options, as delta is higher.
That at least is posted and told in most Indian forums.
But this is just the pure gambling way and in most cases a way with market orders and no limit orders, as it is done mostly on the emotional side and on some TA.
There is a far better way to gamble and that is doing it through tape reading. I do not know many who gamble that way, but if you want to gamble, then that is one of the better ways to do so. And by the way: I do not say the best, but a better way.
I fully support Ashus view and comment about the subject. Professinal option matrixes give you the edge to test and to see at glance what the option greek numbers are. That does not take any time to analyze when you do it all the time. Could post more on that subject, but most of you do any way not use such matrixes, so will stop here on the matrix subject.
For positional trading, it is quit important to work with formulas, math and very defined prices. It is not so difficult to predict if vola will go up or down. And at the moment it comes to real trading, means placing orders in the market: You most of the time will not get the highest vola or the lowest vola price with your options as you most of the time not will get the absolute top or low with your future prices. That is a fact and nothing to think much about. (Bid and ask and some where in between you place your orders / common sense)
So finally: If you want to jump in to an option trade just like that, that is yours and most others option traders choice, as most have no deeper knowledge and understanding how to do it in other ways. It is what most option traders do with the hope to nail the trade and make a quick gain. Nothing else with no plan behind it. Pure emotional greed and hope built on TA patterns.
May I ask you: How many have you seen trading like that and standing the fight for a long time? How many post here there trading diary and how many of them are successfully fighting the market with that behavior?
Take care / DanPickUp
Well the irony here is that trading on option strategy eats up a lot of capital as writing option requires hell of a margin in Indian exchanges, so its game of strong hands here and that's why retail traders are shy of it and in turn liquidity in options is very low, but still opportunities are there and I've seen professionals traders doing it in a glance i.e it takes same time drawing a trend line and getting all the greeks in your software so no big deal, and just a glance at the option table to know what to buy and what to sell, and the best part you know your max profit and loss in advance (no stop loss thing here), so you just execute strategy and sit back and relax as market expiry will take care of everything, no need of tracking every tick for 6 and a half hour(hourly market glancing is enough). I don't trade options right now but have done it and have seen how professionals are doing it in real time.
So this is very valuable information I`m giving for free.
1) Trend of IV(if its going up ur bought options value increases and vice versa)Get out if its going against you and try and time the range (12-18 is range for past 1 year now)
2) See the delta and set SL accordingly(so if you sold a delta 0.5 call then if market moves 10 points this thing moves 4-6 points so keep SL like this based on ur view of market.)Trailing SL similarly.
3) Gamma will help in positional trades when IV increases the gamma will move the delta fast and vice versa.So SL of (bullet point 2) will be for a .5 delta call be around 6 points because the delta changes w.r.t underlying and basis gamma.
4) Lastly theta will always be ur cushion if you get things wrong so a .5 delta call will also lose value if 10 point move does not come.If it comes(10 point move in ur direction) delta and theta will help you.
1) Trend of IV(if its going up ur bought options value increases and vice versa)Get out if its going against you and try and time the range (12-18 is range for past 1 year now)
2) See the delta and set SL accordingly(so if you sold a delta 0.5 call then if market moves 10 points this thing moves 4-6 points so keep SL like this based on ur view of market.)Trailing SL similarly.
3) Gamma will help in positional trades when IV increases the gamma will move the delta fast and vice versa.So SL of (bullet point 2) will be for a .5 delta call be around 6 points because the delta changes w.r.t underlying and basis gamma.
4) Lastly theta will always be ur cushion if you get things wrong so a .5 delta call will also lose value if 10 point move does not come.If it comes(10 point move in ur direction) delta and theta will help you.
Last edited:
May.27 MAY-series Day.21 Nifty=6083 (99)
The Expiry zone has condensed further to (6000~6100) from (5900~6100) as EXPIRY draws near.
Total strikes in CALL window: 4+4(penny)[Yesterday:5+4 (penny)]
Total strikes in PUT window : 3+6(penny)[Yesterday:5+4 (penny)]
Total-OI in this Zone---(6000~6100)
CALL side: 14 M [Yesterday: 15 M]
PUT side : 13 M [Yesterday: 9 M]
(Yesterday's figures are from database, it sometimes may vary from yesterday's POST,since number of strikes are different)
Yellow colour indicates OI-Today more than +0.5M.
Grey colour indicates OI-Today less than -0.5M.
Current position is indicated.
The Expiry zone has condensed further to (6000~6100) from (5900~6100) as EXPIRY draws near.
Total strikes in CALL window: 4+4(penny)[Yesterday:5+4 (penny)]
Total strikes in PUT window : 3+6(penny)[Yesterday:5+4 (penny)]
Total-OI in this Zone---(6000~6100)
CALL side: 14 M [Yesterday: 15 M]
PUT side : 13 M [Yesterday: 9 M]
(Yesterday's figures are from database, it sometimes may vary from yesterday's POST,since number of strikes are different)
Yellow colour indicates OI-Today more than +0.5M.
Grey colour indicates OI-Today less than -0.5M.
Current position is indicated.
Last edited:
Re: May.24 MAY-series Day.20 Nifty=5984 (17)
Weekend is over and a lot was posted about that question. Lets put it down to what it is:
Volaitily skew. Ever heard about that? Had posted about it in the past in some other threads.
Here some links about it as it takes to much time for me to explain it again in detail:
http://www.investopedia.com/terms/v/volatility-skew.asp
http://condoroptions.com/2012/02/24/the-problem-with-volatility-skew-and-why-you-should-care/
http://www.optionistics.com/volatility-skew
Some markets have more or less always a negative volatility skew (like the S&P 500) and some others have more or less always a positiv volatility skew (like the grains).
Means: If S&P 500 is upward trending (negative vola skew), the otm and most of the time atm calls are cheaper than the otm or atm puts. That adapts to Nifty.
On the other hand: If the grains are downward trending (positive vola skew), the otm and most of the time atm puts are cheaper than the otm or atm calls.
Take care / DanPickUp
Weekend is over and a lot was posted about that question. Lets put it down to what it is:
Volaitily skew. Ever heard about that? Had posted about it in the past in some other threads.
Here some links about it as it takes to much time for me to explain it again in detail:
http://www.investopedia.com/terms/v/volatility-skew.asp
http://condoroptions.com/2012/02/24/the-problem-with-volatility-skew-and-why-you-should-care/
http://www.optionistics.com/volatility-skew
Some markets have more or less always a negative volatility skew (like the S&P 500) and some others have more or less always a positiv volatility skew (like the grains).
Means: If S&P 500 is upward trending (negative vola skew), the otm and most of the time atm calls are cheaper than the otm or atm puts. That adapts to Nifty.
On the other hand: If the grains are downward trending (positive vola skew), the otm and most of the time atm puts are cheaper than the otm or atm calls.
Take care / DanPickUp
May.28 MAY-series Day.22 Nifty=6111 (28)
The Expiry zone has confined just one strike 6100 from (6000~6100).
Total strikes in CALL window: 4+4(penny)[Yesterday:4+4 (penny)]
Total strikes in PUT window : 2+7(penny)[Yesterday:3+6 (penny)]
Total-OI in this Zone---(6100)
CALL side: 7 M [Yesterday: 8.8 M]
PUT side : 5.5 M [Yesterday: 4.6 M]
(Yesterday's figures are from database, it sometimes may vary from yesterday's POST,since number of strikes are different)
Yellow colour indicates OI-Today more than +0.5M.
Grey colour indicates OI-Today less than -0.5M.
Current position is indicated.
I think CALLs are over priced.
The Expiry zone has confined just one strike 6100 from (6000~6100).
Total strikes in CALL window: 4+4(penny)[Yesterday:4+4 (penny)]
Total strikes in PUT window : 2+7(penny)[Yesterday:3+6 (penny)]
Total-OI in this Zone---(6100)
CALL side: 7 M [Yesterday: 8.8 M]
PUT side : 5.5 M [Yesterday: 4.6 M]
(Yesterday's figures are from database, it sometimes may vary from yesterday's POST,since number of strikes are different)
Yellow colour indicates OI-Today more than +0.5M.
Grey colour indicates OI-Today less than -0.5M.
Current position is indicated.
I think CALLs are over priced.
@Gmt
Short straddle: Short one put and short one call from the same strike level with the same expiration = Short straddle.
Ex: Short one 6100 call and short one 6100 put which expire both in May.
Short strangle: Short one put and short one call from different strike levels with the same expiration = Short strangle.
Ex: Short one 6100 call and short one 6000 put which expire both in May.
How to convert from short straddle into short strangle?
If market moves against the put side: Buy back your sold put and sell a put one strike level further out.
Ex: Short one 6100 call and short one 6100 put which expire both in May. Now market moves against your put side, as it starts to drop. Buy back this 6100 put and sell the 6000 put with the same expiration day.
Result: You are now short one 6100 call and short one 6000 put with the same expiration day = Short strangle.
If you want to have a bigger range in your strangle, use an other strike level like 5900 or 5800. What ever you like or makes sense to you.
Take care and good trading / DanPickUp
Short straddle: Short one put and short one call from the same strike level with the same expiration = Short straddle.
Ex: Short one 6100 call and short one 6100 put which expire both in May.
Short strangle: Short one put and short one call from different strike levels with the same expiration = Short strangle.
Ex: Short one 6100 call and short one 6000 put which expire both in May.
How to convert from short straddle into short strangle?
If market moves against the put side: Buy back your sold put and sell a put one strike level further out.
Ex: Short one 6100 call and short one 6100 put which expire both in May. Now market moves against your put side, as it starts to drop. Buy back this 6100 put and sell the 6000 put with the same expiration day.
Result: You are now short one 6100 call and short one 6000 put with the same expiration day = Short strangle.
If you want to have a bigger range in your strangle, use an other strike level like 5900 or 5800. What ever you like or makes sense to you.
Take care and good trading / DanPickUp
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