Selling Options

[PSVR]

Hi All,

Recently I have studied a book on options trading and the author recommends
selling options. I found that this is very costly activity. I need to have lot of money in my account to sell an option. For a paltry sum of Rs. 300 odd rupees, I had to lock some Rs. 20000(twenty thousand) for a period of 10 days.

Obviously I sold OTM options far above current levels of NIFTY to be on safe side.

Am I playing it right? Does it require that much of margin? Is there any way to sell options with less margin? Please let me know.

Thanks in advance.
PSVR

 

[moti]

no my dear their is not another way and also the loss in unlimited to selling the naked option

 

[molthi]

Hi All,

Recently I have studied a book on options trading and the author recommends
selling options. I found that this is very costly activity. I need to have lot of money in my account to sell an option. For a paltry sum of Rs. 300 odd rupees, I had to lock some Rs. 20000(twenty thousand) for a period of 10 days.

Obviously I sold OTM options far above current levels of NIFTY to be on safe side.

Am I playing it right? Does it require that much of margin? Is there any way to sell options with less margin? Please let me know.

Thanks in advance.
PSVR

Different Option strategies are applied in different environment of mkt. You have to play very cautiously and keep on studying simultaneously. Normally Option education takes more time to filter in compared to simple stock trading.
We can guess that in the options trading where there are chances of making multiple times return , some of the best brains participate.
Moreover 90% of the option traders lose.
Safest strategy for a newbie may be of selling calls against his stock holdings of optionable stocks, namely COVERED CALL. Where even if you are wrong risk is limited.

 

[DanPickUp]

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[linkon7]

Different Option strategies are applied in different environment of mkt. You have to play very cautiously and keep on studying simultaneously. Normally Option education takes more time to filter in compared to simple stock trading.
We can guess that in the options trading where there are chances of making multiple times return , some of the best brains participate.
Moreover 90% of the option traders lose.
Safest strategy for a newbie may be of selling calls against his stock holdings of optionable stocks, namely COVERED CALL. Where even if you are wrong risk is limited.

90% of all options expire worthless...

Its the option buyers, who target unlimited profit, with limited risk who end up paying the options sellers, who has unlimited risk with limited profit....

It does not mean that option selling is more profitable. It just means option sellers have time as their friend and losses are never unlimited since nifty wont jump to 6000 tomorrow nor will it fall to 3000, losses are never that big as people fear it to be.

When we had a upper circuit post elections... call option writers lost 500-600 points. Some of my friends lost 2 years of profit in that single day. They still write OTM options and make a decent profit every month...

 

[linkon7]

For a paltry sum of Rs. 300 odd rupees, I had to lock some Rs. 20000(twenty thousand) for a period of 10 days.

Obviously I sold OTM options far above current levels of NIFTY to be on safe side.

300 Rs by blocking 20,000 Rs for 10 days works out to 4.5% p.m That's 54% P.A
At this rate u double ur capital in 2 years...wow...!:thumb:

 

[anandy63]

can well conversant member in option trading strategy of our traderji.com share their expertise with low risk for the novice member like me to keep in touch with trading in the market

 

[munde_77]

300 Rs by blocking 20,000 Rs for 10 days works out to 4.5% p.m That's 54% P.A
At this rate u double ur capital in 2 years...wow...!:thumb:

Linkon we have to deduct the brokerage and stt and other expenses from the profit and work out on annual basis

 

[Talon]

You will never get a honest answer for this Q, it's like asking a man, do you cheat on your wife!!!
know it your self
-Talon

 

[DanPickUp]

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