Staring At Massive MTM Losses - What Should I do Now?

[Smart_trade]

Nifty March 5400 Call quoting below 65 now...hope you got out of some positions at a better price.....or still holding like a brave soldier ?

Smart_trade

 

[smartcat]

Nifty March 5400 Call quoting below 65 now...hope you got out of some positions at a better price.....or still holding like a brave soldier ?

Smart_trade

I have given up on it! If I write an email to NSE, will they offer me a refund on the call option I purchased?

Anyway, I'm considering a few option writing strategies which I'd like to try out on a small scale this month - with stop losses in place. That way, I'm hoping my overall losses (since december) goes down a bit.

 

[Taurus1]

Anyway, I'm considering a few option writing strategies which I'd like to try out on a small scale this month - with stop losses in place. That way, I'm hoping my overall losses (since december) goes down a bit.

There is no natural edge in options, either on the buy side or sell side.
If there was, all option writers would be billionaires and nobody would work for a living. Options have disadvantages but their advantages balance it out.
Covered calls are the biggest scam touted, unless you know exatly what you are doing you can lose bigtime if the underlying falls.

 

[comm4300]

There is no natural edge in options, either on the buy side or sell side.
If there was, all option writers would be billionaires and nobody would work for a living. Options have disadvantages but their advantages balance it out.
Covered calls are the biggest scam touted, unless you know exatly what you are doing you can lose bigtime if the underlying falls.

totally agree. :thumb:

combined with an average Technical Analysis skill, one can use option [writing]
to make a decent income. small and steady [n boring].

Options writing/buying cannot be taken as a standalone technique to earn money. TA is required to know what strategy to employ and how much to risk.

 

[sanjosedesi]

But what exactly do I have to do if ONGC shoots up?

Sell all 1000 shares to cancel out the profits earned from shares with losses on the calls? And then buy 1000 more shares for the next month?

...

Mods: Let me know if it is not OK to ask my newbie questions on this particular thread.

you are trying to serve multiple objectives ... Collect the premium, collect the dividend, and both of these in a risk free manner Real life does not let you optimize things so well.

If you are hoping to collect premium, you are not hoping to make big gains. If big gains come, you have to choose. Just like any other trade, it is a question of trying to board a running train if you are not clear in your objective.

If you want to collect premium, you should be willing to sell the stock if warranted. There goes the dividend.

If you love to hold the stock, you need to watch the trend and dump the option if you see the trend going against you.

#1. Take a spreadsheet, work out scenarios ... Price goes way up, price goes way down, goes up than down, and so on. See what makes sense.
#2. how much can the stock go up or down. Look at the charts of last 5 years for ongc. Look at its monthly range.

I am not an options expert or even trade options ... this is just theoretical.

2nd Q ... you opened the thread, did not you? I bet you can ask any questions which do not violate the rules / decorum of the forum.

 

[TheDreamer]

There is no natural edge in options, either on the buy side or sell side.
If there was, all option writers would be billionaires and nobody would work for a living. Options have disadvantages but their advantages balance it out.
Covered calls are the biggest scam touted, unless you know exatly what you are doing you can lose bigtime if the underlying falls.

beg to differ... option sellers always have advantages over option buyers... this is one fin. instrument where it pays to be patient...


how do you know whether the avg. option seller is richer than the avg. option buyer or not?

I think SC is a long term investor who wants to get full leverage out of the stocks remaining dormant in his DP.

 

[Smart_trade]

Option buyers and sellers both have advantages and handicaps working for them. It is a myth that only option sellers can make money. This is true in practice because option sellers are high netwoth indivisuals and financial institutions who understand the game better than a retail investor who generally is a buyer of options.

Option buying can be very profitable if the option buyers understand that they have a handicap of eroding premiums because of time decay. This handicap can be overcome by the help of strong trends in favour of buyer. So buy options when the trend starts, get out when it halts....dont stay put buying the option and hoping that the trend will start some day.

For people more interested on options buying , read Bernie Shaeffers "Options Advisor" book, which is one of the classics on options along with few books by Lawrence McMillan.....There is also a site/newsletter by name " Options Advisor by the same auther.

Options buying can be used very intelligently to make huge gains by identifying sudden increase in the options activity. Read Anthony ( Tony) Saliba on how he reads this option activity.

I mostlly trade futures...but sometimes try my hand in options too.....so thought of sharing my thoughts.

Smart_trade

 

[nara]

Nifty is still above 5300. It would be interesting to see which direction it takes on Monday. If it goes down, I should keep one undi and one bundi ready. That will be my uniform for times to come.

 

[DanPickUp]

Option buyers and sellers both have advantages and handicaps working for them. It is a myth that only option sellers can make money. This is true in practice because option sellers are high netwoth indivisuals and financial institutions who understand the game better than a retail investor who generally is a buyer of options.

Option buying can be very profitable if the option buyers understand that they have a handicap of eroding premiums because of time decay. This handicap can be overcome by the help of strong trends in favour of buyer. So buy options when the trend starts, get out when it halts....dont stay put buying the option and hoping that the trend will start some day.

For people more interested on options buying , read Bernie Shaeffers "Options Advisor" book, which is one of the classics on options along with few books by Lawrence McMillan.....There is also a site/newsletter by name " Options Advisor by the same auther.

Options buying can be used very intelligently to make huge gains by identifying sudden increase in the options activity. Read Anthony ( Tony) Saliba on how he reads this option activity.

I mostlly trade futures...but sometimes try my hand in options too.....so thought of sharing my thoughts.

Smart_trade

ST

Thanks to present it as an Indian openly in an Indian forum.

As an outsider I not could write such words here.

As it is now spoken out I can add my two cents that covered calls or puts are in no way a scam.

If traded the right ways, this kind of option strategy is quit lucrative. But as many time as some thing is damned as bad and useless, it was not defined when it is useless.

So, why do the members which damned this strategy not explain why they damned it?

I am clear about the next comment, but I did not dame this strategy.

DanPickUp

 

[intellibitz]

Nifty close above 5450 the coming week is the bare minimum for the bull run to continue. else the pigs are going to whiplash both the bulls & the bears.

Nifty is still above 5300. It would be interesting to see which direction it takes on Monday. If it goes down, I should keep one undi and one bundi ready. That will be my uniform for times to come.