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

[CASPER]

SmartCat As Always No offense Meant ....



ONGC

NIFTY

 

[nara]

SmartCat As Always No offense Meant ....



ONGC

NIFTY

Well, once was good but following on with comedy with the "no offense meant" tag is hardly warranted.

 

[CASPER]

Your Point NOTED Nara .......,

Well, once was good but following on with comedy with the "no offense meant" tag is hardly warranted.

Below was My First Post in This Thread....,

 

[LivetoTrade]

@nara, It was not an offensive post by Casper - but, was surely in good humour.

 

[TraderDude]

@nara, It was not an offensive post by Casper - but, was surely in good humour.

Yes, Casper is a friendly ghost..he will not offend his friends..

 

[screentrader2012]

Dear

Option trading requires high level expertise. You need to be clear about the direction of the market as well as the speed at which it will move toward the direction. Both are important. Avoid trading in options if you are not clear about these two. Better invest

 

[smartcat]

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.

I will almost finalized my future trading plan - a mix of buying and selling. Eg: Buy Nifty Straddle/Strangle, Sell ONGC covered call, Buy Nifty Call, Sell HUL Strangle/Straddle. That way, one trade will be a natural hedge against another trade.

Re: covered calls

Thanks for the heads up on the covered call pitfalls. But I think I have a slight edge here, because I consider myself fairly good at picking up fundamentally sound stocks. I know the difference between Suzlon and HUL, JP Associates and TCS etc.

If you are hoping to collect premium, you are not hoping to make big gains.

This is ONGC we are talking about - a market cap of Rs. 230,000 crore. I don't expect to see ONGC shooting up 2 or 3 times.

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

I think I will tweak the covered call strategy to hold on to atleast some of the stocks. That way I'll get to collect some dividends at the end of year. I will sell only enough number of ONGC stocks to recover the losses. That is, if my call resulted in Rs. 35,000 loss, I will only sell enough shares to take out Rs. 35,000 from the current lot of shares I own.

#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 did what you asked over the weekend. If price of ONGC goes down a lot, then it will pull Nifty down with it. I hope to make some money on the Nifty in that time, and collect premiums too. After crashing down and suddenly shooting up, my Nifty straddle/strangle again hopefully will come to the rescue.

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.

I guess this Option Selling Vs Option Buying argument is a bit like Value Investing (Warren Buffet style) Vs Growth Investing (Peter Lynch style) in stocks. I guess one can make money both ways.

SmartCat As Always No offense Meant ....

hehe! Again, No offence taken!

Well, once was good but following on with comedy with the "no offense meant" tag is hardly warranted.

Don't worry. Chitragupta is maintaining records of his sins! Definitely casper is heading towards Naraka!


My next question on option strategies to the experts (and beginners!) :

HUL doesn't seem to move much. Does selling HUL straddle sound like a good idea? I'll make a payoff diagram and see when the position enters loss making territory on both the put side and call side. At that point, I'll buy (or sell) HUL future to hedge the position.

What are the disadvantages of the above strategy?

 

[TraderRavi]

Well, once was good but following on with comedy with the "no offense meant" tag is hardly warranted.

definitely u sud laugh more ...

 

[intellibitz]

Getting there.. 5450 and above this week is good news for bulls :clapping:

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.

 

[smartcat]

It's a do or die sprint to 5700 levels (breakeven) - 6 more trading sessions to go!