The Giant thread of options

[beginner_av]

Great stuff to download

The markets are very volatile these days and no options strategy seems to be working for me...

BTW I always look for credit strategies.

Subrata Bera.

Hey Subrata, I think most of you have missed this gem. So I changed the heading of this thread.


http://www.euronext.com/fic/000/010/729/107297.pdf

read and see which high volatility strategy suits you. As a hint, try spreads or strangles (covered) so that when volatility decreases and options expire this month, you will have cheaper stuff next month. Do it only if you know what to do with cheaper stuff next month

bye

 

[beginner_av]

beginner_av,
Opening new vista of knowledge,CC.
Thks.

Asish

Thanks ashish. I must also thank aca_trader who made this thread really interesting. Thanks.

 

[tulika]

Re: Great stuff to download

http://www.euronext.com/fic/000/010/729/107297.pdf

read and see which high volatility strategy suits you. As a hint, try spreads or strangles (covered) so that when volatility decreases and options expire this month, you will have cheaper stuff next month. Do it only if you know what to do with cheaper stuff next month


Thanks a lot for providing that link.. actually i was lookin for details on ratio spreads and now got em in that link provided by you . once again i tender my thanx to you
regards
tulika

 

[aca_trader]

Respecting your point of view, my reply remains the same. And yes, Using stock margin to write puts seems the most ridiculous strategy. When market moves sharply against you, as it has been seen repeatedly recently, you get double whammy. There is no rational in this strategy whoever is practicing it. But if he seems to do it to his satisfaction, great for him.

There is no double whammy as an investor the blue chips are there to be hold in corrections like a covered call writer will do.

And yes, on one hand you talk about margin, and on other hand you talk about risk and return. if you are SO CONFIDENT of bull market...as well as money outflow...and return TOGETHER, why bother about discussing writing puts?See my earlier post to praveen's reply as to why not to write puts, but buy calls if you are so confident of bull markets.

Even in bull markets, the stock may not move in the desired direction during less than one month period and roll over of calls as unlike roll over of puts are not remunerative. Hence, in absence of long term options like Leaps coupled with illquid farther month contracts, to use the strategy of buying calls fails to give consistent profit.

My bought calls give more than 50 to 250% returns (now if any of you will ask for contract notes, dont look further, check gujambcem 110CA and TISCO 440 CA over the last 18 days) in the bull phase...so lets not talk about 5% return etc.

I did not talk about returns like 5% per month for comparing them with yours. Even my own long call picks (and I am a newbie in Options) have given 50% returns in just one day but I still believe that it was application of TA and not options strategies which helped me in such trades.

I talked of returns only in reply to your statement that such person has no option trading knowledge. I wanted to bring attention to the point that one does not survive for long term with consistent returns in market without knowledge.

Looking forward to more words of wisdom from you on different aspects of option trading.

Best Regards,
--Ashish

 

[beginner_av]

I still believe that it was application of TA and not options strategies which helped me in such trades.

You have summed up the most important aspect of successful options trading. Technicals should not only include price and volume, but TIME too, as it is a wasting asset.

Regards

 

[subratabera]

Thankyou very much @beginner_av for providing the link again. But I've already downloaded the book from your earlier post and also started reading it. Well here are two books which, I think, can be useful for new options traders (like me ...

Options Demystified. A Self - Teaching Guide

The Option Trader Handbook: Strategies and Trade Adjustments

Thankyou.

Subrata Bera.

 

[uasish]

So much to Learn Time is a constraint for me .

 

[kkseal]

Thanks Ashish. You've provided confirmation for an idea i had been mulling for long. There are stocks i hold for long and was looking for a way to increase my roi on them. I had come across this covered call strategy but selling calls in a bull market when i'm expecting my stock (the underlying) to move up did not appeal to me; selling puts instead seemed a much more sensible policy (specially since the margin for the same is provided by the underlying stock i hold). I could however revert to selling calls everytime i anticipate a correction. Since i'm willing to hold the stock for long term anyway, my risk is limited to the Puts & Calls i write - is that correct? (I would however like to know the magnitude of this risk more specifically. What's the worse that can happen in such a scenario?)

I also feel Options are great instruments for riding the countertrend (at least in the current bull market).

However my foray into options as of now is experimental (& have limited myself to BUYING Puts & Calls). So thanks AV for starting this thread. Hope to learn a few things from your knowledge & experience. The enlightened debate between you & Ashish has livened up things.

Warm regards to you both.

Cheers
Kalyan.

 

[kkseal]

Technicals should not only include price and volume, but TIME too, as it is a wasting asset.

Very interesting and well said.

That makes volatility breakouts the best breakouts to trade - right?

Regards,
Kalyan.

 

[soody]

Dont read too much into Options theory. If u know the basics Practice it regularly in the market, correct ur mistakes and u can make regular profits.