RKK, I have burnt myself with stock options (got assigned on short leg of well protected spread trade) when stock moved by 5 to 6%. And by the time, I could excercise my Long leg, it retraced..So have not looked into that since mid of this year.
Mainly due to low liquidity and less choice when it comes to exiting the trade.
but yes, with NR7, they make good sense to trade. I would look at the stocks that has good options liquidity.. maybe few leading companies like RIL, SBI, etc.
While scanning such stocks, check out the average liquidity in last 1 or 2 month, for ATM strike, and other strike atleast 10% away from liquidity.
Main issue with stock options is that when stock moves to new level, the ATM options of yesterday immediately looses the liquidity. So even if u are in profit, u can book it only thru excercising the option and in that case u take a hit on time value. i.e. when we buy the option, we pay the time value + intrinsic value.. and when we excercise then we just get intrinsic value..
Hope this helps.
Happy Trading
Mainly due to low liquidity and less choice when it comes to exiting the trade.
but yes, with NR7, they make good sense to trade. I would look at the stocks that has good options liquidity.. maybe few leading companies like RIL, SBI, etc.
While scanning such stocks, check out the average liquidity in last 1 or 2 month, for ATM strike, and other strike atleast 10% away from liquidity.
Main issue with stock options is that when stock moves to new level, the ATM options of yesterday immediately looses the liquidity. So even if u are in profit, u can book it only thru excercising the option and in that case u take a hit on time value. i.e. when we buy the option, we pay the time value + intrinsic value.. and when we excercise then we just get intrinsic value..
Hope this helps.
Happy Trading
& tiredness 
