Trading options near expiry

[onlinegtrash]

if you can please post an example of a trade you took or thought of taking we could look at it from risk management angle.

thanks.

There is no big strategy, I simply buy naked options around support resistance based on bearish or bullish bias... some time it works and some times not... but the times I over leverage and took overnight positions just before expiry it has created big losses time to time...

 

[onlinegtrash]

@Somatung : "sir" :lol:
...
the reason i was intrigued with this thread is because, i had read a book named "trading options expiry" a while back and the ideas presented therein were worth a look.
....

I'd rather be involved in straddle, strangle than go naked. esp on the day of expiry.

let's see what other experts have to say on this...:thumb:

are you referring to Jeff Augen's book: "Trading options at expiry".

The book talks much about ratio spreads on expiry... I think its a good place to start with.
Author calculates the return % from the position value at start to position value at expiry...
So the trades seem to return 30-80% of position value...

In our country, brokers block huge margin when you go short and long on options, instead of blocking only the spread value...
so the actual return on capital blocked will not be anything near 30%...
but its a good start... instead of blindly making bets on expiry!

 

[onlinegtrash]

is there any spread-trader friendly brokers?
i.e brokers who block margin based on spread value instead of blocking huge amount when you short options?

 

[abcpankaj]

is there any spread-trader friendly brokers?
i.e brokers who block margin based on spread value instead of blocking huge amount when you short options?

I have also been looking for such broker since many months , but the search has been futile till now.

One workaround has been to trade option spreads in US markets where margins are low , but could find a way to do it from India (you can try checking with interactive broker).

If you find solution to any of these , please let me know.

 

[comm4300]

are you referring to Jeff Augen's book: "Trading options at expiry".

The book talks much about ratio spreads on expiry... I think its a good place to start with.
Author calculates the return % from the position value at start to position value at expiry...
So the trades seem to return 30-80% of position value...

In our country, brokers block huge margin when you go short and long on options, instead of blocking only the spread value...
so the actual return on capital blocked will not be anything near 30%...
but its a good start... instead of blindly making bets on expiry!

yes. i was referring to the same book.

agreed about margin being blocked. But look at it from the last week of expiry prespective - margin is being blocked only for 3-4 days. and the potential to earn is quite good as compared to going naked.

 

[onlinegtrash]

so.. i plotted my equity in percentage and daily return in percentage with python...

83rd day is the fateful day... i have been talking a day before expiry...
and 84th I gambled back and got a daily returns of 40% on expiry day...

but something is terribly wrong with this kind of trading...
after all ups and downs... my final equity is just 7 % up from day 61.

some more interesting notes:
my account nearly doubled with 80% returns within just 5 days from 61... on 66th day
day 77-82 my winning streak that go me drunk with over confidence... day 83: pay back day!
and account doubled on 82 day... but still gave back all the money... with just 7% at month end...

 

[onlinegtrash]

Another super green day... the biggest win so far!