Trading Options with an Initial Capital of 50K

[anant_agrawal]

The reason you made money in herohonda is because price moved against the sold puts.
What would you do if price dropped by 5% against you?
I strongly suggest you concentrate on buying options rather than selling since one bad trade can wipe out all the profit made from time decay.

i agree with u dear friend......
but 5 % DOWNSIDE is not a joke.....
we can get out any where according to our loss taking capabilty....

and bro..following is the reason thats why i am asking for technical analysis...because suppose if some analyst recommend me to buy some stock..and the price of stock is not increasing and also stay at the recommended price (that means at least not decreasing from recommnded price)
...in this case i can get the benefit of less volatility of stock and time-value...


and bro remember "winning and losing is the part of the game"

and most important thing brother suppose i bought 1 lot of HEROHONDA or any other stock so that the 5 % drop can make huge loss to my capital...
on the other hand call writing will at least less harmfull in this case....


bro actully i am an aggressive trader....

although i too agree with some drawbacks of options writing....such as

1 the options writing blocks the margin as according to its underlying stock....

2 high risk....and limited profits....

3 survillance on market is must required ...

bro i actually dont believe in analysts.....
i iust want the recommondation on the stock about the move of the stock.....
bro if u know the technical analysis nd give me the idea about the trend then plz do contact to me....

bro i would like an reply from u upon my this post

thanks:thumb:

 

[Taurus1]

and most important thing brother suppose i bought 1 lot of HEROHONDA or any other stock so that the 5 % drop can make huge loss to my capital...
on the other hand call writing will at least less harmfull in this case....

Here you are assuming that you know the direction, which may not always be correct.
The criteria is always the amount of trade risk involved.

 

[columbus]

In case of INTRADAY options ,the maximum loss is, HIGH-LOW attained
by particular option.

In today's case it was roughly 1/3 of premium paid. That means in Worst
case you can regain 2/3 of premium.I have taken options in which you have
max. volatility.May not be same for all options.

 

[PGDIMES]

Hi Anant,

Giving a few examples of options debacle where you might had to pay a fortune for writing options:

1) 18th May 2009: All the call option writers will remember this day... :rofl: Even straddles or strangles couldn't save them from the vagary of the market...

2) Quarterly Result days of TCS for the last 5 qtrs except the last one: Same result as above

3) Quarterly Result days of Tata Motors for the last 4 qtrs: Last time the put writers have taken the oath to not do it again... Previously call writers took the same oath...

4) Quarterly Result days of SBIN for the last 4 qtrs: Same result as above

5) Infosys (any qtr): Professional writers have field days on the result days...

There are many more examples... Bottomline is - Don't write options when the big events are coming (whatever eccentric the IV may be... better try futures trading and don't keep your positions open overnight on those days)...

Don't write naked options... Hedge your risk within permissible limits... Always keep some leeway to mend your positions in case they become unfavourable i.e. have your plans A,B,C etc ready while trading options...

 

[Dev Mookerji]

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