Want to use Options for My Nifty Positional strategy.

[DelhiDude]

Hello Friends,
I have been trading Nifty & Stock Futures for a long time but only Intraday.
Recently developed a Positional Nifty & Bank Nifty Strategy but i am not feeling comfortable to implement it properly in live market largely because of Gap up/Gap down possibility against my position.
As i have always been an intraday trader so i like to be in control of my trades by always putting a Stop Loss for my trade.
I do not have much knowledge about options trading but i guess i can use options as SL for my positional trade in Nifty/Bank Nifty.
Generally my Nifty Futures positional trade will have a SL of 30-60 points SL.
So seniors & options experts please advice:
Can options be used as an effective SL for my Futures positional trade to safeguard me against any Gap up/Gap Down situation which could turn out to be below/above my SL.
I'l try to post My Live NIfty/Bank Nifty trades also but because its a positional strategy so i get only 4-8 trades in a month.
Thanks a lot.

 

[travi]

i guess i can use options as SL

It would not be in the scope of this post to teach you how options work in detail.
1. By SL, I hope you mean hedge.
2. Yes, Options are primarily used to hedge the EQ or Futures positions.
3. For example you are long on a stock future, you may pay a small premium and buy some PE to hedge a big swing. If your long SL hits, you can gain significantly from your PE.
4. The exact amount of PE/CE you need will be determined by the number of lots you have taken in futures or stock value in general.
Many calculators are available online.
5. FYI, Options decay over time, that means unlike stock or futures, they loose value over time. You need to learn max about this.
6. Even PE/CE like any other instrument gets affected by gap up/down and you will have to tune your position over time.

Search TJ, there are lots of tips on options.

Hello Friends,
Can options be used as an effective SL for my Futures positional trade to safeguard me against any Gap up/Gap Down situation which could turn out to be below/above my SL.
I'l try to post My Live NIfty/Bank Nifty trades also but because its a positional strategy so i get only 4-8 trades in a month.
Thanks a lot.

 

[amitbond]

Hello Friends,
I have been trading Nifty & Stock Futures for a long time but only Intraday.
Recently developed a Positional Nifty & Bank Nifty Strategy but i am not feeling comfortable to implement it properly in live market largely because of Gap up/Gap down possibility against my position.
As i have always been an intraday trader so i like to be in control of my trades by always putting a Stop Loss for my trade.
I do not have much knowledge about options trading but i guess i can use options as SL for my positional trade in Nifty/Bank Nifty.
Generally my Nifty Futures positional trade will have a SL of 30-60 points SL.
So seniors & options experts please advice:
Can options be used as an effective SL for my Futures positional trade to safeguard me against any Gap up/Gap Down situation which could turn out to be below/above my SL.
I'l try to post My Live NIfty/Bank Nifty trades also but because its a positional strategy so i get only 4-8 trades in a month.
Thanks a lot.

Run a backtest...
consider days close as your option buy price and next day open as sell price...and that will give you the idea or estimate of price that you pay for the overnight hedge