Greeks- why they are important?

[yoogi]

A doubt: Let us assume that the index is 4300 on sep-19 a day after fed meet.
What am I supposed to do?

A option seller cannot exercise anything. Buyers pay the premium and hold the privilege of exercising the option at a time of their choice. Is there anything I can do to have the same effect of making that excercise?

 

[srikanth_kandalam]

A doubt: Let us assume that the index is 4300 on sep-19 a day after fed meet.
What am I supposed to do?

A option seller cannot exercise anything. Buyers pay the premium and hold the privilege of exercising the option at a time of their choice. Is there anything I can do to have the same effect of making that excercise?

Yoogi- not sure what you meant by the last sentence- would you elaborate?

 

[yoogi]

well Asssume nifty is at 4300 well before expiry. My guess/bet is that it will recover.

But if the buyer excercise the option, I will have a Nifty-Sept-Future @ 4400 long, with a loss of 100 points. (is this correct?). This is ok with me because I am bullish and I am sure to get back my price.

I want the buyer to do this. But an option can be exercised only by the buyer. (after all he pays for that privilege.). But I cannot force him to do this.

Is there anything I can do to have the same effect? (neturalising my Put-sell AND having a long position on futures).

 

[srikanth_kandalam]

well Asssume nifty is at 4300 well before expiry. My guess/bet is that it will recover.

But if the buyer excercise the option, I will have a Nifty-Sept-Future @ 4400 long, with a loss of 100 points. (is this correct?). This is ok with me because I am bullish and I am sure to get back my price.

I want the buyer to do this. But an option can be exercised only by the buyer. (after all he pays for that privilege.). But I cannot force him to do this.

Is there anything I can do to have the same effect? (neturalising my Put-sell AND having a long position on futures).

As simple stuff pointed out Indexes are settled in cash ( unless you have ETF like a qqqq)- I think the better way you expect a drop to 4300-4400, why dont you take the profit on the put you sold and perhaps buy an ITM or ATM PUT- since apparaently you feel now that the market is going down( Am I correct?)
There is definitely resistance- and I do expect the market to be lower by sept expiration( well looking at the candle charts- it is pretty clear to me that the market sells off everytime it tries to move!)

 

[yoogi]

Well, yes. The options we have are European and hence are exercised only at the expiry day only.

So on expiry if the underlying is below strike price, I need to buy a future contract manually. If it is above strike price, I need to wait for better price to buy.

 

[yoogi]

I didnt buy back any put as my stop loss was actually 4143 for spot price.

Now this is increasingly like a defensive bull strategy rather than a complete bull. A bull should buy future contract and nothing else.

 

[ratan jain]

Naked and clothed....

No wonder I cant get the hang of it..

Imagine if my broker wanted me to sell naked
He would get a punch, not brokerage

Naked call.... How do I order.... 1 naked call please, and make it fast!

My wife would think I am placing an order for something else !

 

[munde_77]

My assumption was selling a put to buy a stock- not index.

For example if I am interested in reliance for the longer haul- but let us assume I would prefer to get it at 1800 ( current price 1982)- then what I would do is to sell the 1800 Put. If RIL does not dip below 1800- I keep the premium, if it does I get the stock and keep long term ( or can even sell Covered calls). Obviously the choice of strike, IV etc are to be selected carefully. If you are VERY bullish- go ahead sell a ATM put.

This also applies to any stock you are bullish- instead of buying the stock outright- you can sell the puts, and make money- afterall there is a limitations to how many stocks you pursue!

Hi Srikanth_Kandalam . Please give me your e-mail address or contact i want to clarify some doubts about covered calls and puts etc..Hope to hear from you soon.

 

[munde_77]

Hi Srikanth, This is rahul. I was going thru some of the links posts which you have created. was impressed by hte same. I am planning to enter the options trading arena. I had a request . If you are comfortable then can you please give me ur id so that i can get in touch with you if i need to know something about options trading. My mail id is [email protected]. It would be great if you could please guide me in the same.

Hi Srikanth
Please add me my yahoo Id anilagarwal66
My e-mail id is [email protected]

 

[munde_77]

My assumption was selling a put to buy a stock- not index.

For example if I am interested in reliance for the longer haul- but let us assume I would prefer to get it at 1800 ( current price 1982)- then what I would do is to sell the 1800 Put. If RIL does not dip below 1800- I keep the premium, if it does I get the stock and keep long term ( or can even sell Covered calls). Obviously the choice of strike, IV etc are to be selected carefully. If you are VERY bullish- go ahead sell a ATM put.

This also applies to any stock you are bullish- instead of buying the stock outright- you can sell the puts, and make money- afterall there is a limitations to how many stocks you pursue!

Srikanth.........Seems to be very good strategy. Would like to know more about such strategies. Please let me know where can I learn. I am willing to spen money sor learning. If you dont mind please e-mail me my yahoo id anilagarwal66 [email protected]