Hello guys seniors/option experts i need your suggestions/ideas/views here im confused to design proper mm in option .here is the plan im concerned only in buying the options,
Instruement = nifty options.
Capital = 10000.
No. Of lots =1 i.e 25qty.
Trading system type = directional trading system pure intraday
Trades per day = 1 or 2 .
Stoploss = 10pts.
Target = 15 pts .
Keeping aside the characteriscts of trading system drawdown etc.
Here the main confusion iam having is how will i choose the strike price considering abv target and stoploss of trading system .what shd be the parameter that i shd look for? Theta value ? Premium ? Delta? Any other thing?
Lets consider a scenario Here if i consider strike price of same delta,
For call.(coming 2 Strikes otm from cmp)
29Jan14ce8250
Delta = 0.51
Theta = -3.24
Premium = 156
Capital needed = 25 *156 = 3900.
For put.( coming 2 Strikes itm from cmp)
29Jan14pe8250
Delta = 0.49
Theta = -0.64
Premium = 124.25
Capital needed = 25*124.25 = 3106.25
Now, if i had a buy signal in call and stoploss hits im loosing 5.10 Pts technically considering delta only , but what abt theta here see the theta value we have -3.24 , compared to the theta value of put which is only -0.64 .simply i will be lossing more on call compared to put isnt it? While this will not happen in cash market if i got my stoploss hit i will be loosing straight 10pts and winning 15pts clearly on every trade .
Pls give ur important suggestions/thoughts/views /criticism all will be accepted in a positive spirit.
Thankyou
Amit
Instruement = nifty options.
Capital = 10000.
No. Of lots =1 i.e 25qty.
Trading system type = directional trading system pure intraday
Trades per day = 1 or 2 .
Stoploss = 10pts.
Target = 15 pts .
Keeping aside the characteriscts of trading system drawdown etc.
Here the main confusion iam having is how will i choose the strike price considering abv target and stoploss of trading system .what shd be the parameter that i shd look for? Theta value ? Premium ? Delta? Any other thing?
Lets consider a scenario Here if i consider strike price of same delta,
For call.(coming 2 Strikes otm from cmp)
29Jan14ce8250
Delta = 0.51
Theta = -3.24
Premium = 156
Capital needed = 25 *156 = 3900.
For put.( coming 2 Strikes itm from cmp)
29Jan14pe8250
Delta = 0.49
Theta = -0.64
Premium = 124.25
Capital needed = 25*124.25 = 3106.25
Now, if i had a buy signal in call and stoploss hits im loosing 5.10 Pts technically considering delta only , but what abt theta here see the theta value we have -3.24 , compared to the theta value of put which is only -0.64 .simply i will be lossing more on call compared to put isnt it? While this will not happen in cash market if i got my stoploss hit i will be loosing straight 10pts and winning 15pts clearly on every trade .
Pls give ur important suggestions/thoughts/views /criticism all will be accepted in a positive spirit.
Thankyou
Amit