Monthly options writing

[Raj232]

Hi anml, it's a very delicate art writing options. You have to be an active trader to do it. The whole point is that the delta should be neutral in your position at every price change in the index. This Wednesday banknifty rose around 500 pts but it didn't do it in one go. It took it's time throughout the day which allowed me to keep selling puts against my calls. Also the premiums were very high. It wasn't the case when recapitalization news came. But then again that week started with low premiums which wasn't worth selling and volatility was too high. I only carry my positions forward in profit but that week didn't allow me to do that. Hope this information helps you.

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Fully agree, the important aspect is keeping track of delta during live trading.

 

[toocool]

Sarang

What tools do you use to determine delta and other values?

 

[SarangSood]

Sarang

What tools do you use to determine delta and other values?

Google 'option greeks excel sheet'. There put the values of the index and options rate. You will get to know.

 

[onequorauser]

Fully agree, the important aspect is keeping track of delta during live trading.

Can you throw some more light on the process of maintaining neutral delta? DO you buy sell underlying or short the options on the other side (CE/PE). Former would not be feasible in nifty and bank nifty

 

[SarangSood]

Can you throw some more light on the process of maintaining neutral delta? DO you buy sell underlying or short the options on the other side (CE/PE). Former would not be feasible in nifty and bank nifty

Short or shift the option to the required delta would be advisable. If don't want to add on to the existing position then buy or shift the same.

 

[onequorauser]

Short or shift the option to the required delta would be advisable. If don't want to add on to the existing position then buy or shift the same.

So basically what you are saying is to shift the leg that is profitable closer or move the leg that is taking a loss further out. Am I correct?

 

[onequorauser]

So basically what you are saying is to shift the leg that is profitable closer or move the leg that is taking a loss further out. Am I correct?

Just to add there.. on the next day if the tide turns, and the market sways towards the other side, then how do you deal with it?

 

[SarangSood]

So basically what you are saying is to shift the leg that is profitable closer or move the leg that is taking a loss further out. Am I correct?

Yes that would be shifting. Or you can sell extra profitable leg or buy the leg that is giving a loss.

 

[SarangSood]

Just to add there.. on the next day if the tide turns, and the market sways towards the other side, then how do you deal with it?

I didn't get the 'sways towards the other side' part. There is no other side in writing only volatility and i personally don't trade during that period.