Monthly options writing

[SarangSood]

Ok
I will update the post as soon as I will get the right trade.
Usually it is in the first week of every month when we get this type of opportunity.

what kind of opportunity are you talking about in selling options? i have sold weekly bank nifty options 25300 ce & 24700 pe. it's giving good return in 2 days only.

 

[Raj232]

See, the bid-ask price. 90-500, 250-500 etc
Not recommended for traders.
Even for option writers have to wait for settlement which is a big risk. There may be no buyers even price move to their favour, buying price may remain a lot higher. Prices are very absurd and unfavourable for both buyers and seller due to lack of demand and supply.

It is risky to buy sell with such highly illiquid options...
Pathetic OI, less than 100 in most of the strikes even after nerly two week passed.

Sorry not promising at all.. U can't sell even 5-10 lots without big slippage. U can't square off without big slippage and u'll face worst bid-ask slippage.
Demand and supply are very poor.

MCX ignored crude, gave Gold unfair 1st chance, now the whole project of MCX option is under threat. 1st impression is very bad. There is no enthusiasm at all.

I have warned here giving the Gold unfair chance would be a blunder. But who listens to traders. Common Sense is most uncommon in Market. Here people use emotions.
There was a Dhamaka plan to start MCX Options with GOLD on Dhanteras without analyzing demand supply!!! The result is in front of us. Option sellers can't sell, hedgers can't buy due to very less participants. This is because there is the complete absence of traders.

Agreed, that initially this might not look too good, but in a 90- 500 scenario, you can place your sell at 490. It is the buyer of options who is at risk in such a scenario. yes, I agree that the volumes are low but its because we have had Diwali holidays after the Oct series expiry, and any case this is a new instrument.

Agreed 100% that Crude would have been a better option to trade with as the liquidity is much more.
On one hand SEBi says that retail traders are not equipped to trade option derivative, but on the other hand they introduced weekly BankNifty options and also Gold bullion options ..

During the whole month of October, the range was quite limited between 29200 to 29950. Its just a proposition which may be highly profitable in future.

 

[Raj232]

what kind of opportunity are you talking about in selling options? i have sold weekly bank nifty options 25300 ce & 24700 pe. it's giving good return in 2 days only.

@SarangSood This might look good but the risk is much higher. On 25th october when SBI moved from Rs 250 to Rs 320, I'm sure this strategy was not profitable. The point i'm making is that every strategy has its own risks associated with it. Hope you agree.

 

[SarangSood]

@SarangSood This might look good but the risk is much higher. On 25th october when SBI moved from Rs 250 to Rs 320, I'm sure this strategy was not profitable. The point i'm making is that every strategy has its own risks associated with it. Hope you agree.

Yes the risk is there, but why would any1 carry this position when FM has a major announcement to make in the evening. I personally only play volatility and wait for it to subside. Last week was very different than the current one.

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[Raj232]

Yes the risk is there, but why would any1 carry this position when FM has a major announcement to make in the evening. I personally only play volatility and wait for it to subside. Last week was very different than the current one.

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Agreed, but to my understanding, PSU recapitalization came as a surprise. No news outlets mentioned anything about FM having a major announcement.

 

[SarangSood]

Agreed, but to my understanding, PSU recapitalization came as a surprise. No news outlets mentioned anything about FM having a major announcement.

Angel broking mentioned it at 3pm and that too at a time when banknifty was having a very volatile week. I remember i made a very small position on diwali night but had to get out because of the volatility.

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[headstrong007]

Agreed, that initially this might not look too good, but in a 90- 500 scenario, you can place your sell at 490. It is the buyer of options who is at risk in such a scenario. yes, I agree that the volumes are low but its because we have had Diwali holidays after the Oct series expiry, and any case this is a new instrument.

Selling price is the always lowest price of BID-ASK spread.

You, can place your sell at 490 but it will not execute at all. When the highest price offer for the seller is only 90. You have to sell it for 90 only, even if the logical price(from the options calculator) is 500.
U can't buy back it from the market, u'll see buyback price is minimum 500 then just after executing your order@90.
Even option sellers are at a big risk in such scenario. You can't exit even your stop loss from chart is hit. When you sell it @Rs 90, at the same time minimum buy price is Rs 500.

Diwali holidays is over long ago. There is no demand even on the 3rd week running.

Bank Nifty Weekly option was a hit from the very first week. Morning Shows The Day.

 

[headstrong007]

On one hand SEBi says that retail traders are not equipped to trade option derivative, but on the other hand they introduced weekly BankNifty options and also Gold bullion options ..

Correct.
Future volumes are decreasing day by day. So it is just an excuse to increase the lot size and compensate the turnover. It's Secret Agenda...
But, this is a wrong move. More people will shift to options to manage the risk.

 

[Vivekra79]

Sold federal bank 215 PE at 1.8 today.
I will look for the conversion of this naked trade to a covered one if stock cash level crosses below 219.
Sharing my personal trade.
Overnight risk is involved in this trade.
Totally Risk free 2 percent returns are a bit impossible case in equity markets
Or to cover the risk , one can sell its 232.5 call.
Federal bank can give surprise soon.

 

[Raj232]

Correct.
It's Secret Agenda....

100% correct..