new@TJ

[sharan]

1. Covered last day's open position of sun pharma with 800 rs profit.
2. Took a 8200 call during the last 30 minutes. Would cut this out at 8000 spot or 8120 whichever comes first.
3. Now this takes the cake. After a quick fire 125 rs run according to my analysis intermediate target of 635 was met and stock would go for a call consolidation. Had kept order at 3.85 in the first half itself. At 3:28 pm low was 4.35. Did not expect the order to get through. But at the close a sell order took the low to 2.2 rs though nothing was noticed in the spot price. Close is at 4.8 I was under the impression that options price was influenced by spot, was not aware of these deviations. Let's see what happens.

 

[sharan]

Today's trades
Booked 350 rs loss in 8200 call.
Sold cipla 600 put @ 6.75. Profit 2900.
Am working towards an option specific strategy. Facing the following hurdles :
Lack of knowledge
Lack of experience
Lack of time and focus.
However will device a strategy and start testing it to find out its feasibility.
@dan
I do not have a clue as to when to exit an options trade. Since my buying is purely on spot support and resistence levels my entries are satisfactory but have no difinitive exit plan. Any suggestions?
My ledger is green. But would attribute that to luck rather than trading acumen.
Thanks in anticipation.

 

[bunti_k23]

@dan if u hav sum free time can you explain a rough e.g of strangle in which otm call and put are bought, i need to know following things ,
1- what will be the breakeven points.
2- how to set the stoploss and target.
3- what shd we do if the underlying is moving in either direction strongly . And if not the time decay will eat the money rit

 

[Somatung]

@ Bunt_k23 and @Sharan

Take your time and I will make some post at the time enough time occurs to me. Be prepared to answers questions in any way from my side, if I feel to do so to your side, and be prepared that I may send you to certain threads to read about your topic and not will post again about the asked subject. But you will get a post or PM from my side, and that is promised. Until then:

Take care / Dan

 

[Somatung]

@Sharan

A few words in general you not asked for, but is a tricky point and can lead very quick to failure. As I see others do follow this thread, it is meant as a neutral information and not pointed to anybody here. But may the one or the other one will keep it in mind and will not fall in that trap because of knowing about this post here.

It may is beginners luck, it may is not. If you look at your thoughts or analyze them from the psychological aspect, you do the right thing as you value your first trading success with a healthy distance. :thumb: This should keep you away from becoming to over confidence by the result itself. Many who had the experience you faced now at that and even very high levels started to make the mistake to think now that they are kings of the market and could only win. The door into the room of bad, coming experience was exactly at that moment opened, as they started to increase there risk, build on the thoughts of overconfident.

Coming to the question about when to exit an option trade?

Most simple answer: Set a target on the chart or set a target through % on the value from the option.

Example: Nifty future spot at 7965. Overall short term trend is down. You buy a put with a value of f.e 50 Rs. You now can decide the level on the chart and set your target f.e at 7900 or you set a price target on the option price with f.e 75 Rs. Here you decide by your self how many % profit you expect on the option and what risk tolerance you face in your personality. Targets on the chart can be set through S&R levels, analyzing trend channels or use other tools like math. If you set such targets and you are not able to watch the market during the day, you must know how to find out what price the option at those target level will have, other wise you are not able to place a limit order by your broker. If you do not know how to do that, you should go for a price target on the option price and place this price through a limit order by your broker into the market.

As bigger as your targets are, if now on the chart or on the price value of the option, as longer you may have to stay in the market with your trade. So you will be targeted from time decay and may even from vega. (Basic knowledge already mentioned here in this thread and in other threads).

Hope that brings you one step further in your option trading. Take care / Dan

 

[Somatung]

@Bunti_k23

1. Depends on which strike levels you use for your long strangle. (Read in the second link given in this post)

2. Stop loss can be the amount of money you invested for that long strangle. An other way can be done by choosing a certain % on your invested amount you are willing to lose, either on any of your legs or on the whole strategy. This are the most simple ways to choose your stop losses. There are other ways, but if you are new to options, that will do.

Now to the targets: What are targets for you in this strategy? Where would you set them and why there, as you must have some thing in your mind about targets, as you ask me?

3. What would you do in that case. Look, it doe;s not make sense to me to write down here whole concepts of how different option strategies can be traded. I do not have the time to do so. So kindly post your concept or PM your concept how you want to trade the long strangle, include a chart to what is posted, and I will see where I have to spot on, if even. Kindly read also through the following thread, as I have given there so many clues about how a strategy can be traded. You will not find any books who will show you such ways of trading. The link is about a short strangle, so in your case you think just vice versa as you have a long strangle. Adapt, if you want, what is posted there to your concept and that will do for a long time :clapping: http://www.traderji.com/options/74905-advanced-nifty-option-strategies.html#post733503

Here some more links you may go through:

General information about long strangles: http://www.optiontradingpedia.com/free_long_strangle.htm

How to calculate the break even points in a strap - or long strangle (You must scroll down in the page and you will get your answer): http://www.optiontradingpedia.com/strap_strangle.htm

Take care / Dan

 

[sharan]

Hi Dan,
Regarding the first part of your post, am reminded of something :

1. An egg falls from the first floor of a building and does not break. That is coincidence.
2. The egg falls from the second floor of the building and still does not break. That is confidence ( backed by the coincidence).
3. The egg falls from the third floor of the building and smashes - Overconfidence.

Now my point of view. I have always maintained that I am a novice and wanting to learn. None of my posts are bashful.in fact I have always highlighted my inadequate knowledge, zero experience and other deficiencies. I think I am stating what the truth is and as it is. One incident to be noted :
Yesterday I had posted in one of the popular threads in the technical analysis section stating my levels for tata motors with SL and asking for his opinion. He replied to the post today morning. By that time I had made 3000 in that counter. You see that is my lack of exp and lack of know how. I could have made at least 7000 from the trade but lacked basic confidence in my own self.
When basic confidence itself is not there how can there be overconfudence . Having said this I also state that I attach utmost importance to your advices and will do so in future also. You are most welcome to speak it out, rest assured it will be taken the in the right spirit and definitely implemented.
You see the cipla put which I squared off yesterday with 3000 profits made a high of 10 today.
In the time that I get to browse through the forum have identified following members whom I will try and follow :
Pratap, aw10, anil trivedi, manoj borle, Amit randive, saint, xray27 and obviously you.
Their posts are informative and a learner can actually learn from the charts and trade setups mentioned in their posts. I must be missing a few big traders but they will have to excuse me for I am new to the forum and have not browsed enough. I reiterate that I am a novice willing to learn from people who know and are willing to guide.
Thanks for everything.

 

[sharan]

In fact the member whose opinion I had sought on tata motors specifically advised me to avoid trading setups without knowing its success rate and bingo tata motors reversed and rose in the closing hour of trade.
Thanks

 

[sharan]

Hi,
Was out of the radar for some time because of time constraints and inability to find trades.
However today made some decent profit in rec.
Bought rec Oct fut @ 237.75 sold for 239.95
Bought rec Oct 260 call @6.55 sold for 10.7.
Had been waiting for rec to come to 240 levels today during afternoon when mkts became volatile rec chopped down below 240 levels. Though I had taken Oct future contract for carry forward, I could not take the pressure during those crucial secs and closed the trade with some 2.2 k profit. However I had bought the call which I held on and squared off intraday only since I was getting 4 k profits and tomorrow being expiry did not want to carry it forward.
If jindal steel comes to 168 then would want to buy calls for Oct series. Expecting expiry tomorrow between 7940 to 7965. Do not expect nifty spot to breach 7930 tomorrow.
Sharan

 

[lemondew]

Some stuff which will be helpful .

http://www.traderji.com/trading-diary/88670-nifty-options-trading-raj-400.html#post919381