Path to Consistency

[VJAY]

Exactly sir. Hopefully some r enjoying that fallacies to earn big.

My idea is to tell all that do not sell PE when vix is low.

Dear subhadip bhai,
Its not difficult to figure out when VIX is low?...some says below 15 not sell .so since some days its always below 15 ..so how can we find from vix now not selling options...

 

[mohan.sic]

Brother,you seem to be very knowledgeable in options....so please start a new thread and educate us but let this thread progress with whatever little knowledge the thread starter has ,consider that this thread is much below your expertise level...and ignore it.

Smart_trade

Bro, I just thought our friends should not go wrong on this fundamental principle.

Anyway, i will end my post's here saying that:

Options follow futures. If options had to follow spot prices on live/daily basis, that will give statistical arbitrage opportunity to the extent of difference between spot and future. ( either premium or discount ). So these are not errors. Its the parity relationship between Future-CE-PE.

 

[varunkochhar]

My 2 cents were meant to be, you buy what is cheap (at a discount) and sell what is expensive(at a premium). I am not going into the why one should sell or buy(No trends being discussed here). There is no incentive to sell which is already in discount. No more comments from me on this. In fact the pros always sell in the money options to get the advantage of getting this premium which erodes with time. The retail are always under this fallacy that options are based on futures and hence we see most of the options expire worthless. It is like premium stripping by the pros.

 

[Subhadip]

Dear subhadip bhai,
Its not difficult to figure out when VIX is low?...some says below 15 not sell .so since some days its always below 15 ..so how can we find from vix now not selling options...

Do not sell PE. When vix low u can sell CE though.

 

[varunkochhar]

My 2 cents were meant to be, you buy what is cheap (at a discount) and sell what is expensive(at a premium). I am not going into the why one should sell or buy(No trends being discussed here). There is no incentive to sell which is already in discount. No more comments from me on this. In fact the pros always sell in the money options to get the advantage of getting this premium which erodes with time. The retail are always under this fallacy that options are based on futures and hence we see most of the options expire worthless. It is like premium stripping by the pros.

Pls read this edited comment.

 

[Subhadip]

Pls read this edited comment.

Not necessarily pros always sell ITM option only.

Depends on situation.

 

[varunkochhar]

Yes i was meaning that we should also follow the pros to profit from this method.

 

[Subhadip]

So discussed about calendar spread.also discussed about multiple strangle. Now we will discuss bull call spread.also will discuss the bear put spread.

 

[Smart_trade]

Can we take 1-2 strategies,discuss when,how and whys of these, construct a real trade or paper trade, then discuss likely scenarios and how we tackle in each case....that will give us practical learning in the real world of options trading....initially we can experiment with hedged strategies like calendar spreads so that our learning with actual trades may not be very "expensive ...."

Smart_trade

 

[Subhadip]

Can we take 1-2 strategies,discuss when,how and whys of these, construct a real trade or paper trade, then discuss likely scenarios and how we tackle in each case....that will give us practical learning in the real world of options trading....initially we can experiment with hedged strategies like calendar spreads so that our learning with actual trades may not be very "expensive ...."

Smart_trade

All the strategies I will discuss will be hedged.

Some have some positive in when VIX is high like multiple strangle.

Some good when vix is low like Callander spread.

Some good when trend on going. Like bull call spread or bear put spread.

So sir all strategies have something positive.