Selling option: Basic doubt

[rajadawn]

Hi rajadawm

As I read your questions and answers, I see that you do not use any software to trade such strategies.

You tell in your first post : ""I am not exactly a novice in options but so far had been only 'buying' options. Now after some consideration and planning want to enter the 'selling' side""

Even only buying options and being a serious and educated trader would enforce using option analyzing software for your strategies. All the rest ends in the posts you make.

Using option analyzing software and testing most of your questions, would give you the answers you search for.

You should really now go and learn about such software and then come back for other queries. Most of us still will be here.

Take care

Dan,

Thanks but your advice was not really helpful. All I wanted to know was a broker's response in a margin trade. For that you dont need a software. Unless you are a software addict and use it to decide when to eat and sleep I find no reason to raise this issue here.

I thought that softwares help in finding out implied volatility or Delta values. Granted you build strategies with the information but final implementation would boil down to 'buying' or 'selling' calls and puts. The execution part most books on derivatives take for granted. So all my queries are mostly related to execution. For example I read today on Traderji only that unlike elsewhere in the world in India you need to pay up first if an option is exercised against you even if it is a covered call. Elsewhere it will be squared off. These are the kinds of practical problems I want to know and discuss.

 

[DanPickUp]

Dan,

Thanks but your advice was not really helpful. All I wanted to know was a broker's response in a margin trade. For that you dont need a software. Unless you are a software addict and use it to decide when to eat and sleep I find no reason to raise this issue here.

I thought that softwares help in finding out implied volatility or Delta values. Granted you build strategies with the information but final implementation would boil down to 'buying' or 'selling' calls and puts. The execution part most books on derivatives take for granted. So all my queries are mostly related to execution. For example I read today on Traderji only that unlike elsewhere in the world in India you need to pay up first if an option is exercised against you even if it is a covered call. Elsewhere it will be squared off. These are the kinds of practical problems I want to know and discuss.

Hi

Never mind.

"" In case of writing on margin would I still not be in the risk of unlimited losses ( if your margin is used, you will get a margin call, which means you have to bring the money NOW ) and if you not can bring the money, you will be executed now )

or will it be only limited to the margin in case the option is exercised against me ( answer in the part before ) ""

Means. If you test your strategies in advance and you trade them right, you will not have margin calls. Get it ?

Take care

 

[AW10]

Hi rajadawm

As I read your questions and answers, I see that you do not use any software to trade such strategies.

You tell in your first post : ""I am not exactly a novice in options but so far had been only 'buying' options. Now after some consideration and planning want to enter the 'selling' side""

Even only buying options and being a serious and educated trader would enforce using option analyzing software for your strategies. All the rest ends in the posts you make.

Using option analyzing software and testing most of your questions, would give you the answers you search for.

You should really now go and learn about such software and then come back for other queries. Most of us still will be here.

Take care

Dan, you are right about the use of option analysis software, basic concepts of option and option pricing, option greek etc for any option trader.
But, to you surprise, in indian mkt, majority of people jump into option trading without all this. If they have been buying/selling stocks for some time, then they treat option buying also in same style.

Isn't pro option trader need this kind of trader on the other side of their trade ?

Happy Trading

 

[AW10]

Dan,

Thanks but your advice was not really helpful. All I wanted to know was a broker's response in a margin trade. For that you dont need a software. Unless you are a software addict and use it to decide when to eat and sleep I find no reason to raise this issue here.

I thought that softwares help in finding out implied volatility or Delta values. Granted you build strategies with the information but final implementation would boil down to 'buying' or 'selling' calls and puts. The execution part most books on derivatives take for granted. So all my queries are mostly related to execution. For example I read today on Traderji only that unlike elsewhere in the world in India you need to pay up first if an option is exercised against you even if it is a covered call. Elsewhere it will be squared off. These are the kinds of practical problems I want to know and discuss.

If you need this knowledge/funda then read the help section of broker's platform, Read the material in Certification section of NSE about how option trading is treated in Indian mkt.

If you read Guy Cohan, certainly you won't get this info.

 

[rajadawn]

Dear AW10,

Point taken. I don't mind criticism as long as it is honest and helps us improve. I hope your ridicule for novice traders forming the "other side" of the market is valid. I will look into the broker's platform after writing this post.

Hope to keep the discussion alive. But I don't agree when somebody shoos me off with a 'go learn XYZ first' kind of answer. I am not here to pass an exam, nor am I here to proclaim expertise in the subject. I am here to learn. (In that context could Dan/AW10 please suggest some option softwares to begin with- preferably free - that would be a real help)

My only submission is that pros replying to newbies like me should try to be a little more empathetic and try to answer our specific query, however silly it may be. If they can find time to pen a reply at all I am sure they can better utilize to give some of their well earned 'gyan' too.

 

[AW10]

Raadawn, my that post was addressed to Dan. I know his thought process well. He doesn't trade indian market. He trades US market and knows the internal rules of the game of option players/ market makers there.

I hope your ridicule for novice traders forming the "other side" of the market is valid.

Isn't pro option trader need this kind of trader on the other side of their trade ?

With this statement, I was not trying to ridicule novice (Sorry if it sounds so), but was trying to reflect what happens in market day in and out. We all have experience that when how our stop-order gets taken out just to see that mkt moves as per our trade.
We all have bought at the top and sold at the bottom.

In my view, every pro trader was novice at some time.. but it is their individual action that makes the difference - in remaining as novice or moving towards Pro level.

My only submission is that pros replying to newbies like me should try to be a little more empathetic and try to answer our specific query, however silly it may be. If they can find time to pen a reply at all I am sure they can better utilize to give some of their well earned 'gyan' too.

Everybody has their own style of communication. Some are more empathetic whereas others at up-front and blunt. Unfortunately, I think, as a leaner/student we don't have choice in picking up the mentor/guru. I have personally taken lot of crap/shxxt/4 and 5 letters words from my mentors or from people whom I wanted to listen. If they talk sense, then I discount the fact, else I move on.. and same I do with my juniors as well.
Don't get me wrong - I do appreciate openess in expressing your opinion on what you like and don't like.

by the way, For option analysis tool - u can chk out Options Oracle. There is thread dedicated to this. It is free and it does connect to NSE data.

All the best for your journey in the world of options trading.
Happy trading.