options or futures?

tanewbie · #1 26th August 2006, 11:01 AM

For FNO trading, which one Futures or Options is better?

trading in both requires good understanding of Technicals and a good money management system.

Attached is a chart of Tisco. I bot 1 lot futures at the buy signal and 2lots of 520 call.
The futures returned 15% + on margin capital but Options gave a return of nearly 100% at closing price.

Certainly options trading deserves to be studied and practiced!

aca_trader · #2 26th August 2006, 12:28 PM

Quote:

Originally Posted by tanewbie

For FNO trading, which one Futures or Options is better?

trading in both requires good understanding of Technicals and a good money management system.

Attached is a chart of Tisco. I bot 1 lot futures at the buy signal and 2lots of 520 call.
The futures returned 15% + on margin capital but Options gave a return of nearly 100% at closing price.

Certainly options trading deserves to be studied and practiced!

Vish,
Can you please tell me if one should start studying the probability and all for options or can start buying options on the basis of TA only? Also, how to factor liquidity and volatility?

Best Regards,
--Ashish

tanewbie · #3 26th August 2006, 02:45 PM

Hi Ashish
I dont know much about probability or option valuation models. If a stock is breaking out technically or if a stock is bouncing back after a short sell off then I feel options give the best ROI

For eg the day nifty went below 2900 there was big +ve divergence (24/7) in hourly charts. I bot 1 lot of 2900 call @43 it closed abv 250 by 31st Jul.

I f i had bot a ftrs instead then margin wud hv been 40k and gain wud hv been less than in options in terms of ROI. Options gain only in case of a sharp move thts why these days Nifty option is not a good idea as nifty is till waitng to break out in a single direction.

aca_trader · #4 26th August 2006, 04:10 PM

Quote:

Originally Posted by tanewbie

Hi Ashish
I dont know much about probability or option valuation models. If a stock is breaking out technically or if a stock is bouncing back after a short sell off then I feel options give the best ROI

For eg the day nifty went below 2900 there was big +ve divergence (24/7) in hourly charts. I bot 1 lot of 2900 call @43 it closed abv 250 by 31st Jul.

I f i had bot a ftrs instead then margin wud hv been 40k and gain wud hv been less than in options in terms of ROI. Options gain only in case of a sharp move thts why these days Nifty option is not a good idea as nifty is till waitng to break out in a single direction.

Thanks for a nice methodology. But then how to decide position sizing with options?

Best Regards,
--Ashish

beginner_av · #5 31st August 2006, 07:13 PM

my dear sirs,

no no, volatility is a must...when a stock breaks out, volti increases...so option that wud cost Rs 5 now costs Rs 7...so stock has to move by that much more for u to make profit...well thats if u hold till end. else take 50p profit even when the stock is moving and get out. as for money mgmt, rules r the same...how much will u lose? (for strategists, spreads reduce losses, for opti day traders, use the price of option itself to calculate ur "uncle point")

ciao

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