Option selling

doonyadav

Active Member
#1
Hi
I want guidance, as i have decided to sell options for regular income.

Example EOD 30.10.2106 banknifty 19523.55

19000 Nov pe = 200.00 Delta =.26
20000 Nov ce = 164.75 Delta = .36

Any expert - Please guide me how to manage if i sell both the options as this position will be in profit if Banknifty closes between 18636 - 20364 (1728 points range)
Note: Till now I have done paper trade only. Now i want to do some practical trades with 1 lot each only.
 
#3
Hi
I want guidance, as i have decided to sell options for regular income.

Example EOD 30.10.2106 banknifty 19523.55

19000 Nov pe = 200.00 Delta =.26
20000 Nov ce = 164.75 Delta = .36

Any expert - Please guide me how to manage if i sell both the options as this position will be in profit if Banknifty closes between 18636 - 20364 (1728 points range)
Note: Till now I have done paper trade only. Now i want to do some practical trades with 1 lot each only.
Option selling is a short veg and long tv trade..for a range bound trade. Trade only wgen u r so sure abt the index ranges...which sadly we dont ...hence, a SHORT iron condor is a better trade OR SHORT BUTTERFULY.

BNF is a very volatile index ...like today ...the index saw +40 to -70 variation to its spot...WHICH ON AN MTM basis ...gives a lot of stress if not hedged.



Sent from my MI 3W using Tapatalk
 

Subhadip

Well-Known Member
#4
Hi
I want guidance, as i have decided to sell options for regular income.

Example EOD 30.10.2106 banknifty 19523.55

19000 Nov pe = 200.00 Delta =.26
20000 Nov ce = 164.75 Delta = .36

Any expert - Please guide me how to manage if i sell both the options as this position will be in profit if Banknifty closes between 18636 - 20364 (1728 points range)
Note: Till now I have done paper trade only. Now i want to do some practical trades with 1 lot each only.
Go on sell. But plan for these two situations

When will u book loss.
Also when u will add CE or PE buy if market goes these much point or Volatility increases these much percentage
 

travi

Well-Known Member
#7
Hi
...as i have decided to sell options for regular income...

Example EOD 30.10.2106 banknifty 19523.55
19000 Nov pe = 200.00 Delta =.26
20000 Nov ce = 164.75 Delta = .36
Dear Sir,

1. Did you try:
Margin required to write 1 lot of CE & 1 PE = Inr. 110,000
You are wise to write options early on, although, I've suggested the institutions do it pretty early, something like 30-40-50-60 days etc depending on option type. (Monthly, weekly expiry etc)

For Inr.364.75 * 40 = Inr. 14k, you want a BP(Blood pressure) Index of 180/110 for 24/7/x ?
where x=2,3,4... weeks

2. Assuming that your regular income requirement is Inr. 30-50k per month,
you need, 4-6 Lots pair
That requires a margin of 2L to 4L Capital. Assuming that both CE/PE expire for Inr. 0.05

3. For such long term sell, you can't leverage anything from broker, so you need hard cold cash. How much do you have?

4. From point 3, comes point 4, your MM & RM, which is Risk Mgmt and Money Mgmt, and by even a 2% Risk formula, do you have Inr. 50L to RM(Trading Capital)?

5. And MM means, you put 10% of your Net worth to Trading, therefore, you must be worth Inr. 5 Cr.

6. If you FD Inr. 1 Cr for 1 yr, at current rates, you can get a monthly payout Inr. 60k.

Do you get the point?

EDIT: Oops, I forgot, didn't mention the advantages of a hassle free FD.
& Income tax applies to everything.

Next lesson will be on advanced topics of Option Writing sourced from many experts.
 
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doonyadav

Active Member
#8
As expected Vix increased and the option premium as well.
Waiting for big event to pass by on 8th-9th Nov :thumb:
 
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