Option Writing Doubt - Help Needed

Hi guys please help me with this strategy in NIFTY Options, i am newbie

Market as on 23/Nov/16

Nifty Trading at 8192

My trade..

I think market will remain in between 8500 and 7500 so,

-Selling 8500CE at 28 (75*28 = 2100)
-Selling 7500PE at 16 (75*12 = 1200)


My Query
1.If Nifty Expires at below like even 8499, will the 8500CE become ZERO?
2.How much Margin gets blocked to this above investment?
3.How i can make this strategy with lowest risk possible?

1. yes, provided it stays that way even in settlement. (After hours)
2. Check with your broker, typically, 1-1.1L per lot
3. study option strategies like iron condor, butterfly etc

Even then, you can't sell and go off on vacation. Option writing demands the greatest skill and balancing by adding and covering open positions.

Read about Iron Condor.

Take advantage of premium decay by selling option 15 days before expiry. In the last days premium decay is fast.

You can use Max pain theory before 15 days to make a good guess.

Thank you Vagar for suggesting MAX pain theory, will definitely try to find out how it works

I had a few doubts based on the above scenario,
Selling 8500CE at 28 (75*28 = 2100) and 3 days before Nifty Expiring spot price of Nifty is 8475 and the premium increasing close to 30.

Will buying this cause me loss, 30*75=2250, i.e (2250-2100)= loss of -150?
Around Nifty closing does all the options loose their premium value to 0 or can they close at premium of 28 or 30?
If on the day of expiry the option closes at 29 will it be 29*75=2175 i.e (2175-2100)=loss of -75

- Say you sold CE 8500 for some 'x' premium amount some 3 days ago
- On the expiry day after the closing hours if the underlying nifty had closed at 8499. Then the option CE8500 is "out of money" and will become 0. however the tax implications stipulate you to square it off before end of market hours for a small premium amount (say for 0.10).
- you need balls of steel to hold on when NIFTY makes some wild moves beyond and below you strike price. So its common practice for option traders to square their position whenever they reached 50-75% of their premium.

the options prices are impacted by greeks mainly by vega, theta and delta. so depending on these factors price will flactuate. the idea is to Sell a certain strike price option at Higher price and buy it back at a Lower price.

Seller of options usually do it very early in the month when the premiums are high and its far away from the current price. (short strangles). If you buy just 3 days before expiry there is not much time value left in the premium and hence its not worth the risk.

google zerodha varsity for learning about options. its best for people who have established some success on trading other instruments (equity, commodity) and trade with the profit money.

Good luck.

just my 2 rupee