Greeks- why they are important?

srikanth_kandalam · #31 14th September 2007, 12:47 AM

I am sorry for the mistake- it is obvious that if you sell Puts you will have positive delta- and the hedge would be to neutralize this in case the trade goes bad.

I am not sure the next part of your comments are warranted. These are by no means "exotic" concepts- may be it is in India.

I am not going to nit pick- but I have seen too much of silliness on options here. For your info I am trading options in the US since a decade- I am not going to suggest I know everything, but I dont expect to learn from this board!

I guess this is why people stop posting- and perhaps they are justifiied. Attack the logic- no problem with that. frankly we dont even have to worry about these things here- because we get our Position greeks on a realtime basis- and there is hardly any need to calculate etc.

yoogi · #32 14th September 2007, 12:14 PM

Now, the underlying (index) is going up and the 4400-put is going down. So I am set to keep the premium as consolation. It is too early to conclude anything.

I feel this is risk-limited reward limited strategy. I cant complain though.

yoogi · #33 14th September 2007, 12:20 PM

A doubt: Let us assume that the index is 4300 on sep-19 a day after fed meet.
What am I supposed to do?

A option seller cannot exercise anything. Buyers pay the premium and hold the privilege of exercising the option at a time of their choice. Is there anything I can do to have the same effect of making that excercise?

srikanth_kandalam · #34 14th September 2007, 12:34 PM

Quote:

Originally Posted by yoogi

A doubt: Let us assume that the index is 4300 on sep-19 a day after fed meet.
What am I supposed to do?

A option seller cannot exercise anything. Buyers pay the premium and hold the privilege of exercising the option at a time of their choice. Is there anything I can do to have the same effect of making that excercise?

Yoogi- not sure what you meant by the last sentence- would you elaborate?

yoogi · #35 14th September 2007, 12:54 PM

well Asssume nifty is at 4300 well before expiry. My guess/bet is that it will recover.

But if the buyer excercise the option, I will have a Nifty-Sept-Future @ 4400 long, with a loss of 100 points. (is this correct?). This is ok with me because I am bullish and I am sure to get back my price.

I want the buyer to do this. But an option can be exercised only by the buyer. (after all he pays for that privilege.). But I cannot force him to do this.

Is there anything I can do to have the same effect? (neturalising my Put-sell AND having a long position on futures).

srikanth_kandalam · #36 15th September 2007, 12:04 AM

Quote:

Originally Posted by yoogi

well Asssume nifty is at 4300 well before expiry. My guess/bet is that it will recover.

But if the buyer excercise the option, I will have a Nifty-Sept-Future @ 4400 long, with a loss of 100 points. (is this correct?). This is ok with me because I am bullish and I am sure to get back my price.

I want the buyer to do this. But an option can be exercised only by the buyer. (after all he pays for that privilege.). But I cannot force him to do this.

Is there anything I can do to have the same effect? (neturalising my Put-sell AND having a long position on futures).

As simple stuff pointed out Indexes are settled in cash ( unless you have ETF like a qqqq)- I think the better way you expect a drop to 4300-4400, why dont you take the profit on the put you sold and perhaps buy an ITM or ATM PUT- since apparaently you feel now that the market is going down( Am I correct?)
There is definitely resistance- and I do expect the market to be lower by sept expiration( well looking at the candle charts- it is pretty clear to me that the market sells off everytime it tries to move!)

yoogi · #37 19th September 2007, 12:11 PM

Well, yes. The options we have are European and hence are exercised only at the expiry day only.

So on expiry if the underlying is below strike price, I need to buy a future contract manually. If it is above strike price, I need to wait for better price to buy.

yoogi · #38 19th September 2007, 12:40 PM

I didnt buy back any put as my stop loss was actually 4143 for spot price.

Now this is increasingly like a defensive bull strategy rather than a complete bull. A bull should buy future contract and nothing else.

ratan jain · #39 19th September 2007, 02:06 PM

Naked and clothed....

No wonder I cant get the hang of it..

Imagine if my broker wanted me to sell naked

He would get a punch, not brokerage

Naked call.... How do I order.... 1 naked call please, and make it fast!

My wife would think I am placing an order for something else !

munde_77 · #40 18th November 2007, 05:48 PM

Quote:

Originally Posted by srikanth_kandalam

My assumption was selling a put to buy a stock- not index.

For example if I am interested in reliance for the longer haul- but let us assume I would prefer to get it at 1800 ( current price 1982)- then what I would do is to sell the 1800 Put. If RIL does not dip below 1800- I keep the premium, if it does I get the stock and keep long term ( or can even sell Covered calls). Obviously the choice of strike, IV etc are to be selected carefully. If you are VERY bullish- go ahead sell a ATM put.

This also applies to any stock you are bullish- instead of buying the stock outright- you can sell the puts, and make money- afterall there is a limitations to how many stocks you pursue!

Hi Srikanth_Kandalam . Please give me your e-mail address or contact i want to clarify some doubts about covered calls and puts etc..Hope to hear from you soon.

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