option strategy

ayurakshapad · #11 24th November 2007, 08:54 PM

Quote:

Originally Posted by faltub

No sorry no thanks between friends.

I also did same mistake when I posted one graph without checking date and started screeming .......... as human being we all make mistakes.

F

Dear,
i m nifty option trader frm day 1.
wat u thinkabt nifty movement on monday?

rkkarnani · #12 24th November 2007, 11:00 PM

Quote:

Originally Posted by faltub

RKK,

I know it gave chance to exit at 150, but question is not for one option.

Just check the call price movement on24- 25th Oct 2007, u can easly find that Oct contract were moving fast whearas the movement in Nov contracts was too slow. What was the problem ? Did the the greeks of Oct contracts were greater than Nov Contracts ?

F

The Option mkt has not at all matured in India. Markets lack liquidity hence the big spreads are there in ill liquid options. Next month options almost always lack action. Liquidity is there mainly in Nifty options.
I would agree the Greeks etc. do not follow the rules here in India. I am told that Options have a bigger turnover in USA than futures!!!! So its still a few years for our option mkt . to mature. Till then its best to trade in Nifty options if at all.
Regards

Adheer · #13 25th November 2007, 08:12 AM

However, I accept that long future + short call always provide perfact headge.

Long future + short call is termed a Covered Call. A Covered Call can never be a perfect hedge.

Covered call reduces your entry price but does not provide a hedge. It limits your profit on the upside and your risk is reduced only slightly on the downside. So basically you are restricting your profits to reduce your cost price - but keeping the risk factor unchanged. How can that be a perfect hedge ?

A married put is a better "perfect" hedge.
http://www.888options.com/strategy/married_put.jsp