Option Buy Recomendations

ghosh_ak34 · #**161** 20th January 2008, 10:32 AM

Quote:

Originally Posted by rickyric_ny

yes thanks sir, usually from 17th, i trade "in-the-money" options where delta > 0.4 ~ 0.5 people say, to trade after 20th is easy..just SELL a CALL/PUT option and trade at "out-of-money"..limited profit
as after 20th the options depreciate it will be easy to "BUY" on the day of expiry rather to "SELL".... how far this works???

Dear Ricky,

Yeah! Going short out of the money call/put, after 20th of the month makes sense provided one is very sure that the underlying will never reach your strick price. On expiry day one needs to look for those options which has got strong upmove with volumes expected in its underlying. Buying at money options in those identified stock options on/near expiry day is recomended.

Regards

nandu · #**162** 20th January 2008, 03:52 PM

Quote:

Originally Posted by ghosh_ak34

Dear Nandu,

Yeah! I have exp. this earlier and it happens many times when nifty is range bound and one is trapped in it. For options to be successful, the nifty, if you are a nifty trader, should move in a particular direction steadily either up or down. When to buy option is a common question and there could be many answers to this. Normally, what I do I am sharing it here. First find last weeks support (S1)and resistence level (R1). R1 ~ S1 = 300 to 400 points.

P = (Weeks High + Weeks Low + Weeks Close)/3
S1 = 2P - H
R1 = 2P - L

If (R1 - S1) >= 300 then,
Buy call at S1 and put at R1.
else
Do not trade at all.

Keep a target and SL in mind and maintain that strictly. Do not hold call or put after 20th of the month. If you are very sure that S1/R1 will be broken buy put at S1 and call at R1. Hope this helps.

Regards

thanks mr.gosh let me try this...btw..how to trade with shares using Option's...i meant how to write a strategy. coz, i tried buying RELIANCE call "at-the money" and buying nifty put "at-the-money"...(Reliance contributes 10% of the nifty)...ended up losing...kindly help me?....i think ricky's idea was good...selling the shares "out-of-the-money???

ghosh_ak34 · #**163** 20th January 2008, 06:31 PM

Quote:

Originally Posted by nandu

thanks mr.gosh let me try this...btw..how to trade with shares using Option's...i meant how to write a strategy. coz, i tried buying RELIANCE call "at-the money" and buying nifty put "at-the-money"...(Reliance contributes 10% of the nifty)...ended up losing...kindly help me?....i think ricky's idea was good...selling the shares "out-of-the-money???

Dear Nandu,

RIL had a good run, and you should have exited with profits. About writting stock options, Going short out of the money call/put, after 20th of the month makes sense provided one is very sure that the underlying will never reach your strick price. regarding wrirring as said earlier:

I personally do not like writting a call because it eats money as margin. I think, if you are having loss then, you exit that and look for some other one. Maintain strick stop loss. I will never reco. writting a call because of above reason.

Writing a call and buying a call is done to hedge your postions. But below I will just talk about when I will write a call.
In my view, normally call is written when underlying volume is decreasing, underlying is not showing any significant movement up near your strike price and expiry is approaching i.e. after middle of the month. Example you took Chambal Fert. at 100 strike price @6 and the underlying is at 90. But all of a sudden volume goes down from 1000k to 700k for e.g. and Chamble Fert underlying remains around 90 or below 100 near middle of the month, underlying is trading below 50 days moving average or approaching it then one can think to write a call. but its always risky.

Hope above helps.

Regards

nagendra_gb · #**164** 20th January 2008, 06:54 PM

Hi All,
Can any one tell me wht to do with ranbaxy call option. I have 400 call option at 13.50. current market price at 8.55. please suggest.

krishnan_vishnu · #**165** 20th January 2008, 09:46 PM

Dear Mr.Ghosh

As you mentioned Buy call @S1 AND PUT @R1

Put@R1 BUY OR SELL ?

thanks & Regards
krishnan

niksan · #**166** 21st January 2008, 01:50 PM

Ghosh Sir,

Greetings to you.

I bought NIFTY PE 5250 @ Rs 6.20 and its reading around 150 now. High of the day is 200.
Should I hold it any more or exit? So you see NIFTY falling any more from the 5300 levels?

Thanks.

pradeepgorle · #**167** 21st January 2008, 03:01 PM

sir i am new to this can i know what should i buy
?

nandu · #**168** 21st January 2008, 03:47 PM

******GREAT DAY FOR OPTION TRADERS!!!****** .... is it?. Waiting for Volatility Index....Cheers!!!

ghosh_ak34 · #**169** 21st January 2008, 09:01 PM

Quote:

Originally Posted by niksan

Ghosh Sir,

Greetings to you.

I bought NIFTY PE 5250 @ Rs 6.20 and its reading around 150 now. High of the day is 200.
Should I hold it any more or exit? So you see NIFTY falling any more from the 5300 levels?

Thanks.

Dear Niksan,

BOOK PROFIT is the call. CONGRATS! It was a good buy.

Regards

ghosh_ak34 · #**170** 21st January 2008, 09:06 PM

Quote:

Originally Posted by nagendra_gb

Hi All,
Can any one tell me wht to do with ranbaxy call option. I have 400 call option at 13.50. current market price at 8.55. please suggest.

Hi Nagendra,

Exit is the call and reduce your losses! Do not worry, you can buy again when market settles down.

Regards