Option Buy Recomendations

ghosh_ak34 · #**521** 2nd August 2008, 03:05 PM

Quote:

Originally Posted by praveen taneja

sir can u make it lil bit more clear that in the event of gap up n remain above 20 points till 10.30-10.45 buy calls wat u mean by it.is it that at watever rate mkt open like if on monday if nifty open at 4475 so v should wait for 4495 n wait till 10.30-10.45 n then v should buy a call on frst sppt n at 3.00pm we buy a put at R1 for hedging wat if then rate is somewhere between S1 n R1 or at S1 pls make it clear i m confuse on it thnx n forgive me for my ignorance god bless u alll

Dear Praveen Taneja,

When market opens gap up or down by 20pts then, we need to wait till 10:30-10:45AM for it to remain up or down by 20pts. Normally, Nifty stabilizes around 10:30 AM-10:45 AM and shows some direction either up or down. Then, depending on 20pts up or down buy a call at S1 or put at R1 with SL=30% from your buy price and hold it till your target is met or hold it with trailing SL = 10% (max) till 3:00 PM-3:15 PM and square off your position. Suppose you do not want to square off then, at 3:00 PM-3:15 PM buy put at R1 or and call at S1 to hedge your position so as to minimize your risk from gap down or gap up opening the next day. There is no need to worry about the nifty levels before you buy these options.

I hope this helps.

Regards

ghosh_ak34 · #**522** 2nd August 2008, 03:15 PM

Quote:

Originally Posted by ravalsb

Dear Ghosh,

What are your views on TATAPOWER. Have seen reasonable amount of OI build up in call options for august series.

Regards

Dear Ravalsb,

Tata power looks okay on charts. But I will not recommend an entry atleast at this point.

Regards

jace48 · #**523** 2nd August 2008, 07:48 PM

Quote:

Originally Posted by ghosh_ak34

Dear Praveen Taneja,

Normally, Nifty stabilizes around 10:30 AM-10:45 AM and shows some direction either up or down. Then, depending on 20pts up or down buy a call at S1 or put at R1 with SL=30% from your buy price

Dear ghosh_ak34,

Is S1 R1 on strict basis or every rally upwards to be treated as R1 and every downward to be treated as S1?

Thanks..!

ghosh_ak34 · #**524** 2nd August 2008, 08:41 PM

Quote:

Originally Posted by jace48

Dear ghosh_ak34,

Is S1 R1 on strict basis or every rally upwards to be treated as R1 and every downward to be treated as S1?

Thanks..!

Dear Jace48,

As stated earlier, these R1, S1 are weekly levels.

Regards

jace48 · #**525** 2nd August 2008, 09:55 PM

Quote:

Originally Posted by ghosh_ak34

Dear Jace48,

As stated earlier, these R1, S1 are weekly levels.

Regards

So does that mean it's not necessary to trade daily but in the entire week whenever we reach our R1 or S1 level in coming week?

If my understanding is correct we can take position close to R1 or S1 level as well, say 20 or 30 points close to it since it is not necessary nifty may hit our levels.

Thanks...!

ghosh_ak34 · #**526** 3rd August 2008, 01:42 PM

Quote:

Originally Posted by jace48

So does that mean it's not necessary to trade daily but in the entire week whenever we reach our R1 or S1 level in coming week?

If my understanding is correct we can take position close to R1 or S1 level as well, say 20 or 30 points close to it since it is not necessary nifty may hit our levels.

Thanks...!

Dear Jace46,

Yes, its not necessary to trade daily. Whenever nifty trades up with 20 or more points buy call at S1 and whenever nifty trades down with 20 or more pts buy put at R1. Do not enter into trade before 10:45 AM and do not carry any open position home , always hedge your position before you call it a day so as to avoid any risk arising out of Nifty gap up or gap down opening.

Always maintain a strict SL=20-30% from your buy price. Have a target = 40-50% from your buy price and square off when your profit is met or hold your profit making position with a trailing SL=10% (max).

Hope this helps.

Regards

balaj78 · #**527** 4th August 2008, 08:37 AM

sir,
This is raj from chennai . i have a dou't in options .
for eg nifty is at 4430 . i bought a call option 4300 call at rs 157.
if at the expiry nifty was at 4550 the price of the call option would be
(4550 - 4300) = 250. suppose i forget to close the open position it will be automatically
exercised by the exchange or i have to inform the broker to excersice the contract . what will happen when i din't close the position .

skarpio · #**528** 4th August 2008, 10:32 AM

Quote:

Originally Posted by balaj78

if at the expiry nifty was at 4550 the price of the call option would be (4550 - 4300) = 250. suppose i forget to close the open position it will be automatically
exercised by the exchange or i have to inform the broker to excersice the contract . what will happen when i din't close the position .

No. Read up on option greeks that tell you how to calculate option prices. Its not just a simple difference.

Index options get closed at expiry i.e. they are squared off. Read up on the difference between exercise and square off. The former doesn't really happen here in India though.

tradengrow · #**529** 4th August 2008, 03:07 PM

Quote:

Originally Posted by skarpio

No. Read up on option greeks that tell you how to calculate option prices. Its not just a simple difference.

Index options get closed at expiry i.e. they are squared off. Read up on the difference between exercise and square off. The former doesn't really happen here in India though.

Dear Skarpio,

Yes, we can use options calcultor for calculating the option price at differnt calander days. But question is fro where will we get the annual Interest rate. Volatility (may be we can us VIX from nseindia) , dividend yield etc.

Please suggest these and provdie an example.

Regards

lalpar · #**530** 4th August 2008, 07:00 PM

Hi Ghosh Sir,

I squared of my trade for 4400 Put taken at 165 at 161..Markets look postive and may move upwards..So I decided to book partial loss and wait for some time

Regards
Lalith

The Following 4 Users Say Thank You to ghosh_ak34 For This Useful Post:
absolutme (4th August 2008), columbus (3rd August 2008), deoria (3rd August 2008), praveen taneja (3rd August 2008)