Why trade Options if volume is so low

A

AakashM

New Member
#1
#1
Hi
I'm new to option trading. I'm considering learning Options in detail.

Is the options market worth trading in, in India with such less volume compared to Futures.

One example:
Reliance 1M Futures - 150,000 lakhs traded volume
Highest Option volume at 2220.00 strike price - 3,700 lakhs traded volume
(Data from NSE India)

Thanks,
Aakash
 
V

vvv0501

New Member
#5
#5
AakashM said:
Hi
I'm new to option trading. I'm considering learning Options in detail.

Is the options market worth trading in, in India with such less volume compared to Futures.
Click to expand...
I have been trading options for over a year and my advice is you can pretty much forget about trading in options on individual stocks. There is simply not enough liquidity in even at-the-money options and you will get killed by the slippage.
Nifty options trading is possible, though even those are not as liquid as one would like. I find that the best way to trade options in our market is to adopt a strategy to take advantage of the time decay, as the actively traded options are always the near-month options that lose time value rapidly in the second half of the month. Best strategy is to write out-of-money options (somewhat risky) and put on credit spreads a week or two before expiry.
 
R

raosrinivas

Active Member
#6
#6
ayurakshapad said:
try to catch wat trader is trying/asking to point instead of leg pulling!!!!!
nt a good habit, (observation frm past comments on various topics)
Click to expand...
oxy is a decent, serious guy. he does not try to pull anyone's leg(s) from what i have seen. no volume thing is a fact that he mentioned, not even sarcastic, far from leg pulling.
 
D

dr_tejas_shah

New Member
#7
#7
vvv0501 said:
I have been trading options for over a year and my advice is you can pretty much forget about trading in options on individual stocks. There is simply not enough liquidity in even at-the-money options and you will get killed by the slippage.
Nifty options trading is possible, though even those are not as liquid as one would like. I find that the best way to trade options in our market is to adopt a strategy to take advantage of the time decay, as the actively traded options are always the near-month options that lose time value rapidly in the second half of the month. Best strategy is to write out-of-money options (somewhat risky) and put on credit spreads a week or two before expiry.
Click to expand...

Can you explain it in bit more details?
 
O

oxusmorouz

Well-Known Member
#8
#8
ayurakshapad said:
try to catch wat trader is trying/asking to point instead of leg pulling!!!!!
nt a good habit, (observation frm past comments on various topics)
Click to expand...
I'm afraid you have misunderstood. Have you considered the bid-ask quotes of options in companies like Sasken, CESC, Hindzinc? It's pretty frustrating even looking at them!
I don't seek to enter into an altercation here but just a note : it does pay to be unbiased. If you do have something personal, let's have it straight.
 
Last edited:
F

franktrader

Member
#9
#9
raosrinivas said:
oxy is a decent, serious guy. he does not try to pull anyone's leg(s) from what i have seen. no volume thing is a fact that he mentioned, not even sarcastic, far from leg pulling.
Click to expand...
i too feel so :)


ayurakshapad have misunderstood oxy's comment here ... :eek:

lack of liquidity is a BIG issue in trading Indian options.
 
S

SGM

Active Member
#10
#10
vvv0501 said:
I have been trading options for over a year and my advice is you can pretty much forget about trading in options on individual stocks. There is simply not enough liquidity in even at-the-money options and you will get killed by the slippage.
Nifty options trading is possible, though even those are not as liquid as one would like. I find that the best way to trade options in our market is to adopt a strategy to take advantage of the time decay, as the actively traded options are always the near-month options that lose time value rapidly in the second half of the month. Best strategy is to write out-of-money options (somewhat risky) and put on credit spreads a week or two before expiry.
Click to expand...
Hello VV

Right on the Spot

With a bit of directional play involved one can build a credit spread legging into one side at a time (intraday). Can start doing it around 10 sessions (days) to expiry (abt 2 weeks), slowly scaling into the position and building it to the size.

But not for newbies. A short option can be dangerous to your financial health, do not try unless you understand the risk and can mitigate it.


Regards
Sanjay
 
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