A guide to Option trading - Index and stocks

Ume_r · #1 9th October 2008, 06:49 PM

Hi All

Thanks to Traderji for opening a forum which is an open window to all of us.

I have been trading index and stock option for a while now. Its been the most riskiest and the most potential ( i believe).
I have been using all the information i get and just playing on a guess work.

I wanted to start such a thread to all the new comers, the intermediate (like me), and also calling on the experts to share their experience and guide us for a better understanding and usage.

Lets put in our real experince and hope to get a better understanding from this thread.

Cheers!

coolboy007 · #2 9th October 2008, 06:55 PM

Quote:

Originally Posted by Ume_r

Hi All

Thanks to Traderji for opening a forum which is an open window to all of us.

I have been trading index and stock option for a while now. Its been the most riskiest and the most potential ( i believe).
I have been using all the information i get and just playing on a guess work.

I wanted to start such a thread to all the new comers, the intermediate (like me), and also calling on the experts to share their experience and guide us for a better understanding and usage.

Lets put in our real experince and hope to get a better understanding from this thread.

Cheers!

Hello ume

Yeah you are right the options are most riskiest and have the most potential. I got burnt the first time i ventured 1 month back but after that there was no looking back for me after that have made consistent profits. I usually hedge my positions , never play naked and have stopped taking OTM options

i did it when i entered options. I usually take 2-3 CE or PE and hedge with 1 PE , didnt had the courage to go naked long or shorts.

I am long on nifty currently with some 3600 CE 4500 cE( bought 20 days back stuck in it ) and 1 3400 PE for hedging.

BEst of luck.

Ume_r · #3 9th October 2008, 07:04 PM

Hello coolboy007

Thanks for a lightning reply for my first thread

Exactly saying...this was the same senario how i entered in to option trading and really have burnt my fingers hard.

I also hold the same pos as yours... 3600 and 4500CE but ATM in 36CE and dead on 45CE.

"and 1 3400 PE for hedging" - headging

im really confused with this words.. even if i understand it theoretically fail to use it practically thats the toughest part of mine.

Hope it gets better....

BUZZ · #4 9th October 2008, 07:23 PM

first question" how to trade options and how to find its scrip..
give an example for explanation
Buzz

Ume_r · #5 9th October 2008, 07:35 PM

Hi

at first, in an index, I will look at nasdaq intraday and the world market reaciton and watch CNBC TV18 news and then will decide to go for a PE or a CE and then look at the nearest strike price and will wait for a better level.

example as on wed 08/oct I knew that nse would open a gapdown and would fall further.. so went for a 35PE spot as soon as the market opened.. but after the sunoutage I could not square off the pos when it zoomed up. waited for a while and closed just ITM. ( as i would target only for intraday and if it dosen't workout - i would go for delivery)

pl let me know if this is the right way of trading...

many thanks

coolboy007 · #6 9th October 2008, 07:43 PM

Quote:

Originally Posted by Ume_r

Hello coolboy007

Thanks for a lightning reply for my first thread

Exactly saying...this was the same senario how i entered in to option trading and really have burnt my fingers hard.

I also hold the same pos as yours... 3600 and 4500CE but ATM in 36CE and dead on 45CE.

"and 1 3400 PE for hedging" - headging

im really confused with this words.. even if i understand it theoretically fail to use it practically thats the toughest part of mine.

Hope it gets better....

Hey you are holding ditto positions like me leaving 3400 PE.

I never take positions without hedging , have you used OPTION ORACLE software , it scares me when i am going for naked longs and click on analysis. It helps me a lot in building strategies. So i hardly lose with hedging.

Ume_r · #7 9th October 2008, 07:46 PM

I have 35PE 1 lot.. dint know i was headging

yes have just seen Option oracle.. do you use it for intraday trading or for analysis ?

by the way... headging is a good idea, but do you hold this position until expiry or ??? how is it you close all this positions in ITM...

coolboy007 · #8 9th October 2008, 08:09 PM

Quote:

Originally Posted by Ume_r

I have 35PE 1 lot.. dint know i was headging

yes have just seen Option oracle.. do you use it for intraday trading or for analysis ?

by the way... headging is a good idea, but do you hold this position until expiry or ??? how is it you close all this positions in ITM...

I cannot do intraday as i study and have to go to school everyday i am 17 years old. Trading is my hobby parttime instead of playing silly computer games.

Yeah Options oracle is my lifeline b4 taking positions it tells my max loss in every case so helps me a lot.

Dude u r holding 3500 PE and am holding 3400 pe a little difference

Usually my rule is to clear all options positions by 21-22 of every month as after that time decay comes in heavily and we lose on ce and pe both so never hold till expiry.

rkkarnani · #9 9th October 2008, 09:28 PM

All the best for this new thread, and look forward to understand more about Options and using it as a hedging tool!!!
Very good initiative!!!

I have noticed that the Stock Options are quiet illiquid and the spread is big!!! The Option scenario is yet to fully mature in India!!!
Maybe it is a good time to learn and be prepared when the real time comes!!!
The Index Options and mainly in Nifty are the ones which are very liquid!!!

Ume_r · #10 17th October 2008, 07:14 PM

coolboy007 - what happened to your positions ?