linkon's Stock options

linkon7

linkon7

Well-Known Member
#1
#1
This is one topic that i put on my back burner since i never had the Capital to pursue full time. I am hoping to come across some capital soon and that means i have to start devoting some time and energy towards it...

I have no intention of trading them now, its a matter of just case study. Its not a recommendation to buy / sell and please do your own analysis before u decide to buy stock options.

This is a swing trade method and typical trade will last for about 5-6 days.
mental preparation is that almost 50% of all trade will be loss making.

Haven't exactly decided on the methodology yet and will frame rules as and when i gain experience with it.

I will be following daily time frame, so trades will be based on open of the stock on the next day. Camarilla H4 / L4 will be guiding factor for the trigger of the stocks. I wont be looking at the stock's charts untill EOD and all analysis will be done on paper only.

The stocks i short listed for trades are :
Code: 
ABAN
ASHOKLEY
BAJAJHIND
BHARTIARTL
CAIRN
CHAMBLFERT
CIPLA
DLF
ESSAROIL
GMRINFRA
HDIL
HINDALCO
HINDUNILVR
ICICIBANK
IDBI
IDEA
IDFC
IFCI
INFOSYSTCH
ISPATIND
ITC
JINDALSTEL
JPASSOCIAT
KFA
LT
MTNL
NAGARFERT
NTPC
ONGC
POWERGRID
PUNJLLOYD
RCOM
RELCAPITAL
RELIANCE
RNRL
RPOWER
SAIL
SBIN
SUZLON
TATAMOTORS
TATASTEEL
TCS
UNITECH
WIPRO
Hope to get some nice feed back from all...
 
linkon7

linkon7

Well-Known Member
#2
#2
reserved...!
 
linkon7

linkon7

Well-Known Member
#3
#3
reserved...for modifications!
 
linkon7

linkon7

Well-Known Member
#4
#4
reserved for systems...and analysis...!
 
linkon7

linkon7

Well-Known Member
#5
#5
Stock options selected for 29th :
Code: 
INSTRUMENT	SYMBOL	EXPIRY_DT	STRIKE_PR	OPTION_TYP	OPEN	HIGH	LOW	CLOSE	SETTLE_PR	CONTRACTS	VAL_INLAKH	OPEN_INT	CHG_IN_OI	TIMESTAMP

OPTSTK	GMRINFRA	25-Feb-10	65	CA	2	2	1.4	1.8	1.8	81	135.07	260000	142500	28-Jan-10

OPTSTK	IDFC	25-Feb-10	160	CA	2.5	3.1	2.4	2.85	2.85	26	124.87	179950	23600	28-Jan-10

OPTSTK	ONGC	25-Feb-10	1140	CA	28.75	28.75	16.1	18.9	18.9	11	28.75	6075	1575	28-Jan-10

OPTSTK	RELIANCE	25-Feb-10	1080	CA	31.5	31.5	23.4	26.95	26.95	1365	4539.34	521400	179100	28-Jan-10

OPTSTK	TATASTEEL	25-Feb-10	600	CA	17	22.5	15.1	21.2	21.2	746	3526.98	271220	43548	28-Jan-10
Assumption is all the above is bought only if H4 / L4 is broken on a closing basis...
 
VJAY

VJAY

Well-Known Member
#6
#6
Dear Linkon,
Hope another gem for learning purpose from you......thanks for sharing with us what you want to do in trading.......
 
praveen taneja

praveen taneja

Well-Known Member
#7
#7
Wow Bro hope of one more thread for options and that too naked no covering no hedging god bless u and best of luck
 
praveen taneja

praveen taneja

Well-Known Member
#8
#8
Strong & Weak futures
This is list of 10 strong futures:
Sun TV, Triveni, Pantaloon Retail, Bank of Baroda, GTL Infra, Titan, Cummins India, Indian Bank, Crompton Greaves & Indusind Bank. And this is list of 10 Weak futures:
Aban Off shore, Orchid Chem, Praj Industry, IOB, GT Offshore, India Info, Moser Bear, EKC, TV-18 & KFA.
Nifty is in Down trend
 
A

AW10

Well-Known Member
#9
#9
Linkon, Good to see this thread on stock option. For following reasons I am staying away from it -
1) illiquidity is killer. Stock option might be active on a day when there is news in stock, but in next 2 days, liquidity drops ..and then you are stuck.
2) price quotes are at the mercy of operators.. specially OTM options.
3) very few stocks - ril etc have fairly healthy trading volume of few 1000 stocks daily, on regular basis.. Even that is far less then the volume that is good enough for me.
4) As stock movements in % terms are larger then Nifty move, chances are high that the option that u hold becomes deep OTM or deep ITM quite fast..and then if u happen to be on the wrong side of the trade, then u are stuck. Low liquidity and slippage will hurt.

5) So when u are forming some strategy, plz do take care of liquidity and slippage. So rather then starting with 100s of stock in shortlist, I would suggest to take stocks that have fairly stable average contract traded volume on last 20/30 days.
6) Simple strategy like spreads, also does not give good Reward risk profile. And if I can get the same RRR profile on nifty, then why bother to goto stocks.. Rather increase the position size in nifty which does not suffer from liquidity. Atleast I have more flexibility to adopt different strategies there.

At the end of the day, our next trade is a random event with probability of 50/50. Our trading system, might give win rate of 70%..but that is not the probablity of next trade's success. Next trade has equal chance of falling in 30% of our system's track record.

Hope my comments don't discourage you. I am also looking forward for threads on stock options. Quite possible, scenario might have changed in last few months since I had looked at it last time.

Hope this helps..
All the best.. and happy trading
 
linkon7

linkon7

Well-Known Member
#10
#10
AW10 said:
Linkon, Good to see this thread on stock option. For following reasons I am staying away from it -
1) illiquidity is killer. Stock option might be active on a day when there is news in stock, but in next 2 days, liquidity drops ..and then you are stuck.
2) price quotes are at the mercy of operators.. specially OTM options.
3) very few stocks - ril etc have fairly healthy trading volume of few 1000 stocks daily, on regular basis.. Even that is far less then the volume that is good enough for me.
4) As stock movements in % terms are larger then Nifty move, chances are high that the option that u hold becomes deep OTM or deep ITM quite fast..and then if u happen to be on the wrong side of the trade, then u are stuck. Low liquidity and slippage will hurt.

5) So when u are forming some strategy, plz do take care of liquidity and slippage. So rather then starting with 100s of stock in shortlist, I would suggest to take stocks that have fairly stable average contract traded volume on last 20/30 days.
6) Simple strategy like spreads, also does not give good Reward risk profile. And if I can get the same RRR profile on nifty, then why bother to goto stocks.. Rather increase the position size in nifty which does not suffer from liquidity. Atleast I have more flexibility to adopt different strategies there.

At the end of the day, our next trade is a random event with probability of 50/50. Our trading system, might give win rate of 70%..but that is not the probablity of next trade's success. Next trade has equal chance of falling in 30% of our system's track record.

Hope my comments don't discourage you. I am also looking forward for threads on stock options. Quite possible, scenario might have changed in last few months since I had looked at it last time.

Hope this helps..
All the best.. and happy trading
Click to expand...
Actually i have short listed 42 stocks( 22 of them have fairly OK volumes on regular basis) with trading volume of more than 50 contracts on options. Even i am scared of the liquidity part and decided to short / long futures just incase i dont get exit. Another aspect is that i intend to carry only those options who are in the positive.

I will be actively trading this only after i gain consistent profit on paper for atleast 3 months. Till then its just under the microscope...
 
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