How to make money by writing CALL option just before exiry

vince · #31 19th July 2006, 02:53 PM

Quote:

Originally Posted by abhinkoi

Hello Vince,

Can you please let me know how this shorting Put strategy works. I am confortable with shorting CALL but not put.

Suppose if I sell 3100 PUT at 197 or 3000 PUT at 116. In which condition I would be in loss....I mean from which point (Close of NIfty at expiry) my loss will start...What will happen if NIfty closes below 3000...Please explain if you could with an example...

That will clear so many of my doubts...

Thanks in advance

Cheers
Abhi

If you sell a 3000 p at 116 your risk begins at 3000-116=2884.

Anywhere above 2884 at expiry you gain.

Why the discomfort to short puts ????

At least you know the max you could loose and that would be if the nifty hit Zilch, 0 , which we know is not possible.

vince · #32 20th July 2006, 09:41 AM

Looks like profit booking time on those short puts today.

and hey Agilent also looks like the right time to sell your calls.

Agilent · #33 20th July 2006, 10:24 AM

Quote:

Originally Posted by vince

Looks like profit booking time on those short puts today.

and hey Agilent also looks like the right time to sell your calls.

Thats why i called u the expert , my friend

Cheers

Agilent · #34 20th July 2006, 10:30 AM

Quote:

Originally Posted by vince

Please Agilent , I am do not claim to be an expert and ,I am not recommending anything at all. I have just said that i am short some puts at the moment.

I suppose the best strategy is something that you are comfortable with and that would differ from person to person.

There is no living on the edge. All my trades are planned and executed as per.

Vince
Had missed seeing this post ..

Listen ... I meant all of us (Derv traders) live on the edge ... not you only , man

I was comparing this to equity investors who see lesser fluctuations in their holdings.

Cheers
AGILENT

I mean , where (other than options) would see prices grow or slump 300% or 400 % in a single day, intra day .

abhinkoi · #35 20th July 2006, 12:01 PM

Thanks a ton Vince for your help. So it means as long as Nifty price is above the (Strike price - Premium) i.e. 2884 I would be in profit before expiry and after that per point I will lose Rs. 100..Is that true?

If yes than Shorting is the much better than buying call. At least you have something in your pocket for few days and if things go in right direction u always keep the premium...

Thanks again and correct me if I misunderstood something.

vince · #36 20th July 2006, 12:27 PM

Quote:

Originally Posted by abhinkoi

Thanks a ton Vince for your help. So it means as long as Nifty price is above the (Strike price - Premium) i.e. 2884 I would be in profit before expiry and after that per point I will lose Rs. 100..Is that true?

If yes than Shorting is the much better than buying call. At least you have something in your pocket for few days and if things go in right direction u always keep the premium...

Thanks again and correct me if I misunderstood something.

You got that right !

All the best

Agilent · #37 20th July 2006, 12:46 PM

Quote:

Originally Posted by abhinkoi

Thanks a ton Vince for your help. So it means as long as Nifty price is above the (Strike price - Premium) i.e. 2884 I would be in profit before expiry and after that per point I will lose Rs. 100..Is that true?

If yes then Shorting is the much better than buying call. At least you have something in your pocket for few days and if things go in right direction u always keep the premium...

Thanks again and correct me if I misunderstood something.

Abhin
I thought the thrust of yr thread was on writing a call .

How did u take this somersault (.. buying call ?)

AGILENT

abhinkoi · #38 20th July 2006, 02:26 PM

Thanks Vince for clearing my doubts...

Agilent the purpose of starting this thread was to understand the procedure / pros n cons of writing a call but in the meantime so many new things were introduced and we ended up understanding writing both...

Anyway all is well if end is well.
I enjoyed talking to both of you.

Will come up soon with some more questions ...
Till then lets enjoy WRITING .....

Agilent · #39 3rd August 2006, 11:24 AM

Abhin, my friend ... r u there..

Hope you aborted your idea of writing the Aug 3100 call ..

http://www.traderji.com/51656-post23.html
(As it turns out, 19 July ..when this was posted .. was a minor bottom for the markets ! ... And this despite crude price having hardened since then ... just shows fuel costs are not so vital after all)

Eager to hear

AGILENT

srikanth_kandalam · #40 9th August 2007, 01:56 AM

Quote:

Originally Posted by Agilent

Abhinav
As long as Nifty closes <3100 on 29 June, the 3100 call will expire worthless, hence your profit will be 27 (less brokerage)

I'm not able to tell u how much Nifty 3000 call will trade at if and when NIfty is at 3072. In any case this call will still have some value, and you could end up with a loss when u square off

Suggest you get some other experts (Vince ?) to corroborate, and don't go by my advice alone. FnO option sales can be tricky matters. But I would reiterate : go for well out-of-the money calls, of u r looking to sell. Dont get tempted by the pricier in-the-money calls.

AGILENT

Agilent

Due respects to your posts- apparently you guys trade options like stocks. That is exactly a prescription for disaster. If you do not account for Implied vs Statisticaly volatility and do not know your position greeks- just trading on movement of underlying is nothing less than gambling and this is the worst way to tell others how to use options.

Sorry- but I could not resist the stuff that is being posted here.

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