Stock Options
- Thread starter LOGI
- Start date
Puh, that information is a bit on very thin ice.
- High OI and low vola. Do not take the trade.
- High Delta and 40 day to expiry. Do not take the trade
- Trend up for the last 5 days, but vola high and Put call ration 1:3. Do not take the trade.
Every body which not understand in dept what is posted should stay away from any kind of option trading, expect those which have enough money to play with.
- High OI and low vola. Do not take the trade.
- High Delta and 40 day to expiry. Do not take the trade
- Trend up for the last 5 days, but vola high and Put call ration 1:3. Do not take the trade.
Every body which not understand in dept what is posted should stay away from any kind of option trading, expect those which have enough money to play with.
@Einstein
In your other post you did not explain on what trading idea your three points are based. You just came up with the comment: My rules for trading stocks are below. I mean, that is fine but it has to be fine tuned as it is a bit like going to a Porsche race with a nice looking Citron.
Now lets go a bit deeper into the subject. Stuff you may know, but others do not. So if some not more advanced option speculator read your post, they can be hardly punched from the market, because taking your rules probably as granted.
There are various option you can buy like otm, atm, itm, this month series, next month series and so on. Each of those option works in a different way, as the option greeks have a different impact on each one of them. I know that the Indian market has limited offers on stock options, even than you have possibilities and you have to choose exactly what option you want to use for what reason.
Depending how long you want to play the options and for what you want to use it like playing a direction, using it to hedge an other stock or option, you will take a different approach the way you make your decision about the option you will use.
As you now come up with the question: If one is bullish on stock. and he wants to buy naked call options. what type of option you'll buy??
First of all: I agree with you that we not should complicate trading and keep it simple. Even than, coming up with
1. Make sure it have high number of Open Interest.
2. Make sure it have High Delta.
3. check last 5 days price trend. if it seems Okay(liquid), only then enter the trade.
is really not enough to stand the market in a long run. To many traps you can and will fall in over time.
OI is a point to look at. Yes, I agree with you about that. It really helps to be sure that the chosed option is traded. But OI by it self has to be analyzed in dept and in conjunctions with other facts.
Delta. In both posts of you: No note from you in dept why high delta. High delta means itm options. But why itm options and not atm or otm. High Delta can not be taken as a general rule. It has to be analyzed in conjunction with the time we want to stay in the market and the risk we want to take with the option.
Trend: Yes, trend has to be analyzed. But where do I get in the trend? Depending where and how we enter a trend with options, we can play different strategies and games. But also here: No in dept note from you, just: If it seem to be ok. Yes, a trend is always ok. Did you go long yesterday in Nifty?
Now you see why your three posted rules are in no way to take as a recommended path. It is the begin of the path and it has to be worked out in a more precisely way, in case you want to move on with it. Your choice and your money you trade with. In case you really only want to speculate on a very short intra day basis, you not even need any of your rules when doing option trading trough tape reading. But that is more for option on futures and not for stock options. An other killing field.
@Charmsenthil: Even your question at begin is in such a general way and has no note in dept expect: Most of them are not liquid. Answer: So take the once with big OI. That's it.
Wish you further good luck and many good trades / DanPickUp
In your other post you did not explain on what trading idea your three points are based. You just came up with the comment: My rules for trading stocks are below. I mean, that is fine but it has to be fine tuned as it is a bit like going to a Porsche race with a nice looking Citron.
Now lets go a bit deeper into the subject. Stuff you may know, but others do not. So if some not more advanced option speculator read your post, they can be hardly punched from the market, because taking your rules probably as granted.
There are various option you can buy like otm, atm, itm, this month series, next month series and so on. Each of those option works in a different way, as the option greeks have a different impact on each one of them. I know that the Indian market has limited offers on stock options, even than you have possibilities and you have to choose exactly what option you want to use for what reason.
Depending how long you want to play the options and for what you want to use it like playing a direction, using it to hedge an other stock or option, you will take a different approach the way you make your decision about the option you will use.
As you now come up with the question: If one is bullish on stock. and he wants to buy naked call options. what type of option you'll buy??
First of all: I agree with you that we not should complicate trading and keep it simple. Even than, coming up with
1. Make sure it have high number of Open Interest.
2. Make sure it have High Delta.
3. check last 5 days price trend. if it seems Okay(liquid), only then enter the trade.
is really not enough to stand the market in a long run. To many traps you can and will fall in over time.
OI is a point to look at. Yes, I agree with you about that. It really helps to be sure that the chosed option is traded. But OI by it self has to be analyzed in dept and in conjunctions with other facts.
Delta. In both posts of you: No note from you in dept why high delta. High delta means itm options. But why itm options and not atm or otm. High Delta can not be taken as a general rule. It has to be analyzed in conjunction with the time we want to stay in the market and the risk we want to take with the option.
Trend: Yes, trend has to be analyzed. But where do I get in the trend? Depending where and how we enter a trend with options, we can play different strategies and games. But also here: No in dept note from you, just: If it seem to be ok. Yes, a trend is always ok. Did you go long yesterday in Nifty?
Now you see why your three posted rules are in no way to take as a recommended path. It is the begin of the path and it has to be worked out in a more precisely way, in case you want to move on with it. Your choice and your money you trade with. In case you really only want to speculate on a very short intra day basis, you not even need any of your rules when doing option trading trough tape reading. But that is more for option on futures and not for stock options. An other killing field.
@Charmsenthil: Even your question at begin is in such a general way and has no note in dept expect: Most of them are not liquid. Answer: So take the once with big OI. That's it.
Wish you further good luck and many good trades / DanPickUp
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