Writing Options - Risks and Rewards ?

Hello All ,

Like every common trader , I initially tried many formulas , charts , Pivot points and finally nothing worked ( at least for me ) and I lost good amount of money .

Later I have started writing Out of Money Options ( mostly in stock as nifty is hitting highs and highs nowadays) and earning 1% per month .

I know tons of good hearted genius are here and they know the pros and corns of this strategy . Kindly share your thoughts . Thanks in advance :clap:

looks like a good strategy. the only problem is that you are shorting stocks...and stocks can spike up suddenly. i remember Auropharma spike up one day and took out 5-6 strikes.

as long as you are able to manage spikes up/down, you are good.

-writing naked options without any protection is like sitting on volcano to warm your a$$.
-It works for 80-90 % of the time , giving false psychological comfort .
-(Not so) rare gap up/down may cost more than the pennies earned in many months.
-Read about Nassim Taleb & his book Black swan if you havent already.

all the best.

Regards

Funniest response that I have read on the forum!

If in case my Out of money becomes in money , I ll buy or sell futures of same stock to compensate the losses but I ll loose again if my futures is in opposite direction . Still working on proper strategy with protection . I ll take your advise

Selling option and eating premium is best way of making money (subject to having good amount of margin money)...and more safe is Nifty and Bank Nifty....

Should be ready to take large hits at some point or other .. if you can withstand those hits i think you can have a return of 2 % on total margin turnover per month especially on typical stocks

Yes . Basically I trade in Stocks as Yes Bank, Reliance Capital, SBIN , Axis Bank where the premium is very high . Thank you

There is only 1 side to market and thats is Right side.

Rules are simple if u are in direction of trend u will make alot in option ifu are opposite u loose all u bet :xD

nothing is perfect as these system are designed to loot money from both side bull as well as bear.

Doing nifty option makes sense as liquidity is sufficient. i stay away from stocks option.

few yrs ago i traded stock option didn't go well and in nifty too after loosing so many times i finally understood the game
but still haven;t made any marvel louse profit not put till now.alli win is just 30% well thats not bad but not good enough.