You are right in calculation.
A spread of 5000 -- 5200 strike can have max value of 200. In this case, as the market has gone against your bearish position, you take the max hit of 200.
After adjustment of initial collection of 29 Rs., your net loss will be 171 Rs.
From learning perspective...
You have missed that I have used PUT to create the spread.
A 4000 PUT will be ITM only when market is below 4000 i.e. it will have some value else it is of no value.
A 4000 CALL will be ITM only when market is above 4000.
So when market is 4001, both the PUTs will expire worthless...
As mentioned many time that NR7 is a setup. An indicator that the expansion is just around the corner. It can be traded in different ways. Most common approach is to trade the Breakout. IMO, if someone is or wants to be a Breakout trader, then they also need to become Breakout Failure trader...
Highly appreciate this wonderful thread on options from a option-pro like you. Well done.
Just subscribed to this thread and will drop in here whenever I am in TJ.
Meanwhile, keep option traders happy in TJ thru your posts.
Happy options trading
IMO, your 5800/5900 spread has been 6 to 7 strikes ITM compared to 5400/5500 spread which is just 2 or 3 strikes ITM.
Faraway strikes have low liquidity compared to nearer strikes, hence their pricing is at the mercy of smarter market players. That's why u see unfavourable price(hence profit)...
I don't have any experience with such strategy. There is concept of put-call parity in option pricing that helps in determining fair value of put or call option. Due to market condition, this equation is not in balance at times and hence gives opportunity to arbitrage and make money by price...
Due to wider spread on stock options, your net cost of spread goes against your trade (i.e. u end up more during buying and get less during sell). Due to low volume, market maker, or other professional trader who are trading against you, give poorer price to you.
Hence IMO, better to stick to...
TT, even after Backtest of 1000 txn, are you not fooling yourself by trusting them casue in mkt future is never the same. Always it is said "this time it is different". Even after that, aren't we still at the mercy of probablity.
How big a sample size should be is interesting question...
I like his appraoch to take bold action to get things/people on track.
With this bomb, he finally managed to get opposition agree to form coalition govt.
He might not be next PM/leader but atleast parties will sit togather and face the EU/IMF togather.
In my scanner, I prefer to use value > 4 as filter on weekly/monthly timeframes. For daily x > 4, gives more false signals so prefer to use higher value.
If we go x > 7, then there are too few signals.
So, yes the contraction lookback period needs to be adjusted to meet other requirement of...
Each strike has its own delta and as a result, there is net delta for spread position.
If underlying goes to say 280/290 level, then delta of both the strike will reach very close to 1.00 (maybe 1 and 0.98) giving net delta very close to 0. In such case you might be able to see max profit...
He is LSE educated. He is also known to take big bets. Like he took bet of throwing news of referendum, which he cancelled yesterday. And after all, he is just not ready to leave his leadership and let someone else from his party take it forward.
Ricky welcome to the world of trading. To answer ur questions
1. Yr P&l is always given by (sell price-buy price)*qty.
2. As underlying moves, price of all option chain will move. ITM , ATM or OTM strikes move at different pace depending on mkt condition e.g. In trending mkt OTM are better...
My 2 cents on VWAP calculation
tick, 1min, 30min, day is our own perception. Using average of H,L,C is another such by product of left brain people. Once can alway challange why open is excluded, why don't give move weight to closing price and use H,L,2*c etc.
IMO, most precise...
Future pricing has its own component like Cost of capital, interest rate, remaining life etc to determine fair value of future for an underlying.
Lets not forget that all pricing is subjected to demand supply and sentiments situation at any time, which is not given by any theoratical...
Appreciate your sincerity to learn trading. You are going thru typical journey of a trader.
At early stage, trader learns something, and then practices it in market. When results are favourable it feels like we have cracked the mkt, and then mkt moves into different phase and same...
p8N8. Good to see you frank acceptance of reality of trading.
If you think, you made wrong decision, or you shd have taken some other decision, then it is never late to correct your decision. IMO, taking decision is great. If it turns out to be wrong, even better cause you have learnt...
Jovial, In trading, it is said that you should plan you exits before you open the trade. Cause emotions are least at that stage. Once trade is open, gread, hope, fear starts influencing the decision.
Anyway, to manage this trade - (just my suggestion)
1) exit when your defined loss limit is...
Sai Ram, Hope you won't me being straight forward and asking few question -
1) do you have track record of profitable trading of atleast 8 to 10 months or not ?
2) Do you have family to support or just you?
3) Do you have sufficient money to survive for 1 to 1.5 yr without expecting any...
Aditya, I think, u forgot to notice that many of posts are at 6.00 /7.00 /8 am IST.
Don't worry my friend I am also nocturnal animal (thanks to our education system).. my most productive time is when everybody is sleeping.