A Beginner's way to trade options.

[jamit_05]

st ....wanna ask you one thing ....its been in my mind since long long time...
the buyer has got limited risk while the writer got unlimited risk...simple yeah..
ok...but y so ? is it because
the time decay plays an important role or
the writer has got an upper hand ALWAYS or the writer is more professionally/technically talented/equipped like fii/ institutions than the buyer.. ...i.e has they always got an edge over the buyer of option from very beginning..i.e its not a 50 50 game...

i hope u got it wt i mean to ask..
thanks
harsh

I think, Harsh, that professional options writers hedge their positions. I have discovered, that the ones who regularly earn from options usually engage is some sort of a pair adjustment (hedging their naked positions). He understands that if he just wants to trade naked (well I dont mean literally then why not trade futures. He trades options because of the game he can play with pairs or ratios. (Like straddles and strangles). There he is better off, better than 50:50. He adjusts his position towards tilting the odds in his favor. Thats what seperats options from futures.

Now the big question is "How?", which is exactly why we are all here.

 

[jamit_05]

.
.

One can trade miniflow or 60 min flow with the help of options....when you get a buy,buy at the money call, and when you get a sell then buy at the money puts.

Smart_trade

ST sir,

Could we do this?

For the May option contracts, could be take up a straddle or a strangle as and when the opportunity arises. We will follow it up all the way. And along the way we will learn. In that way we will have some interesting questions to ask.

This approach has another advantage.

Options is a very fast field (the greeks, esp, are best kept at bay) and hence so many questions to ask. But with we taking up one path of say, straddles or strangles, the question automatically, for the most part, will revolve around the trade in action. It will be a very focussed approach hence efficient.

 

[lvgandhi]

ST sir,

Could we do this?

For the May option contracts, could be take up a straddle or a strangle as and when the opportunity arises. We will follow it up all the way. And along the way we will learn. In that way we will have some interesting questions to ask.

This approach has another advantage.

Options is a very fast field (the greeks, esp, are best kept at bay) and hence so many questions to ask. But with we taking up one path of say, straddles or strangles, the question automatically, for the most part, will revolve around the trade in action. It will be a very focussed approach hence efficient.

What is straddles or strangles?

 

[Smart_trade]

ST sir,

Could we do this?

For the May option contracts, could be take up a straddle or a strangle as and when the opportunity arises. We will follow it up all the way. And along the way we will learn. In that way we will have some interesting questions to ask.

This approach has another advantage.

Options is a very fast field (the greeks, esp, are best kept at bay) and hence so many questions to ask. But with we taking up one path of say, straddles or strangles, the question automatically, for the most part, will revolve around the trade in action. It will be a very focussed approach hence efficient.

Yes Amit,we will trade the next 60 min flow signal with call/put or spreads....We are going to have 3-4 days holidays so I will be selling straddle to take advantage of time decay. But beginners should not attempt this trade as the crash situation could be pretty ugly for this trade.

I will take this trade in the afternoon and explain the thought process EOD

Best wishes,

Smart_trade

 

[Smart_trade]

What is straddles or strangles?

LVG,

Straddle is a simultanous buing/selling of call and put of the same strike price....strangle is simultanous buing/selling of call and put of the different strike price....

We will be selling straddle in the first week, then after premiums decay,we will buy the straddle to take advantage of price movements.....In the last week we will play with 2 spreads (calls Condors) ....Lets see how it develops....

Regards,

Smart_trade

 

[myvineet]

One can trade miniflow or 60 min flow with the help of options....when you get a buy,buy at the money call, and when you get a sell then buy at the money puts.

Smart_trade

DA, isn't it a better choice to sell ATM put when we go long & sell ATM call when we go short ..thats way we earn both directional move+ time decay..

the BETA may not be same but we can compensate that with time decay in put\call..

reagrds

vineet

 

[Satyen]

nice nice ............ thanks ST da and amit for this thread i was thinking 60 min flow with option but dont know abc of option plz give some link or e-book so that can learn some option basic in this holiday thanks again ........

Regards
Satya

 

[Satyen]

Any questions on options ? Would try to answer to the best of my ability.

Do we all know the option basics ?

Smart_trade

No please guide ........

Regards
Satya

 

[Satyen]

Yes Amit,we will trade the next 60 min flow signal with call/put or spreads....We are going to have 3-4 days holidays so I will be selling straddle to take advantage of time decay. But beginners should not attempt this trade as the crash situation could be pretty ugly for this trade.

I will take this trade in the afternoon and explain the thought process EOD

Best wishes,

Smart_trade

wow thanks will be waiting ......

Regards
Satya

 

[myvineet]

nice nice ............ thanks ST da and amit for this thread i was thinking 60 min flow with option but dont know abc of option plz give some link or e-book so that can learn some option basic in this holiday thanks again ........

Regards
Satya

satya, there are many website where you can learn basic about options..

there is option thread by SUNIL BHAI, where he try to explain some basic option strategies...


http://www.traderji.com/options/24278-options-trading-strategies.html

hope it helps

regards

vineet