Advice needed with regard to Option Trading

RiddhiPD

Active Member
#1
So,I have invested in NiftyBees through out the last year.Lets just say I have accumulated Niftybees around 500 units.

Now my queston is although I am In profit, recent hammering eroded a large amount of my position.So as a precautionary measure I want to hedge the position and maybe make a monthly income out of it.For this I am looking to sell option.

My choices are

1.selling naked call ( 1 lot) may be 600 points away in next month and wait for time value to go down.Even if nifty climbs up 600 point in a month and i see loss in option I can liquidate my position,if needed.

2.Selling Call spread to minimise the risk....but I am not sure how much away should I position the spread though.But it will minimise the risk quiet a lot.

3.Selling front ratio call spread.I have never attempted it.But can I get out of the position if I am in max profit zone?? I have never attempted it but if I do how and where do i place it....keeping in mind I am holding nifty bees so risk is limited.But I want minimize the risk as far as I can.

I want to hold niftybees as a investment.Keeping in mind please suggest something for me....
 

travi

Well-Known Member
#2
The problem with selling naked in itself is risky but in your case you are selling naked calls which is hedged by long niftybees.

Selling Puts isn't a good idea bcos you'll be very directional, ie. LONG so a fall in Nifty will make a loss in both legs.

Either you can just sell a FAR OTM Call and keep rolling it as nifty moves. Keep in mind, the higher the IV (implied Volatility), more the gain.
This is like a covered call position.

incase you want to sell an ATM or near OTM, then to hedge it you can buy a slightly higher strike Call and hedge it but it wont make much sense since you have a Delta 1 long position in spot.. ie. SELL 10700CE and buy 10900CE
Just make sure you sell enough units backed by equal niftybees weightage. I think 750 bees equal to derivative 1 lot.
 

RiddhiPD

Active Member
#3
The problem with selling naked in itself is risky but in your case you are selling naked calls which is hedged by long niftybees.

Selling Puts isn't a good idea bcos you'll be very directional, ie. LONG so a fall in Nifty will make a loss in both legs.

Either you can just sell a FAR OTM Call and keep rolling it as nifty moves. Keep in mind, the higher the IV (implied Volatility), more the gain.
This is like a covered call position.

incase you want to sell an ATM or near OTM, then to hedge it you can buy a slightly higher strike Call and hedge it but it wont make much sense since you have a Delta 1 long position in spot.. ie. SELL 10700CE and buy 10900CE
Just make sure you sell enough units backed by equal niftybees weightage. I think 750 bees equal to derivative 1 lot.

Thanks for the suggestions.....will keep in mind.I am working on raising my niftybee units.....r
 

Similar threads

Broker Special Offers

Intraday Higher Leverage

Save up to 90% in brokerage and get higher leverage for intraday trades.

Name:Phone:
Email:City:
State:
Are you a day trader?