Frankly I am amazed at the stuff that is being posted here on option trading. There are fundamental differences in trading option- you ignore this and you will burn yourself.
First- you need to have an idea of what the Implied volatility of a certain option is. You will need to Benchmark this with the Statistical or Historical volatility- to make a judgement whether the option is "cheaper" or "costlier"
Without this fundamental information- the guys who are suggesting trading options based on stock movements are dead wrong.
In addition you need to know about the "greeks" of the option you are considering trading. Like some xXXXX here were quoting buying options based on stock movements- do you guys realize unless you buy DEEP ITM options- your option prices will not move as fast as the underlying? If you bought ATM ( at the Money options) the best you will have is a delta of ).5 approx. That means if stock price goes up by 1 rupee your option price goes up by 50 paisa. Try making money after you pay the brokerage!
I am not even going into implied volatility changes which are the MOST important aspect of pricing- and is ignored by most novice traders. Simply put implied volatiliy is like the tides at sea- when the tide is hig- the options get pricier and when it is low it gets cheaper- the fundamental aspect to winning- is to be aware of these changes and not Just stock and option quotes- if you do that you XXXXX who are talking about buing and selling- will just mislead some innocent guys to be slaughtered.
I just chanced on this site- I want to trade options- but I have not found a credible resource that gives me the greeks and volatility info- without this if you are trading- best of luck.
First- you need to have an idea of what the Implied volatility of a certain option is. You will need to Benchmark this with the Statistical or Historical volatility- to make a judgement whether the option is "cheaper" or "costlier"
Without this fundamental information- the guys who are suggesting trading options based on stock movements are dead wrong.
In addition you need to know about the "greeks" of the option you are considering trading. Like some xXXXX here were quoting buying options based on stock movements- do you guys realize unless you buy DEEP ITM options- your option prices will not move as fast as the underlying? If you bought ATM ( at the Money options) the best you will have is a delta of ).5 approx. That means if stock price goes up by 1 rupee your option price goes up by 50 paisa. Try making money after you pay the brokerage!
I am not even going into implied volatility changes which are the MOST important aspect of pricing- and is ignored by most novice traders. Simply put implied volatiliy is like the tides at sea- when the tide is hig- the options get pricier and when it is low it gets cheaper- the fundamental aspect to winning- is to be aware of these changes and not Just stock and option quotes- if you do that you XXXXX who are talking about buing and selling- will just mislead some innocent guys to be slaughtered.
I just chanced on this site- I want to trade options- but I have not found a credible resource that gives me the greeks and volatility info- without this if you are trading- best of luck.
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