General Trading Chat

LivetoTrade

Well-Known Member
Tata Steel Q4: Cons Net Loss At Rs 5,674 Cr Vs Profit Of Rs 1,036 Cr (YoY)

Tata Steel Q4: Cons Exceptional Loss Of Rs 4,811 Cr

Tata Steel Q4: Cons EBITDA At Rs 1,543 Cr Vs Rs 5,011 Cr (YoY)

Tata Steel Q4: Cons Operating Margin At 4.6% Vs 11.8 % (YoY)

Tata Steel Says: Decline In Commodity Prices Impacted FY15 Performance
 
Most books on options are written from the point of view of option sellers. Talking about volatility,option greeks,payoff diagrams etc...

"Options Advisor" by Bernie Shaeffers is written entirely from the point of view of options buyers.....it talks about how to judge when the underlying is going to have accelerated price move...it is based on charts. Good read for option buyers.

Smart_trade
pretty hard to find, , nowhere:confused:
 

LivetoTrade

Well-Known Member
Most books on options are written from the point of view of option sellers. Talking about volatility,option greeks,payoff diagrams etc...

"Options Advisor" by Bernie Shaeffers is written entirely from the point of view of options buyers.....it talks about how to judge when the underlying is going to have accelerated price move...it is based on charts. Good read for option buyers.

Smart_trade
pretty hard to find, , nowhere:confused:
https://books.google.co.in/books?id...chniques Using Equity & Index Options&f=false
 

nirav_j

Well-Known Member
Looks like you are playing ATM straddles. Just curious, have you tried delta neutral OTM strangles?
I find OTM strangles less risky (and, of course with less reward). It's because if market moves in one direction, one of the legs becomes ATM/ITM and its delta increases. The other leg becomes more OTM and delta decreases. Eventually, the rate of change of option prices differs so much that overall position becomes profitable. But this needs to be managed carefully as well (usually get out after 3-4 trading sessions max) to avoid huge time decay.
Yeah, from paper trading, Im liking the ATM strikes. IMO its easier to manage than a OTM strikes.

I believe you are talking about a long strangle, whereas Im talking about a short straddle.Intent is to make time decay work for me.open position @ expiry of current contract for next month contract ..

However, im looking at short straddles just for nifty. For stocks, I intend to work on Long Strangles, OTM strikes ..
 

Jai Mata Di

Well-Known Member
Just a simple observation.. :lol:

Just 4 week ago (22nd april) nifty was nearly same level like today.
8400 CE was around Rs 240 then, today only Rs 90.
150 point premiums decreased out of Rs 240 due to time decay(mainly) in 4 weeks. This shows why option buyers ultimately struggle to making profit in the long run.

Unless very experienced trader who can spot the trend clearly most of times (not always possible) option buying is actually injurious to traders health.


Best Wishes & Happy Trading.
H.C.
My observation is in the line of previously discussed topic in this thread that time decay (theta) is the biggest enemy of option buyer. It is like slow poison.
Options are expiring assets, from above example 8400 CE lost 60% of its value in last 4 weeks (about only 20 trading days). When some one lost 50% capital in trading, it already needs to make double gain (50+50=100) to make break even. There is slippages, brokerages other taxes as add on. So option buyer need to win in big % to compensate all using the the trend (delta). If still somone is winning good in the long run (very fewer) then that is good for them but most option buyers loosing in the long run, bcoz mathematically they are facing more toughest adversities. :eek:

My advice is simple trading with nifty future even with 2-3 lots is better than trading using option buying. But most beginners start with option trading (buying:D) bcoz of low capital.
I advised TR long ago when he lost too much bcoz of option trading. He listened, phir loosa kam ho gaya. One day he would be successful future trader.

I also advised, if some one really want to involved in option trading, follow your same strategy just replace option CE buying with selling PE and PE buying with selling CE. You replace your intraday trade using such strategies.

About position option selling:-

Theoretically there is unlimited loss potential but actually not bcoz option sellers close their position(or hedge their position) during highly volatile market events like vote etc. In most other days nifty mostly remains range bound. Usually position option sellers win good money in 8-9 month per year. Rest 3-4 month in trending market they can loose all profit. But they always maintain their stop loss. They quit their strikes and then open ther position in safer strikes higher or lower when market shows weakness.

Such traders are mostly good swing traders or strategiest. Some of them usually know near & far sup-res very well keep eye on the trend in longer daily & weekly charts. They can continue their winning position till expiary (book partial) but they never continue their loosing position against the trend for long. They writes both put and call (upper & lower ranges). If trades goes wrong for one side, they take profit from other wide, quit loositing position and changed to higher/lower side again when trend show weakness.
Some advanced traders often use "delta neutral" strategies, creating positions where the total delta is close to zero. Most of times such position ends in profit regardless of moves up or down in the underlying. This approach requires frequent adjustments(changed strike :D) too remain delta-neutral .
For more details one can read famous book of Guy Cohen (Option made easy & The Bible of Options Strategies). I have both the book in my collection. Prettey useful books, although after reading the book throughly I usually prefer to trade only intraday in Nifty Future and for few high probability overnight trades (option buying using some profits with limited risk). I have never intraday traded with option buying although I do some intraday trades with option selling, that too using only Nifty Spot & Future Charts not CE/PE charts. :p

Long time consuming post...
But, I hope, now I hv covered my idea behind the observation in details (for Rahul & all friends). It can help some friends. :).



Happy Trading & Best Wishes.
H.C.
 
Last edited:

sudoku1

Well-Known Member
In Bse Smallcap index eod..der was a strong selloff resulting in gravestone doji..remains 2 b seen whether it spils over 2 NF 2day.
 

Dax Devil

Well-Known Member
It is very annoying when you hear traders talking about 'unlimited' loss in option writing, that too in 2015! It only shows how limited their knowledge is, how lazy their minds are. Eg, I buy a nifty ATM call for, say, 80 rs. The so called limited loss is 80x25=2000 - or I sell an ITM PE for, say, 180 amounting 4500. Now in order to have 'unlimited loss', either of 2 things must happen. Either nifty hits the 500 lower circuit in a minute/before placing the SL or I just go into coma while the LC is being taken out... Technically, the loss would still be limited.
All in all, futures are much better 'option'. Both in terms profit and margin.
 

manishchan

Well-Known Member
It is very annoying when you hear traders talking about 'unlimited' loss in option writing, that too in 2015! It only shows how limited their knowledge is, how lazy their minds are. Eg, I buy a nifty ATM call for, say, 80 rs. The so called limited loss is 80x25=2000 - or I sell an ITM PE for, say, 180 amounting 4500. Now in order to have 'unlimited loss', either of 2 things must happen. Either nifty hits the 500 lower circuit in a minute/before placing the SL or I just go into coma while the LC is being taken out... Technically, the loss would still be limited.
All in all, futures are much better 'option'. Both in terms profit and margin.
Haha.. Totally agree.. dtz coz they don't u understand "Probability" :D
 

Similar threads