I did post this on another thread, but got no replies, not sure why or MM is not so important. Anyways.
Kamleshji, as you are following options closely these days can you please give your thoughts on this and let me know. (BTW, I suck at MM
trying to get things right).
What kind of money management do you use while trading in options. The reason am asking is you cant use the popular 2% rule with options. As the options tend to jump up and down more than 2% from close to next day open. It would be great if you guys could tell what kind of money management or Stop losses you would use.
To make it simple lets take the case of NIFTY OPTIONS with 10L trading account.
1. How do you determine number of lots to trade (again there are two cases here)?
a) When you are writing options.
b) When you are buying options.
2. How do you determine your SL for intraday options trading. What % or any other formula?
3. How do you determine your SL for positional options trading. what % or any other method? Again here I would like to ask for both cases.
a) When you are writing options.
b) When you are buying options.
4. Do you move your SL (trail SL) as soon as you are in profits. What % or method? For intraday.
5. Do you move your SL (trail SL) as soon as you are in profits. What % or method? For positional options trading.
a) When you write options.
b) When you buy options.
Also, please add anything important I've missed out. If you want to discuss on taking profits, would be good too.
Cheers!