Hi guys,
I joined TJ few months back, after loosing a fortune on buying OTM options
and have been following various threads on option trading.
My 1st option trade was a buy on Tata Motor call before the quarterly results. I made a profit of 14,000/- in 48 hours and then came the nightmares. Within the next 2 months I lost nearly 200,000/- and it did not end till I stopped trading all together.
After going through the various threads on TJ, I realize that odds of making profit by buying options is very low. Consider:
1. The underlying have to move in my direction
2. It has to cross my strike and have a premium more than what I have paid
3. The movement has to be within a specific time so that all my profits are not consumed by theta.
4. The amount of profit should exceed that of brokerage + STT which may be as high as 250/- depending on the broker.
With this realization I stopped buying naked options and made a new year resolution that all my trades will be hedged and will follow a definite strategy.
I subsequently gathered whatever free cash I had left and opened a low brokerage account with Zerodha. Now I am learning to do spread trade and pair selling based on option OI and volatility data. I prefer strategies where at least one leg of my position is sell option. My strategy is entirely based on the knowledge I gathered from posts of TJ senior members.:thanx:
I hope to gain more knowledge following the discussions in various forum.
I also wish to share my experiences in future if I ever become competent enough.
Please wish me luck guys.....this is a new beginning for me.
I joined TJ few months back, after loosing a fortune on buying OTM options
and have been following various threads on option trading. My 1st option trade was a buy on Tata Motor call before the quarterly results. I made a profit of 14,000/- in 48 hours and then came the nightmares. Within the next 2 months I lost nearly 200,000/- and it did not end till I stopped trading all together.
After going through the various threads on TJ, I realize that odds of making profit by buying options is very low. Consider:
1. The underlying have to move in my direction
2. It has to cross my strike and have a premium more than what I have paid
3. The movement has to be within a specific time so that all my profits are not consumed by theta.
4. The amount of profit should exceed that of brokerage + STT which may be as high as 250/- depending on the broker.
With this realization I stopped buying naked options and made a new year resolution that all my trades will be hedged and will follow a definite strategy.
I subsequently gathered whatever free cash I had left and opened a low brokerage account with Zerodha. Now I am learning to do spread trade and pair selling based on option OI and volatility data. I prefer strategies where at least one leg of my position is sell option. My strategy is entirely based on the knowledge I gathered from posts of TJ senior members.:thanx:
I hope to gain more knowledge following the discussions in various forum.
I also wish to share my experiences in future if I ever become competent enough.
Please wish me luck guys.....this is a new beginning for me.
