Index option trading

#21
Overall closed with minor profit. At one point of time sitting with around 12k. But taken long strangle expecting some movement (ofcourse like lottery) .

While taking positions one by one only lost 3k.
No movement happened and closed with 5k profit . May be after brokerages and taxes may be 2k . Let's see
 

sridhga

Well-Known Member
#26
u are just displaying ur balance better if u can let us know ur trades
But by displaying his balance, he is giving much stronger to this trading community

The account seems to be down by 50%. The OP is doing non-directional short option trades in Bank Nifty.
In Traderji, we discuss a lot about premium erosion etc. Bank Nifty options are expensive and that is certainly not without reason. It does not mean that the premium is low hanging fruit. The account size is not important. Bank Nfty, when it moves, it can easily move by 300 points in one direction. That can immediately put directional option sellers and buyers into big losses if caught on the wrong side. Similarly, it can also put straddle sellers into losses irrespective of the direction of the movement. Straddle sellers may make less losses but are more assured of losses if such a move takes place.
 

siddhant4u

Well-Unknown Member
#27
The account seems to be down by 50%. The OP is doing non-directional short option trades in Bank Nifty.
In Traderji, we discuss a lot about premium erosion etc. Bank Nifty options are expensive and that is certainly not without reason. It does not mean that the premium is low hanging fruit. The account size is not important. Bank Nfty, when it moves, it can easily move by 300 points in one direction. That can immediately put directional option sellers and buyers into big losses if caught on the wrong side. Similarly, it can also put straddle sellers into losses irrespective of the direction of the movement. Straddle sellers may make less losses but are more assured of losses if such a move takes place.
So strangle or even iron condor could be better to play at Banknifty? Depending on one’s appetite, he can sell far otm and have plenty of time to adjust.
 
#28

sridhga

Well-Known Member
#29
So strangle or even iron condor could be better to play at Banknifty? Depending on one’s appetite, he can sell far otm and have plenty of time to adjust.
If you ask me selling a strangle has no built in stop loss. You need to have a manual stop loss for each individual leg. This causes even more confusion for a trader while the trade is on.

I still think directional trades are better even in Bank Nifty. We try to draw channels, support, resistence etc for all other scrips to trade. Why don't we do the same thing in Bank Nifty? Just because options are available and are easily tradeable, why should we always take neutral positions? This underlying also moves, right?
 
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siddhant4u

Well-Unknown Member
#30
If you ask me selling a strangle has no built in stop loss. You need to have a manual stop loss for each individual leg. This causes even more confusion for a trader while the trade is on.

I still think directional trades are better even in Bank Nifty. We try to draw channels, support, resistence etc for all other scrips to trade. Why don't we do the same thing in Bank Nifty? Just because options are available and are easily tradeable, why should we always take neutral positions? This underlying also moves right?
This is in case we don’t know the directions. Besides, my thought process was for swing. But yes for day trading, directional trades make sense (if its clear which way mkt is going)
 

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