Low Risk Options Trading Strategy - Option Spreads

[simple_trader]

Sir,
i would like to know why Aug puts are costly compare to the calls?
what does it indicates?

regards,
vishwas

As thumb rule, whatever looks costly is good for writing normally (most of the cases). Those become zero on expiry mostly.

 

[simple_trader]

It seems RIL result is on 27th July (Tuesday). Option buyers, may be it is good to bet on 1000PUT and 1100 CALL pair or 1050 call & put pair. My personal opinion, RIL may go up side. First please confirm RIL result date. I may be wrong.


Happy Trading.

 

[DanPickUp]

Hi

To finish the discussion about the excel sheet I had a look around in the net.

I downloaded different excel sheets from the net. All very small, a few 100 kb on size and nicely made.

The one AW10 recommend is for free. I downloaded it and made some little tests. In my view, it is enough for any beginner. Even for more advanced traders, you can do some stuff. I then also had a look, how big the program on the computer is. It is 6.26 MB.

I then had a look at my option excel sheet and it has a size of 17.6 MB.

I then was clear about, what I have and I was clear what you can use.

Use Option Oracle in a proper way. It is a good software and it is surely enough for most of traderjis option traders.

If you think you need more, you may test this one :
http://www.kaininito.com/theoptionclub/buy.php

It is not for free and if you do not understand Option Oracle, you also do not need this one.

As AW10 says : If not understanding the strategy and the 100% use of such tools, sub tools will do more then enough. I second this view at any time.

Take care

DanPickUp

 

[cool_kk]

Hi

Any advice to hedge my under threat trade.

I sold 5500 CE @ 17rs JULY.

Now running @ 28 and there may be chances NIFTY reaching 5500 July Expiry.

I am not into futures so any option advise.

Thanks

 

[simple_trader]

Hi

Any advice to hedge my under threat trade.

I sold 5500 CE @ 17rs JULY.

Now running @ 28 and there may be chances NIFTY reaching 5500 July Expiry.

I am not into futures so any option advise.

Thanks

Yesterday FIIs bought 4000 cr of NIFTY option and 5500 July option added highest OI (unusually high). Today's upward movement confirms that FIIs bought it yesterday.

Somewhere in this thread, AW10 has written about not being short in option. Volatility is very low. It will increase day by day. Better to be in buy side, if not naked, then spread etc.

Coming to 5500 call, check out resistance around 5500 NF, if we are not able to cross with ease then, there is a chance of high volatility and even market can come down. It was not recommended to Sell 5500 call July. At the same time I think it can be zero on expiry.

Happy trading!

 

[cool_kk]

Yesterday FIIs bought 4000 cr of NIFTY option and 5500 July option added highest OI (unusually high). Today's upward movement confirms that FIIs bought it yesterday.

Somewhere in this thread, AW10 has written about not being short in option. Volatility is very low. It will increase day by day. Better to be in buy side, if not naked, then spread etc.

Coming to 5500 call, check out resistance around 5500 NF, if we are not able to cross with ease then, there is a chance of high volatility and even market can come down. It was not recommended to buy 5500 call July. At the same time I think it can be zero on expiry.

Happy trading!

Thanks!

What I understand is 5500 call is bought by FII.
It means they will try to push NIFTY UP.. Is it so..

Regarding my 5500 call sell I should hold and wait till expiry to know where it goes or is there any level I should look for like 5520 then I should get out ?

Thanks

 

[simple_trader]

Thanks!

What I understand is 5500 call is bought by FII.
It means they will try to push NIFTY UP.. Is it so..

Regarding my 5500 call sell I should hold and wait till expiry to know where it goes or is there any level I should look for like 5520 then I should get out ?

Thanks

It is very difficult to predict intraday levels correctly. I expect some profit booking/shorting around 5500-5550 NF level. We need to judge market gradually. Volatility can bring it down to 5420 odd level in intraday.

You should not have taken this naked position.

 

[AW10]

Sir,
i would like to know why Aug puts are costly compare to the calls?
what does it indicates?

regards,
vishwas

vishwas, aug options are costly cause it has more life in that.. i.e. 40 days or so.
hence you are paying more for this time duration.. Advantage is you get longer period to be right or wrong in your decision..

look at from option writer perspective who is selling insurance to you.. he is asking for more money to cover you for longer period of time (40days). If you want insrance for 10 days (i.e. july expiry), then it is obvious that you will pay less premium.

hope it is clear.

happy trading.

 

[AW10]

Thanks!

What I understand is 5500 call is bought by FII.
It means they will try to push NIFTY UP.. Is it so..

Regarding my 5500 call sell I should hold and wait till expiry to know where it goes or is there any level I should look for like 5520 then I should get out ?

Thanks

cool_kk,
How much amount you are ready to loose, in order to gain 17 rs ?
is it 0 rs, 20 rs, 100 rs, 150 rs, or you are rich person and don't care to loose.

answer of above question shd help u in deciding what shd be yr next action. What simple_trader has mentioned, what fii are doing, what media is reporting, what i am saying is not going to help you..(and most of the time, different source will confuse you more).
your 5500 put, will be worth 30 rs/40 rs roughly when nifty reaches 5520 (depending on when mkt reaches there), . Can u hold on to such position without loosing sleep ? if yes, then hope and pray that nifty doesn't go there.. but successful trader's don't depend on HOPE. They manage their risk or loss effectively..
You need to understand the risk associated with naked short positions and how they will develop with the moves of the underlying. It is anybody's guess where mkt will end by expiry..
Even if FIIs have bought yesterday, it will not take time for them to dump the same in one day, if they decide to do so. IMO, They are in the business of making and protecting the money, not loyal to country or market. If there is better opportunity somewhere else, then they will move their money somewhere else. Does anybody know for sure, if they were not the one who shorted the mkt on Tuesday in last hours, and bought 5500 calls yesterday to protect their shorts ? F&o world is lot more complex.

happy trading.

 

[cool_kk]

cool_kk,
How much amount you are ready to loose, in order to gain 17 rs ?
is it 0 rs, 20 rs, 100 rs, 150 rs, or you are rich person and don't care to loose.

answer of above question shd help u in deciding what shd be yr next action. What simple_trader has mentioned, what fii are doing, what media is reporting, what i am saying is not going to help you..(and most of the time, different source will confuse you more).
your 5500 put, will be worth 30 rs/40 rs roughly when nifty reaches 5520 (depending on when mkt reaches there), . Can u hold on to such position without loosing sleep ? if yes, then hope and pray that nifty doesn't go there.. but successful trader's don't depend on HOPE. They manage their risk or loss effectively..
You need to understand the risk associated with naked short positions and how they will develop with the moves of the underlying. It is anybody's guess where mkt will end by expiry..
Even if FIIs have bought yesterday, it will not take time for them to dump the same in one day, if they decide to do so. IMO, They are in the business of making and protecting the money, not loyal to country or market. If there is better opportunity somewhere else, then they will move their money somewhere else. Does anybody know for sure, if they were not the one who shorted the mkt on Tuesday in last hours, and bought 5500 calls yesterday to protect their shorts ? F&o world is lot more complex.

happy trading.

Yes, I totally agree with you.
I need to take decison base on what my risk appetite is.
I may loose some sleep today as I am in USA so need to keep an eye at night time.
Normally, I see only first one hour and go to sleep so missed late action yesterday..

I got the crux, so I only need to wait & watch and take decision approx.

Thanks Simple/AW10 for advise.