Low Risk Options Trading Strategy - Option Spreads

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AW10

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AW10

Well-Known Member
nifty closing price on 4/9/09 -4695 nifty open price on 7/9/09 -4720 nifty 4700call close price on 4/7/09 -130 nifty 4700call open price on 7/7/09 -127 why so difference?
Bhuppi, this could happen due to inefficincies in the mkt prices. I don't know whether u would have really got an order filled at 127 to buy 4700 call today at mkt open..
Cause 4700 strike is ATM strike and generally they are very liquid. And if you had got the order filled then u were getting a bargain with 100% probabilty of success there.

Here is the reason -

Friday = 4700 call = at 130 rs. Real value of 0 (cause it was OTM) Time value = 130 approx decay in remaining 20days (4 to 24th) = 130/20 = 6rs per day.
With this simple logic on monday when spot was at 4727
4700 call had Real value of =27 rs. (= 4727 - 4700) Due to time decay, it should have lost 12 rs in 2 days of weekend.. So price at that moment shd be = 130 - 12 + 27 = 145 atleast.

You were getting bargain at 127 for something which is worth 145. By the what happened to the premium at 10.15 am or so today ?

Happy Trading
 

tvrssvk

Active Member
Hi all Seniors,

Sorry for intrupting the flow...I would like to knw whether trading options is similar to intraday trading....whether we have to sit in front of the system continously till the end of the trading day or whether we can trade option like swing trading a stock. Kindly provide the info.....
 

AW10

Well-Known Member
tvrssvk, How u trade option depends on your own requirement. You can scalpe (sell withing minutes after buying), day trade (hold it for few hours and close before end of the day), of hold it till expiry..

This all depends on you as a trader,how u want to trade them. Depending on your purpose you will have to sit in front of computer or go on holiday (yes using options, u can define a trade with exact max risk that u might incur.. so just place such trade and go on holiday).

Happy Trading
 
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tvrssvk

Active Member
tvrssvk, How u trade option depends on your own requirement. You can scalpe (sell withing minutes after buying), day trade (hold it for few hours and close before end of the day), of hold it till expiry..

This all depends on you as a trader,how u want to trade them. Depending on your purpose you will have to sit in front of computer or go on holiday (yes using options, u can define a trade with exact max risk that u might incur.. so just place such trade and go on holiday).

Happy Trading
Happy Trading
Thanks for your reply. However, you deserve to change your name to Awesome number 1!!!!!---hope ur mind is wandering for the previous posts :clap::clap:

Was going through your threads and read the above change of name from one of the member. You really deserve it. Keep up the work buddy!!!!!
 

tvrssvk

Active Member
Hold it till expiry-----Low risk options trading strategy - Option Spreads-----will it be one of the best strategy to hold till expiry.

The reason is I will not be able to watch the market on market hours, hence I would like to swing trade options or hold it till expiry----your views will be highly appreciated.

One more thing, do we need paid softwares like amibroker of Fcharts to excell in options or is it enough having a look at icharts.in. Kindly excuse if my question sounds stupid!!!!
 
Thanks for your reply. However, you deserve to change your name to Awesome number 1!!!!!---hope ur mind is wandering for the previous posts :clap::clap:

Was going through your threads and read the above change of name from one of the member. You really deserve it. Keep up the work buddy!!!!!
I agree to that, AW10 = awesome.:clapping:
 

lazytrader

Well-Known Member
Hold it till expiry-----Low risk options trading strategy - Option Spreads-----will it be one of the best strategy to hold till expiry.

The reason is I will not be able to watch the market on market hours, hence I would like to swing trade options or hold it till expiry----your views will be highly appreciated.

One more thing, do we need paid softwares like amibroker of Fcharts to excell in options or is it enough having a look at icharts.in. Kindly excuse if my question sounds stupid!!!!
You should be asking anyone whether paid softwares are better or go for simpler alternatives. You should build a strategy and select the one you want/works for you and your strategy.

I've always wanted to keep things simple. So I don't use indicators or any kind of advanced formula. All i use is a couple of SMA's, fibo and trendlines. Rest is calculated in excel (pivots, NR's etc).

You should never be lost when trading if your software doesn't work.
 
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