Make money by writing call & put options

[beda]

your tip was very informative thanks a lot

 

[suncoupon]

hi joy_mitali,

i understand writing OTM call option.
i want to know from you, if its the same writing deep ITM call option when the price is really high and expiry time is short ?

kindly let me know.
regards,
suncoupon

 

[nrajeshcbe]

don't ever write a put option. you can consider writing a call option but not put. since the risk of market falling steeply is higher than rising steeply.

 

[lokanathpai]

Hi Guys,

Now NIFTY is at 2260. Do you think it will go up from here? Certainly not. It amy settle at 2230, possible. Now 2260 put premium is around 17.50. Then buy it, if Nifty goes down to 2230, premium will move to Rs 30 certainly, your breakeven is at Rs 24.
You can make good profit. Go ahead!

 

[birdeez]

Dear TA Trader , I do agree that one can make money by writing options ie., what the whole insurance industry is about and how the insurance companies make money.
The other advantage of writing calls and puts is that with the passage of time the price decreases and you have the option of buying it at a lower rate even if the price has not changed or moved up a bit.
However , the word of caution is that writing options call, put always gives you money instantly but exposes you to UNLIMITED RISKS, so beware and always have your stoplosses in place. Thanks -birdeez

 

[gopii]

Dear Joy

as per suggestions of writing options, some amount of risk is involved in studying or predicting the trend, on which you decide to sell a call or put

however it would be much safer to hedge, and do a Bear call vertical credit spread (Bearish) or a Bull Put vertical Credit spread ( Bullish / sideways) and for more safety do both together and take corrective actions as needed.

ofcourse the profit is reduced ( but its there never the less) and let the market move any which way it wants who cares.

Please advice could you guide me if it can be done lucratively on the indian stocks.

thks
b rgds
Gopii

 

[mojac]

Re: put options ---Query

Dear Sir,
I have a query on Put options.
Hope i will get an appropriate answer.
If we sell a Put option & dont get a seller to buy
it back,what will be the effect at the expiration date.
Is it necessary to square off the sold Put. ie, buy it back ?
Pls guide me.

 

[mojac]

Re: put options ---Query

Hi,
i was amazed why nobody is responding to a query.
I didnt ask anything useless,which everybody keeping mum.

 

[[email protected]]

Hi Mojac,

It is not necessary to square off the sold put, as it will settle in cash on the expiry day of the option, if it is in the money. On the other hand if the short put is not in the money, than it will expire worth less and you will keep the premium as your profit from the sold put.

I hope this answer will satisfy your quest.

Regards,

Wastej

 

[[email protected]]

Attention: New Traders.

Using options while trading can be very profitable. Let us say that you have never used option till now and you want to buy a stock say Tata Power or far that matter any other stock, which has options also. You have done your homework, be it fundamental analysis of technical analysis. The stock is sitting at you entry point, and you are ready to pull the trigger and buy the stock.

Now consider that instead of pulling the trigger and buying the stock, you sell a put for the same stock and collect premium. (Usually it is done two strikes below the CMP.)
If stock goes down and the put is in the money on expiry date than you will own the stock, which in any case you wanted to buy, but at a far lower price. It is like buying stock on 10% Sale.

I leave the rest for the imagination on part of New Traders.

Good Luck.

Wastej