Make money by writing call & put options

[yasir_s_n]

i think option trading is the best way to really gain from the markets

 

[sachinisgod]

Hi ppl

I have been a member of this forum since a year now but posting for the first time!

I have a query with regards to shorting (Writing) options:

My question is that: How does the margin to be deducted/added get calculated after every trading session?

If I write a single Nifty Put (European) at a strike of 4400 for 10(today when Nifty Spot is 4700 plus). I understand I will get Rs.500-brokerage on T+1 day. But if Nifty falls to 4600 tomorrow then the premium for my Put goes to Rs.13. So will my margin payout for tomorrow be Rs. 3 (13-10) * 50(Single lot) * margin percentage or Will it be Rs. 100 (4700-4600) * 50(Single lot) * margin percentage?

I have bought some options and created long strangles to profit a bit. But I would like to venture into selling options too. Lack of clarity on the above query is not allowing me to do so. I hope the query is clear and that one of you gentlemen/ladies will help me out with it.

Thanks a lot for all the information you all have provided as of now!

cheers

 

[vangara_kris]

Dear frendz, being new entrant searching earlier topics and found this one interesting. I wud like to share my views too on option trading specially writing. Current mkts being in bearish trend, i prefer to write nifty call options once the Slow Stochastics enters over bought zone on 3 month EOD Chart. This in recent occassions gave me some good profit. Views/comments invited pl.
Krishna

 

[vpsarathy]

Dear frendz, being new entrant searching earlier topics and found this one interesting. I wud like to share my views too on option trading specially writing. Current mkts being in bearish trend, i prefer to write nifty call options once the Slow Stochastics enters over bought zone on 3 month EOD Chart. This in recent occassions gave me some good profit. Views/comments invited pl.
Krishna

It will nice if you teach members reg trading in options and the various indicators.
vps

 

[krishna23]

writing naked options is the dumbest thing to do...

 

[rkkarnani]

writing naked options is the dumbest thing to do...

Hello,
Can you kindly explain a bit in detail!!???
What is the difference between writing naked calls and buying or selling future contracts!!!???
Thanks!!!
R K Karnani

 

[rkkarnani]

Dear frendz, being new entrant searching earlier topics and found this one interesting. I wud like to share my views too on option trading specially writing. Current mkts being in bearish trend, i prefer to write nifty call options once the Slow Stochastics enters over bought zone on 3 month EOD Chart. This in recent occassions gave me some good profit. Views/comments invited pl.
Krishna

Hi VK, What exactly you wish to say when you write : 3 month EOD chart!!!
What parameters are you using fot the Stochastics!!!???
Would really love to learn about Option writing !!!
Look forward to more from you!!!
regards
R K Karnani

 

[vangara_kris]

Dear frendz, i agree that writing option nakedly is risky and to be frank there is risk @ every corner of stock mkt. Any how, i give my style of option trade. Iam not an expert too in this. Jab tak chalta chala lenge. Now, i give my option trading style.
I strongly believe that we are into bear market (whether it is short/medium/long term i donno there are other experts who count waves and let us know). I check SS in 3 month EOD chart of icharts.in . Whenever SS comes into Over Bought Zone, i write near OTM call and book profit once SS enters Over Sold Zone. If my trade goes wrong i am ready with a future to curtail loss. I have no idea on greeks nor have any software. This is for positional please.
Krishna

 

[krishna23]

Hello,
Can you kindly explain a bit in detail!!???
What is the difference between writing naked calls and buying or selling future contracts!!!???
Thanks!!!
R K Karnani

it is very important to have some hedge when one goes abt writing options...

for instance u could do a calender spreads where instead of just selling the current month options contract u can buy a farther month's contract to hedge urself...ever since leaps have been introduced u can do this very effectively...this is gr8 when the volatility is high in the near month so u can get a better credit and then u can keep selling subsequent month's....

futures and options are great tools and provide amazing leverage...
writing options can totally destroy an account...what i am sayin' is when there are better ways so why take so much risk...

one could do a credit spreads like the bull put spread or the bear call spread...they too are gr8 but will limit one's risk to the difference in strike prices minus the credit...

always the most important thing is what risk u take to get the return that u do and in my opinion the risk u take by writing naked options is too high...just imagine if someone sold puts in january right before the crash what his account statement would have looked like...

enough of my blabbering friend...

u trade safe,
krishna

 

[pasha]

it is very important to have some hedge when one goes abt writing options...

for instance u could do a calender spreads where instead of just selling the current month options contract u can buy a farther month's contract to hedge urself...ever since leaps have been introduced u can do this very effectively

If the underlying makes a sudden big move the far option is a very small hedge and the position could lose money. Credit spreads are the better choice.