new@TJ

#31
@Sharan

As far as I understood: In your first part of the post you say that you do not get a feeling that you understand everything. Let me tell you this: That is the way it is at the begin and even in later stages in option trading include in any other way of trading like future- or even stock trading. That is perfectly normal. Even I faced that feeling strongest when I started with options many years ago. I was reading books, was watching many videos from different traders, went to option trading seminars and even had a mentor. Still: Many times I felt that I do not understand everything, this specially when the option strategies and the different ways they can be traded got complicater and complicater. So just accept that feeling and move on with learning about options, as when you move on from time to time of a sudden you will realize and understand this or that topic you may did not feel before that you understood it. Such moments you will go through even after years and years. This are the typical: "AHA, now I got it" moments we experience in trading as well as in other fields, include in our normal, daily life.

1. You can watch any option matrix from any script to get an approximate feeling about how much an option does move up or down in value according to market moves. It is best to take any information about any option as approximate and not as absolute, as there are too many variables in any option pricing under different market conditions. So if SBI matrix showed the numbers you mentioned, then that is an approximate idea of what it can be.

If you want to have it in an other way you can use the following option price calculator to check if the option mentioned from you are priced with a fair value or if the option is under - or over priced: http://www.option-price.com/index.php

About any option matrix from any script: In option and special in option strategy trading it is absolute necessary to watch this matrixes. There is no way around that, as the matrix gives many clues about any option (pricing, IV, the greeks, OI, Volume and so on) on any strike level include some information/clues about where the underlying script can move towards.

2. Well, then you also have seen my old avatar (DanPickUp) in which I am not able to log in, as I lost my old PW and my given e-mail address to TJ was also closed at the time I lost that PW. In that and even in this avatar I have easily posted only on option trading over one thousand post's and more. It is time consuming and that time would even jump up when I open again a thread about option trading. Beside other reasons I do not have that time, so posting from time to time a post like this is fine. What you can do: You can ask the admin to move this thread into the option section of the forum, so you would have a thread about option trading and you could further post in this your already existing thread which then would be there. What about that? :) If time permits I then can post there from to time a post.

Take care and have a nice Sunday :)

(If you want to move this thread into the option section, use the red triangle on the right, upper side in any post. By doing so you will contact the admin/s of the forum about your wish. An other way is to contact Smart_Trade through any post and ask him about it. He is even able to move posts from this thread into an other thread which you would open newly under your name like others have done in the past)
 
#32
Hi somatung,
Have requested the admin to move the thread to the options section.
Sharan.




@Sharan

As far as I understood: In your first part of the post you say that you do not get a feeling that you understand everything. Let me tell you this: That is the way it is at the begin and even in later stages in option trading include in any other way of trading like future- or even stock trading. That is perfectly normal. Even I faced that feeling strongest when I started with options many years ago. I was reading books, was watching many videos from different traders, went to option trading seminars and even had a mentor. Still: Many times I felt that I do not understand everything, this specially when the option strategies and the different ways they can be traded got complicater and complicater. So just accept that feeling and move on with learning about options, as when you move on from time to time of a sudden you will realize and understand this or that topic you may did not feel before that you understood it. Such moments you will go through even after years and years. This are the typical: "AHA, now I got it" moments we experience in trading as well as in other fields, include in our normal, daily life.

1. You can watch any option matrix from any script to get an approximate feeling about how much an option does move up or down in value according to market moves. It is best to take any information about any option as approximate and not as absolute, as there are too many variables in any option pricing under different market conditions. So if SBI matrix showed the numbers you mentioned, then that is an approximate idea of what it can be.

If you want to have it in an other way you can use the following option price calculator to check if the option mentioned from you are priced with a fair value or if the option is under - or over priced: http://www.option-price.com/index.php

About any option matrix from any script: In option and special in option strategy trading it is absolute necessary to watch this matrixes. There is no way around that, as the matrix gives many clues about any option (pricing, IV, the greeks, OI, Volume and so on) on any strike level include some information/clues about where the underlying script can move towards.

2. Well, then you also have seen my old avatar (DanPickUp) in which I am not able to log in, as I lost my old PW and my given e-mail address to TJ was also closed at the time I lost that PW. In that and even in this avatar I have easily posted only on option trading over one thousand post's and more. It is time consuming and that time would even jump up when I open again a thread about option trading. Beside other reasons I do not have that time, so posting from time to time a post like this is fine. What you can do: You can ask the admin to move this thread into the option section of the forum, so you would have a thread about option trading and you could further post in this your already existing thread which then would be there. What about that? :) If time permits I then can post there from to time a post.

Take care and have a nice Sunday :)

(If you want to move this thread into the option section, use the red triangle on the right, upper side in any post. By doing so you will contact the admin/s of the forum about your wish. An other way is to contact Smart_Trade through any post and ask him about it. He is even able to move posts from this thread into an other thread which you would open newly under your name like others have done in the past)
 

bunti_k23

Well-Known Member
#33
Do you heard all players of option........ belongs university? Do you have that certificate....?if not then.....enter school.....(Cash market)......after...2-3 yrs.....enter college......(Future.....trading)................then think about option.....:thumb:
Aha realisation moment now i got u why u were saying that complete school first then college then in university :lol:, im learning the concepts involved in options , hatsoff to seniors ur simple comments have deep meanings and valuable lessons for learners like us :thumb:
 
#34
Have had nice guidance from seniors so far. :thumb:
All their advices are useful.
Have bought SBI 2300 puts at 3 rs(avg price) qty 9 lots. Probably I am in for a rebuke from omsai. Anyway let's see how it spans out.
@omsai
I have seen ur posts and know that you are very bullish on bnf and SBI ( your ex).:). But this should not deter you to guide me in future. I do not want guidance on trades, but need inputs on trading techniques. Will always look up to you, manishchan, and obviously somatung in future for guidance. You three were the ones who guided me initially. Thanks once again.
 
#35
Here a little update on the Sept 8400 call with an other example. ONE YOU MUST UNDERSTAND WHEN STARTING TRADING OPTIONS. Even if market (Nifty) made a new all time high today, the call did not reach its all time high from 15.40 Rs. It only went to 14.25 Rs even the market did move to a higher level compare it was when the price of 15.40 Rs was seen. Why?

Otm options have only time decay and no intrinsic value. So even if you are right with the direction, you can lose money with it. You will lose money with it in case market moves not up enough to kill the time decay which erodes the price of this option day by day.

The second reason why we not reached the old high price again with this option was the Implied Volatility, which went down from 11.19 to 10.17.

So as told in this post: http://www.traderji.com/options/95260-new-tj-2.html#post999622 time and volatility also can be your enemies.

Now that was an other, absolute simple lesson, with a nice example and I guess it is now clear and understood why time and IV also can and will be your enemies when it comes to option trading and not only your friends like in the first example.

Past:


Today:


Take care and have a nice day :)
 
#37
Today Nifty lost only 21 points. This has more or less zero affect to the Sept 8400 call or any other option from any other month on that strike level.

So time to do our third example (if any of you want) with live data from the Nifty option matrix. The third example will be the pure analyzing of time decay of options and we will see what it means. Do the math by your self as you have to see and understand it by your self. I will post the screen shoots from yesterday and from todays value from the Sept 8400 call, from the Oct 8400 call and from the Nov 8400 call. Do compare the prices and you should understand why I wrote in the rules that you should take options with a live time from 30 to 60 days before expiration. Here we go:

Sept 08, 2014 / 8400 call:


Sept 09, 2014 / 8400 call:

--------
Oct 08, 2014 / 8400 call:


Oct 09, 2014 / 8400 call:

--------
Nov 08, 2014 / 8400 call:


Nov 08, 2014 / 8400 call:


Just in case you do not get the point I will post the result here how much in % the Sept 8400 call lost today. It is 15 % of its whole value.

Now how much did the Oct call loose of its whole value since yesterday and how much did the Nov call loose of its whole value since yesterday? The answer will make it absolute clear what time decay means on any otm options in any month.

Take care and have a nice day :)
 
#38
@Somatung
Among the numerous problems of trading in options is concerned one particular issue I find very alarming is liquidity in a counter. At this point of time I am of the opinion that pharma will perform well if nifty has to go up. Sunpharma target according to my analysis is Rs. 940 on the conservative side. However even the current month options counter of 920 call is very sparsely traded. For Oct there are no trades at all for 920 call. Except for the indices and some prominent counters like SBI, icici, tata motors and few others liquidity is a major concern. The underlying value could reach its desired target and yey my options trade could yield losses because of liquidity.
 
#39
@Somatung
Among the numerous problems of trading in options is concerned one particular issue I find very alarming is liquidity in a counter. At this point of time I am of the opinion that pharma will perform well if nifty has to go up. Sunpharma target according to my analysis is Rs. 940 on the conservative side. However even the current month options counter of 920 call is very sparsely traded. For Oct there are no trades at all for 920 call. Except for the indices and some prominent counters like SBI, icici, tata motors and few others liquidity is a major concern. The underlying value could reach its desired target and yey my options trade could yield losses because of liquidity.
Liquidity is a point to consider on any strike level in any market at any time in any derivative. If you do so, then that is fine and you did understood that problem very well.
 

bunti_k23

Well-Known Member
#40
@somatung sir im trying to figure out that how u have calculated the target and stoploss for the first live trade e.g u have given in this thread , is it from the value of delta? Rit nw iam reading ur thread (options trading with danpickup) . And currently im on page 15 :D so i can clearly say that whatever knowledge i have rit nw is most from ur thread some from pratap sir s some from aw10 sir s. And i want to thank you all guys for these superb starters .