Nifty Option Writing on expiry day

[vino26th]

Still a trader needs to have a good understanding of how option selling is done with enough practice of how to adjust strangles with index movements. Option selling & that too on expiry day requires a different skill set and experience all together. That is if he wants to become a geniune option seller for a long term. Otherwise for speculation anything can be done though the risk/reward is very low in this case.

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For starters just looking to play safe

 

[Subhadip]

I think the chances for nifty to shoot more than 100 points in one direction on a single day is very less. Even it does what if we square off that position when nifty spot starts to cross 100 points in one direction and wait for the other side to expire and collect the premiums from that side

the side u get out will be at around 30 points.. so u will loose 28 points & on other side u will gain 2 points..

will it be profitable?

 

[vino26th]

the side u get out will be at around 30 points.. so u will loose 28 points & on other side u will gain 2 points..

will it be profitable?

At what scenario can the premium shoot up to 30 from 2?? Can U please explain in detail?? I thought of keeping a stop loss of around 10 rs.

 

[Schatz]

folks fail to understand one thing: as such there is no theoretical edge in option selling over option buying... the edge comes after that.. how do u manage the position... managing long options r more difficult but it can be done and mkt makers r doing it everyday ... managing short options seem and sound easy till that one day comes which takes away ur few months profit... e.g. 20th sept,23rd sept, 1st Oct ..just to name a few .. unless u clearly understand the details of options , options selling wont fetch anybody any positive return in long run...

one more thing, i have seen many ppl talk about options selling by selling either calls or puts... this is outright incorrect.. they r taking delta position... a true options (vol) seller who sells both sides and stay delta neutral.. if u make money from deltas and announce that u r options seller u dont know what u r doing...

 

[moneymanager1980]

folks fail to understand one thing: as such there is no theoretical edge in option selling over option buying... the edge comes after that.. how do u manage the position... managing long options r more difficult but it can be done and mkt makers r doing it everyday ... managing short options seem and sound easy till that one day comes which takes away ur few months profit... e.g. 20th sept,23rd sept, 1st Oct ..just to name a few .. unless u clearly understand the details of options , options selling wont fetch anybody any positive return in long run...

one more thing, i have seen many ppl talk about options selling by selling either calls or puts... this is outright incorrect.. they r taking delta position... a true options (vol) seller who sells both sides and stay delta neutral.. if u make money from deltas and announce that u r options seller u dont know what u r doing...

there is no theoretical edge in option selling over option buying.
is this not an edge ? a true options (vol) seller who sells both sides and stay delta neutral

 

[SarangSood]

folks fail to understand one thing: as such there is no theoretical edge in option selling over option buying... the edge comes after that.. how do u manage the position... managing long options r more difficult but it can be done and mkt makers r doing it everyday ... managing short options seem and sound easy till that one day comes which takes away ur few months profit... e.g. 20th sept,23rd sept, 1st Oct ..just to name a few .. unless u clearly understand the details of options , options selling wont fetch anybody any positive return in long run...

one more thing, i have seen many ppl talk about options selling by selling either calls or puts... this is outright incorrect.. they r taking delta position... a true options (vol) seller who sells both sides and stay delta neutral.. if u make money from deltas and announce that u r options seller u dont know what u r doing...

Totally agree. Playing delta plus vega can be very tough to pull off. If a person has delta knowledge then they need not be selling options. Just buy ITM or ATM option as the margin required and theta decay would be relatively less.

Option sellers to be successful in long term need to understand volatility in depth. Then comes the tricky part of delta management & adjustment. I still think there is an edge for option sellers from buyers. There is a surety of options expiring though the risk/reward is not favourable. The proof is that there are more successful option sellers over buyers.

 

[Schatz]

Totally agree. Playing delta plus vega can be very tough to pull off. If a person has delta knowledge then they need not be selling options. Just buy ITM or ATM option as the margin required and theta decay would be relatively less.

Option sellers to be successful in long term need to understand volatility in depth. Then comes the tricky part of delta management & adjustment. I still think there is an edge for option sellers from buyers. There is a surety of options expiring though the risk/reward is not favourable. The proof is that there are more successful option sellers over buyers.

As you know, i am vol seller ... there is an edge bcoz vol seller accepts a unfavorable skew in their risk/reward.. without that edge nobody would sell options .. thts why i said "theoretically" .. the edge is usually there 230 days out of 252 days.. and there is negative edge in remaining 22 days ... if somebody does not have proper understanding.. he would give back most of its after cost profit of 230 days in those remaining 22 days...

if it is not fair pricing nobody would conduct business in options mkt.. most of the time we say retail does this and that .. retails have small impact of mkt.. large moves r caused by big players... i mentioned earlier that FEB 2020 somebody bought loads of 12200 calls when nifty was below 11900 .. in 1 week we have come to 12300...

 

[Schatz]

Totally agree. Playing delta plus vega can be very tough to pull off. If a person has delta knowledge then they need not be selling options. Just buy ITM or ATM option as the margin required and theta decay would be relatively less.

Option sellers to be successful in long term need to understand volatility in depth. Then comes the tricky part of delta management & adjustment. I still think there is an edge for option sellers from buyers. There is a surety of options expiring though the risk/reward is not favourable. The proof is that there are more successful option sellers over buyers.

stay active on options thread.. Anil is MIA ... we can continue to discuss our views and stuffs

 

[Schatz]

there is no theoretical edge in option selling over option buying.
is this not an edge ? a true options (vol) seller who sells both sides and stay delta neutral

as i mentioned that without that edge option selling is not a sensible business because of skewed risk reward profile... hence that way its fairly priced!!!

 

[SarangSood]

stay active on options thread.. Anil is MIA ... we can continue to discuss our views and stuffs

I visit the forum from time to time but It's the lack of option writing activity that i stay put. Bdw i too am writing in Nifty only since last two months. I feel there is more depth in its option prices as compared to bnf where the prices freeze at times. This month specifically last two weeks have been decently productive.