Nifty Options-Intraday Trading Strategy.

[munde_77]

Hi munde,

Thanks for your tip which you suggested in your thread regarding selling 2 ATM puts and 1 ATM call ....... Can you kindly suggest me some good analyzing software. I tried options oracle version 16.

Thanks

Just an update. Got it started. Tweaked configa little bit. What options analysing software you guys are using.

As I am using paid software . It will be against the forum rules if I post the details here. It will be considered as an advertisement for promoting.

You can search in google and you will find it.All the best

 

[munde_77]

Thanks Munde77 for letting me know that a thorough knowledge of greeks is a must. Could you kindly clear these doubts:

1. You suggested a good analyzing software is necessary. Does the analyzing software come with trading terminal we get with the broker?

2. If the analyzing software is an external, kindly advise of good software that serve this purpose.

Thanks

I think Indian brokers do not provide analyzing software for options ( because they don t want retailers to analyze and profit from option trading by using it :lol::rofl: )

I think Interactive brokers (India )Pvt Ltd is providing , but not sure.

As their brokerage is high compared with other brokers in India , I did not go in much details of their trading softwares etc.

There are some paid option analyzing software in India for NSE.


First you should be thorough with Greeks , then only the software will be useful to you. . Otherwise it will be waste.

 

[cloudTrader]

Thanks Leonid for taking the time to share your experiences. If i may, what
were the specific challenges you faced when trading options intraday?

It would be great to know the first hand experience of a trader.

Well talking about the specific challenges , the foremost which was encountered was the way Options used to behave differently than the Futures.

An equity trader is used to trading in a simple manner of targeting the price at support & resistance.

In options the same methodology did not work so smoothly. The price of the underlying moved as per analysis but Options due to the play of greeks played very differently.

Sometimes the underlying used to give a good move but due to IV dropping drastically the options moved insignificantly and at other times when the underlying used to move in a trading range , Options with high levels of IV made very fast & furious up & down moves which ultimately were hitting stops placed by me in the system even when the underlying was not breaking important levels.

This made me to shift to Futures for Intraday with quite clear S&R levels and defined stop losses.

Now with more experience in Options I can handle Options Intraday but I do not find Options trading too tempting for Intraday. However I must also share that by trading psychology I am more bent towards a longer time frame than Intraday.

 

[ankurpcl]

To add more in this, one exercise for everyone.
Take any one strike say 6850 or 6800 call or put whatever you like, watch the behavior of put and call for minimum 20-30 working days at particular strike.

Design your algo when one is up and other is down, how exactly you need to trade. if you familiar with greeks apply them same.

But this way you understand more perfectly intra day options. Also if anyone want to go for intra prefere ATM strikes only.

 

[tradingstudent]

Well talking about the specific challenges , the foremost which was encountered was the way Options used to behave differently than the Futures.

An equity trader is used to trading in a simple manner of targeting the price at support & resistance.

In options the same methodology did not work so smoothly. The price of the underlying moved as per analysis but Options due to the play of greeks played very differently.

Sometimes the underlying used to give a good move but due to IV dropping drastically the options moved insignificantly and at other times when the underlying used to move in a trading range , Options with high levels of IV made very fast & furious up & down moves which ultimately were hitting stops placed by me in the system even when the underlying was not breaking important levels.

This made me to shift to Futures for Intraday with quite clear S&R levels and defined stop losses.

Now with more experience in Options I can handle Options Intraday but I do not find Options trading too tempting for Intraday. However I must also share that by trading psychology I am more bent towards a longer time frame than Intraday.

Leonid, much appreciated.

 

[tradingstudent]

To add more in this, one exercise for everyone.
Take any one strike say 6850 or 6800 call or put whatever you like, watch the behavior of put and call for minimum 20-30 working days at particular strike.

Design your algo when one is up and other is down, how exactly you need to trade. if you familiar with greeks apply them same.

But this way you understand more perfectly intra day options. Also if anyone want to go for intra prefere ATM strikes only.

Ankurpcl,

For my understanding, you are asking to pick a strike price and study the behavior of both Call & Put at the same strike price for 20-30 days. Is this correct?

Kindly do elaborate on why ATM strikes work best for intraday and what are the advantages in doing so.

Thanks

 

[ankurpcl]

Reason for Selecting ATM Strikes for intra as below:
1. More volume and difference between buy and sell price less compare to far strikes, this makes easier to square off the positions if taken on both sides of market direction
2. Options Greek give some regard to ATM Strikes although some cases even Greek concept becomes no more applicable but most of times Greeks work perfectly for ATM Strikes
3. If you plan to build your own software its more easier to fine tune your software at ATM Strikes than far strikes

 

[TradeOptions]

Ankurpcl,

For my understanding, you are asking to pick a strike price and study the behavior of both Call & Put at the same strike price for 20-30 days. Is this correct?

Kindly do elaborate on why ATM strikes work best for intraday and what are the advantages in doing so.

Thanks

ATM strike has a delta of 0.5 and is very liquid compared with the deep OTM and ITM strikes. Least slippage in doing the trades.

 

[munde_77]

ATM s are not most liquid. Slightly OTM calls and puts are more liquid.

ATM has the most (Theta) time value. Slightly OTMs have highest liquidity and slippage is less compared to ATM

 

[ankurpcl]

@munde_77

It will be great if you can explain the concept to new members considering today's nifty ATM strikes and slight OTM Strikes.

Thanks in advance.