Nifty Options-Intraday Trading Strategy.

#22
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
Hi Munde,

Thanks for pointing me in the right direction.
Note: I am new to options, so seniors feel free to correct me..

I did some research and this is what i found:

In General:

1. ATM options have highest time decay.
2. Options in general in the expiring month have accelerating time decay.
3. ATM options lose most of their time value in the last 30 days.

So if one were to construct a intra day strategy with the focus of taking advantage of time decay, is selling ATM call and put a component of the strategy?

Thanks
 

toughard

Well-Known Member
#24
Nice to see all advices :thumb:

tradingstudent is going to be tradingteacher after learning all the pricing models:clapping:

Buddy... I assume that you know basics of options... don't trade live while your studies and observations... do a paper trade... market will always be there...

Now...

1st thing..... just develop a concise on option price behavior by watching them continuously ... no better education is needed towards understanding options if you are here to trade options INTRADAY....

2nd.... have some simple trend identification system like ema cross on smaller time frame in place for example chart like 2min or 3min max....

3rd.... now start playing safe with simple combinations....
for example if you get up-trend signal based on ema cross then BUY nifty future @ 6800 for example and SELL ATM ie.,, 6800 calls equal quantity....
for down trend vice-versa ( your study on ATM is more than needed to this)

4th.... stay tuned close to the screen... as soon as you spot your M2M showing good profits square off both the trades... just dont be greedy!

5th... stop loss is nothing but your ema cross or the amount that you can lose is showing up in M2M with - sign:p

6th... after doing this on papers for full month and on some expiry days of understanding all kind situations... go live!!

7th.... 2 things to remember...
A. just believe what you see & DONT see what you believe while reading the charts
B. you already planned your trade so just trade your plan and DONT keep Planning your trades in live market

8th.... after market hours spend some time to create other combinations using your present days observations

9th... only during nights to pass you time or to get fast sleep STUDY ALL PRICING MODELS:confused:,GREEKS:confused: or even you can wright books on option trading:rofl:


Bottom line is your speed in learning options suggest the your NOT as novice as you described:D

anyway... all the best :cool:

:thumb:
 
Last edited:
#25
Hi Toughard,

Thanks for the kind words. I am really a novice with respect to

a. Trading b. Options

I have been pouring over the threads on traderji, some of the posts have so much information here & more importantly i attracted to the inputs that come trader's years of experience. I initially start reading one thread and it points to another thread, within 1-2 hours there are 20 to 30 browser tabs open ranging from technical analysis, experimental strategies, money management..

After scratching the surface with regards to options & trading in general, the following are necessary:

1. Knowing about the option strategies.
2. Knowing about the option parameter, theta etc...
3. Knowing about pricing models.
4. Knowing about technical analysis.

My goal is trade intraday, so kindly give me your inputs from your experience..

1. The big question: What is the feasibility of options as a day trading medium?

I realize there will always be 1% of the crowd that can convert even iron into gold, but in general does options lend itself as a day trading instrument?

2. if one were to succed as an options day trader, what specific areas one should focus on and their priority level?

Every component of trading is new to me, but I am willing to put in the effort and i would be really thankful if the seniors could structure and point me out in the right direction..

Thanks

PS:



I realize if one
 
#26
@Tradingstudent

I would say it is now time for you to start to show your first intra day paper trades here. And then let's see what other information you may need. We not just can ask and ask for this and that and never show some thing about what we may do.

Now it is your turn to start showing what you learned so far. Not by posting some comments. Most can do that after reading in the forum for a certain time. No

But by posting: Today I start with paper trading. I bought this and this option because of this and that reason. and so on.

Take care and good luck. We are here, do not worry about that :)
 
#27
@Tradingstudent

I would say it is now time for you to start to show your first intra day paper trades here. And then let's see what other information you may need. We not just can ask and ask for this and that and never show some thing about what we may do.

Now it is your turn to start showing what you learned so far. Not by posting some comments. Most can do that after reading in the forum for a certain time. No

But by posting: Today I start with paper trading. I bought this and this option because of this and that reason. and so on.

Take care and good luck. We are here, do not worry about that :)
@ Somatung,

I respectfully have to say, you are wrong in this regard. These are my reasons for saying so & I am quoting your words wherever necessary:

1. "I would say it is now time for you to start to show your first intra day paper trades here."

Considering the breadth & complexity of options and that the fact that i am just getting started and need to understand the dynamics. Most importantly, i don't want to waste traderji''s members valuable time by doing paper trades
without grasping the options dynamics and asking members to analyze half backed strategies.

2. "We not just can ask and ask for this and that and never show some thing about what we may do."

I have to again respectfully disagree with you for this point.
a. People who ask questions have their own learning speed & comfort levels. b. Enforcing a sort of quid pro quo will discourage beginners or people to ask many questions.
c. People who can go the extra mile can answer or give information as per their comfort.
d. People who feel otherwise always have the right to simply choose to ignore or not answer them.

3. "Now it is your turn to start showing what you learned so far. Not by posting some comments. Most can do that after reading in the forum for a certain time."

I have to say you are wrong. If you read my post, i had a very important and specific question: Is using options viable as an intra day strategy?

This is a million dollar question and i am trying to see what can suit me vis a vis trading style. This is a question that can really be answered by trader's who toiled hard and have experience and have battle scars. I am sorry that somehow, you misconstrued this question as idle chit chat.

4. Most importantly i want prepare myself well, and that's why i requested the seniors to advise on the structure or mentor me in the direction so that i can put in the time and effort.

@Somatung, on a side note, it would have been nice if your post at least attempted to add value or clarify the questions that were pertinent.

Thanks
 

praveen98

Well-Known Member
#28
Hi Trading Student,

Is using options viable as an intra day strategy?
The answer to your question is resounding "yes." Learn price action trading and i don't think understanding Option greeks and other theoretical concepts a must,but it is better to know theory, and rather than theory it is better to understand what we are planning to do...trading options whether it is intraday or on a larger timeframe is a different ball game ...what you are asking (2 to 3 points) is more akeen to scalping ...Learn price action trading....be in line with trend ...be fleet footed for options trading cut the losing position straight away.
All the Best:thumb:
 

toughard

Well-Known Member
#29
Hi Toughard,

Thanks for the kind words. I am really a novice with respect to

a. Trading b. Options

I have been pouring over the threads on traderji, some of the posts have so much information here & more importantly i attracted to the inputs that come trader's years of experience. I initially start reading one thread and it points to another thread, within 1-2 hours there are 20 to 30 browser tabs open ranging from technical analysis, experimental strategies, money management..

After scratching the surface with regards to options & trading in general, the following are necessary:

1. Knowing about the option strategies.
2. Knowing about the option parameter, theta etc...
3. Knowing about pricing models.
4. Knowing about technical analysis.

My goal is trade intraday, so kindly give me your inputs from your experience..

1. The big question: What is the feasibility of options as a day trading medium?

I realize there will always be 1% of the crowd that can convert even iron into gold, but in general does options lend itself as a day trading instrument?

2. if one were to succed as an options day trader, what specific areas one should focus on and their priority level?

Every component of trading is new to me, but I am willing to put in the effort and i would be really thankful if the seniors could structure and point me out in the right direction..

Thanks

PS:



I realize if one
1st thing try to organize the all the information that you are getting across the net by categorizing them as you are trying to categorize your needs...


2nd
1. Knowing about the option strategies - just visit http://www.optiontradingpedia.com/strategy/optionstrategyselector.htm

2. Knowing about the option parameter, theta etc... - NOT NEED for intraday
3. Knowing about pricing models. - NOT NEED for intraday
4. Knowing about technical analysis. - try to keep it as simple as possible and get settle fast with some basic indicators as its very wast subject with never ending possibilities

3rd
1. The big question: What is the feasibility of options as a day trading medium?
ans- very very good
a. just know which strike price to select
b. spot the direction
c. be quick to exit (some on said scalping... may be right)
d. quantity depending on your risk taking & money management


4th
2. if one were to succed as an options day trader, what specific areas one should focus on and their priority level?
a. dont bet all you have at once
b. cut the losses fast
c. keep in mind that good exit would be with +10%
d. big exit would be 50% max
e. stop trading if you lose your daily stake " die an other day!! not today"


if you keep asking more questions about same basics then that sends a signal that you are expecting a spoon feeding which no one dose... try to start trading on papers and come up with you question on trading practically


all the best...
 

toughard

Well-Known Member
#30
@Tradingstudent

I would say it is now time for you to start to show your first intra day paper trades here. And then let's see what other information you may need. We not just can ask and ask for this and that and never show some thing about what we may do.

Now it is your turn to start showing what you learned so far. Not by posting some comments. Most can do that after reading in the forum for a certain time. No

But by posting: Today I start with paper trading. I bought this and this option because of this and that reason. and so on.

Take care and good luck. We are here, do not worry about that :)

hi i saw your comment

" @Umash2000

Regarding your comment: Expect option traders to give their option strategies.

If you want to trade the ranges/levels you posted, there are various strategies you can play through leg in or by implementing them at once. Put and credit spreads on support and resistance, long and short Condors by placing the legs at or around the levels you feel is best, long and short Butterflies the same way like the Condors, Iron condors and iron Butterflies, Diagonal debit and put spreads, Calendar spreads by placing the short leg in this month series or vice versa, Circuits with put and calls and what ever you like. Endless variations with different out comes. Good luck and see you around."

very nice .....
 

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