Option experiments...

[aimer]

@Aimer

As I do not know how deep your whole trading knowledge is, it is difficult to recommend you any specific strategies.

My knowledge in options is a bit superficial...just know few basics, have not gone into details of various different options, just know few by names...so I started trading with basic strangle and stradle...earlier I used to trade naked call and puts and squared it intraday itself coz whenever I have kept the same for few days , I have always incurred loss...
Had started todays trade with a motive to hold till the lower level of 700 reaches or till I get a decent profits...but after going through ur post I got out immediately in bankofbaroda with some profits, would have exited asianpaints also if had made profits there also as its better to get out of trade if caught on the wrong side...but yes my perspective of such strategies are trading the dailies with 20-30 days trading period...

 

[Somatung]

@Aimer

Ok, I see.

What is your outlook for "Asianpaints" for tomorrow?

How much loss do you face at the moment in the trade?

What is your risk you could face with your straddle when market now would move strongly up or down or only stay side ways tomorrow?

This are the basic questions you should be clear about at end of any day when you do trade option strategies over night. Any questions to that?

 

[aimer]

@Aimer

Ok, I see.

What is your outlook for "Asianpaints" for tomorrow?

How much loss do you face at the moment in the trade?

What is your risk you could face with your straddle when market now would move strongly up or down or only stay side ways tomorrow?

This are the basic questions you should be clear about at end of any day when you do trade option strategies over night. Any questions to that?

Asianpaints for me is still bullish, but its in a retracement mode and since it has formed pin bars on dailies , i would see more of downside in it...My breakeven is 48 points(excluding brokerage) and it was trading around 6 points down before that confusing bid/ask rate of 6...Dont know what it will show tomorrow...but till the loss remains constant will try holding but if it starts increasing gradually will exit....
What do u recommend looking at the present scenario?

 

[Somatung]

@Aimer

If Asian Paints further moves down, what would be your risk? You MUST know that.

If Asian Paints further moves up, what would be your risk? You MUST know that.

If Asian Paints further moves up and down in the range between 800 and 700, what would be your risk? You MUST know that.

I am not sure if you understood your risk your take into the last details if you do risk the whole amount per straddle you trade.

As you know how to calculate it, then you will understand what may could happen tomorrow in case your shares drops further. Did you get that? Only question: When will your profit start? This underlying level you should have in your head as from here on you are on top of the trade on not in the waiting line to come into profit.

Let it be enough for today and if time permits lets do some post tomorrow.

Take care and have a nice night over there / Dan

 

[aimer]

@Aimer

Let it be enough for today and if time permits lets do some post tomorrow.

Take care and have a nice night over there / Dan

Thanks Dan for the helping hand, would like the same in future also...

By the way regarding my position as it was placed in an awkward situation, i got out with very minimal loss...now will concentrate only on indices...no more scrips...

 

[Somatung]

Thanks Dan for the helping hand, would like the same in future also...

By the way regarding my position as it was placed in an awkward situation, i got out with very minimal loss...now will concentrate only on indices...no more scrips...

Hi

Your idea/position was not placed in an awkward situation. It was an absolute normal situation. The share seems to correlate quit strongly with the Nifty. Yesterday you showed a bit of tenseness about your idea/position. That was why I posted that I am not sure if you are absolute clear about your risk. To me it did not look like much risk you had to take over night, as you still today could add and reduce legs too and from your straddle.

This morning you had some points of loss in the trade. So what? There is a solution to that and you not even have to leave your trade. Depending if you sit in front of the terminal or not, you just will play with short options around your long options. This is how such a long straddle in the long run is managed, regardless what market does. And I do not trade for a few cents profits, so I will keep that trade and manage it.

To give you a starting hand: If the share now moves further up again, you will sell the 800 or 820 put. You then have either a credit - or a debit spread on the put side and now the call can start to work. Be clear about why you would choose the credit spread instead the debit spread or vice versa.

Now the above posted you can test with your next straddle or even strangle. Play around with the option legs you can use and add and reduce them how ever it makes sense to the given market situation and the legs you already have in the trade. No limits to that. It takes a bit and even a bit more and more of time to get a gripe on that kind of trading. But this time you have to spend and to sit in front of the matrix and if you get that grip on it, you for example would not need to sell your long straddle today, as you then will know how to manage such trades and end them with profit.

Hope that helps a bit and motivates you to test and manage such trades and not only keep them for one day with the hope of quick profit. I am sure you will succeed in the long run. For the testing of the above you do not need me, as the results are endless as you can convert any strategy into any other strategy and back and more. Even discussing each of the results here include how it could be improved and how the MM could be improved, is over my time limit. But I know other option traders from this forum would like to do the same and you may do it as a group in this thread. It would help if you use Option Oracle or any software you can use for free in your place to even see how your trades look visually.

Take care and good trading / Dan

 

[gmt900]

Hi

Your idea/position was not placed in an awkward situation. It was an absolute normal situation. The share seems to correlate quit strongly with the Nifty. Yesterday you showed a bit of tenseness about your idea/position. That was why I posted that I am not sure if you are absolute clear about your risk. To me it did not look like much risk you had to take over night, as you still today could add and reduce legs too and from your straddle.

This morning you had some points of loss in the trade. So what? There is a solution to that and you not even have to leave your trade. Depending if you sit in front of the terminal or not, you just will play with short options around your long options. This is how such a long straddle in the long run is managed, regardless what market does. And I do not trade for a few cents profits, so I will keep that trade and manage it.



To give you a starting hand: If the share now moves further up again, you will sell the 800 or 820 put. You then have either a credit - or a debit spread on the put side and now the call can start to work. Be clear about why you would choose the credit spread instead the debit spread or vice versa.

Now the above posted you can test with your next straddle or even strangle. Play around with the option legs you can use and add and reduce them how ever it makes sense to the given market situation and the legs you already have in the trade. No limits to that. It takes a bit and even a bit more and more of time to get a gripe on that kind of trading. But this time you have to spend and to sit in front of the matrix and if you get that grip on it, you for example would not need to sell your long straddle today, as you then will know how to manage such trades and end them with profit.

Hope that helps a bit and motivates you to test and manage such trades and not only keep them for one day with the hope of quick profit. I am sure you will succeed in the long run. For the testing of the above you do not need me, as the results are endless as you can convert any strategy into any other strategy and back and more. Even discussing each of the results here include how it could be improved and how the MM could be improved, is over my time limit. But I know other option traders from this forum would like to do the same and you may do it as a group in this thread. It would help if you use Option Oracle or any software you can use for free in your place to even see how your trades look visually.

Take care and good trading / Dan

I would like to add my two cents.

It helps to keep spare margin money for adjusting your trade.

For example , if you have 4.0 lac capital, use only 1.0 or 2.0 lac to take a trade.

Apart from having margin to be used for adjustment , it gives great mental comfort since you don't have to close the position with loss.

 

[aimer]

Hi

Depending if you sit in front of the terminal or not, you just will play with short options around your long options. This is how such a long straddle in the long run is managed, regardless what market does. And I do not trade for a few cents profits, so I will keep that trade and manage it.

To give you a starting hand: If the share now moves further up again, you will sell the 800 or 820 put. You then have either a credit - or a debit spread on the put side and now the call can start to work. Be clear about why you would choose the credit spread instead the debit spread or vice versa.

Thanks Dan for the reply...
Got ur viewpoint regarding the trade...I would have managed it by selling a 800/820 put for the up move...the logic being if the price increases, the put will start losing and will cover the loss...but one doubt that was irritating me was, that why did my position go into red when I had gone for a long straddle, was it related to volatality?...surely the volatality was high...also as u said, i would have played by selling out puts....but after selling those puts if the scrips again started moving down...what would I do...again buy back those puts and sell some ATM calls or leave the initial position with just the straddle?

Also if the mkt doesnot move eitherway and stagnates the premium gets eaten up...in such case the straddle wont work...so in such case how to manage it, because its not known whether the mkt would go into sideways mode before hand, or in such case do we start playing with different legs, or just leave it for the day coz next day may be a moving day...

sorry Dan, lots of questions arising at a time and am unable to control myself...take ur time and plz clear my doubts...

 

[aimer]

Hi

To give you a starting hand: If the share now moves further up again, you will sell the 800 or 820 put. You then have either a credit - or a debit spread on the put side and now the call can start to work.

Take care and good trading / Dan

Dan, did not get it clear, sorry, I am still a novice, but in the above trade although the scrip was going down my put was not moving , but the call was falling like a stone, so the concern was with the call, so instead of selling puts, wouldnt it had been better to sell 820calls, coz selling either debit or credit spread on the put side would ultimately increase my losses as the scrip was bearish...ya if the scrip would have started moving up then selling the put option would be a better choice...

I may be totally wrong Dan, but considering me as a novice plz clear my doubts...

EDIT: sorry overlooked the post, you have already cleared it...its when scrip is moving up then will go with debit/credit spread on the put side

 

[Somatung]

As posted in post 10 of this thread:

About the option greeks: As told: You must understand them in dept as I do not have the time to explain them again and again

As posted in post 16 of this thread:

For the testing of the above you do not need me, as the results are endless as you can convert any strategy into any other strategy and back and more. Even discussing each of the results here include how it could be improved and how the MM could be improved is over my time limit.

But I know other option traders from this forum would like to do the same and you may do it as a group in this thread.

It would help if you use Option Oracle or any software you can use for free in your place to even see how your trades look visually.

Take care / Dan