Option Selling Especially Selling Put Guidance Needed

[shashank yadav]

@ Somatung
what do you think about shorting deep otm option at the day of expiry ?

 

[Somatung]

@ Somatung
what do you think about shorting deep otm option at the day of expiry ?

Hi Shashank yadav

Shorting deep otm at the day of expiry you can do if you feel safe by what you do. Still: Do never count for sure to have any free lunches in the market. Never ever.

It is less about what options you sell instead more of HOW you manage your sold options according to market moves. What ever you decide, just KNOW how to manage those short options and never let them get itm.

So if you may never before did short options, even deep otm and even on expiry day, do some test trades. In the link you will find data for three months to download, so you at least can check your idea with this data for this short time frame. http://www.traderji.com/options/100246-request-option-chain-page-nse-website-2.html#post1112972

Dan /

 

[wiseowl]

sorry for the typo error. buying of 8600 call and 7400 put to protect against any heavy movement to either side

 

[Somatung]

sorry for the typo error. buying of 8600 call and 7400 put to protect against any heavy movement to either side

Hi

Ok, that makes more sense. We then talk about a "Long Iron Butterfly" http://www.theoptionsguide.com/iron-butterfly.aspx

To improve it you can try to leg in or you even implement a "Broken wing iron butterfly" http://www.optiontradingpedia.com/broken_wing_butterfly_spread.htm in the direction market most probably will/could move.

Many ways to do, so no specific way is the best way. It is all your choice how you want to manage such trades, just understand what you do.

Happy "Dussehra" / Dan

 

[wiseowl]

@ Somatung
what do you think about shorting deep otm option at the day of expiry ?

Dear Shashank,

I have been working on this strategy for few months now if you short call and put which are having a delta of 20(-20) to 30(-30) .you do get a decent return with manageable risk. Like Dan said the posn has to be monitored. like with todays data max pain being at 8200 and shorting of call 8400(delta 35) and put 8000(delta - 25) would give a decent return in this case approx. 21.

 

[shashank yadav]

I checked that data very much volatile.
Somatung what will you advice about shorting at the day of expiry in last hour. I think shorting a lot having LTP 10 only be safe. As market has to move a lot in last hour to make change in it.

 

[Somatung]

I checked that data very much volatile.
Somatung what will you advice about shorting at the day of expiry in last hour. I think shorting a lot having LTP 10 only be safe. As market has to move a lot in last hour to make change in it.

Hi

I not can give you any advise about this scenario you are asking for as I do not trade this way. So for this very specific event you are asking for I do not have sufficient experience to give you any advise.

I avoid to trade on the last two expiry days and let only the hedged positions run through this expiry time to let those legs expire. But those is a complete other way of trading compare to your specific idea you ask for.

Let's see if some one comes up who has more experience on your idea.

I wish you a nice weekend / Dan