Options Doubt

[okabira]

There is a difference between trading Options and Equity Stock which is-
In Eq,you can put 3 orders(buy,target order and sl order) but in option you can place only 2 orders(buy and target order or buy and sl order),if you want to place 3rd order you must have full margin.

.

yea u mean bracket and market order ?

I always do market orders ..( CO orders for zerodha ) ... Q to buy and SL ... thats it !

 

[Kumar .]

.

yea u mean bracket and market order ?

I always do market orders ..( CO orders for zerodha ) ... Q to buy and SL ... thats it !

For EQ-
Say I want to buy 1000 shares of VEDL,so I place orders like this :
Buy 1000Q @ 320
SL for 1000Q @ 319
Target Limit order @ 323

We do this in a same margin(capital) we have with the broker.

But for Options,we need full margin for that 3rd order be it a target order or sell order-

Buy CE @ 75
SL @ 69
now if I want to place target order @ 85,I need a full margin which is 23-24k instead of just rs 6375

 

[okabira]

@Subhadip
@Smart_trade
@columbus
@timepass
@traderniftybull


. .. is trading option against trading equities a bad choice ?

I mean my good amount of profits gets eaten up by STT and other charges .. ... any other way to bring STT down for same asset ... other than trading option ? impossible right ? ...

So suppose I trade reliance-EQ ... buy 1000 @ 870 ... SL 868 (2 pt)
now i got out at 875 , ie 5000 Profit
-----------------------------------------------------------------
lets assume .... hypothetically for the current trade.. i dont know greeks .......

1. suppose i am bullish on reliance-FnO .. .. so same thing as above ... just pricing would be very little different .
(SL 2 pt here also)

2. now with options ... same case ... currently at 870 strike price , offers at 25.50 .. I buy Relaince-870CE , [email protected]
here my SL would be 23.50 .. (2 pt) .. as the stock moved up ... so option's price will go up right ??


Now this is i want to ask ... that can an option behave inversely to stock price in ANY CASE ??

.. will the greeks help me out here ? If that it is the case ...then i will learn it .

I know that options greeks will help me decide future price prediction ...
but if the underlying STOCK is rising ... will option fail to rise ?

tell me .

 

[traderniftybull]

'. .. is trading option against trading equities a bad choice ?"
- Sorry, cant say, I dont know, As I hardly trade equities intraday. But you are right, most part of profit (or loss ) goes to cost of trade (brokerage, if per trade and taxes etc)

"Now this is i want to ask ... that can an option behave inversely to stock price in ANY CASE ??"
- Yes, it can, particularly on big event days, like company results, Fed meet, RBI meet etc, when IV is on the higher side and so the options prices (both call and put) are on the higher side than it should be. So for option buyers, the strategy will be different in such cases, to get out of trade a bit early, how much early, that depends on market movement. Or a novice can avoid to trade on such days, it is not necessary to trade all events. And secondly on sideways.narrow range days.

BTW, these are the cases, when there are full chances that both put writers and call writers may make money (but not 100% foolproof). Otherwise, in most of the trades either of one will make money and other side may loose heavily.

.. will the greeks help me out here ? If that it is the case ...then i will learn it .
I dont know. Knowledge in any form is good, and one should get it, gain it.

------------------------------------------------------
hmmmm, on SL
Will you let me know
what will be your SL (I mean how far it will be in points) when you are trading Reliance, SBI (equity, future and ITM options), BN (future and ITM options),, Nifty (future and ITM options),)

This question is open to all for their comments
--------------------------------------------------------

 

[Subhadip]

@Subhadip
@Smart_trade
@columbus
@timepass
@traderniftybull


. .. is trading option against trading equities a bad choice ?

I mean my good amount of profits gets eaten up by STT and other charges .. ... any other way to bring STT down for same asset ... other than trading option ? impossible right ? ...

So suppose I trade reliance-EQ ... buy 1000 @ 870 ... SL 868 (2 pt)
now i got out at 875 , ie 5000 Profit
-----------------------------------------------------------------
lets assume .... hypothetically for the current trade.. i dont know greeks .......

1. suppose i am bullish on reliance-FnO .. .. so same thing as above ... just pricing would be very little different .
(SL 2 pt here also)

2. now with options ... same case ... currently at 870 strike price , offers at 25.50 .. I buy Relaince-870CE , [email protected]
here my SL would be 23.50 .. (2 pt) .. as the stock moved up ... so option's price will go up right ??


Now this is i want to ask ... that can an option behave inversely to stock price in ANY CASE ??

.. will the greeks help me out here ? If that it is the case ...then i will learn it .

I know that options greeks will help me decide future price prediction ...
but if the underlying STOCK is rising ... will option fail to rise ?

tell me .

Yes, I do trade stock options other than Nifty option..trick is to trade less...

In option, buying 870 call will have .5 delta, as it is ATM CE.

So if that is true, then if future moves 5 points, then option will move 2.5 points,

Now if u r buying October option, then theta decaying will be high.

If future moves today, then 5 point move u will get 2.5 points in 870 CE , but if future does not move for two days, then the 870 CE will have time decay, so suppose two days future remain at around 870 range, the n that option price would have been at 23 rather than 27.

So if future moves 5 point say on Wednesday, then option would be at 26..may be then, irrespective of the great move in future..

Is there any alternative to that:

Many:

1. Buy 800 CE & sell 870 CE- Same quantity.
2. Buy Future & sell 870 CE..

These two will have movement like future but will help if there is sideways also...

If price goes down also, say if u buy future of Reliance, at 870 & sell 870 CE @27..

Now at October expiry, if Reliance moves to 870+ 10= u have profit of 17 points.

Also if reliance goes down..at close at 850, still u have profit of 7 points..

That is all

 

[traderniftybull]

Many:

1. Buy 800 CE & sell 870 CE- Same quantity.
2. Buy Future & sell 870 CE..

These two will have movement like future but will help if there is sideways also...

If price goes down also, say if u buy future of Reliance, at 870 & sell 870 CE @27..

Now at October expiry, if Reliance moves to 870+ 10= u have profit of 17 points.

Also if reliance goes down..at close at 850, still u have profit of 7 points..

That is all

Bhai,
How much money is required to take this trade (in full)
and
what will be the cost of full trade, if executed at levels mentioned above.

 

[Subhadip]

Bhai,
How much money is required to take this trade (in full)
and
what will be the cost of full trade, if executed at levels mentioned above.

I have to check...Span margin calculator of zerodha..If any one can do it..I am not in front of laptop

 

[traderniftybull]

I have to check...Span margin calculator of zerodha..If any one can do it..I am not in front of laptop

OK
I am in no hurry, you may post details in the evening.

 

[Subhadip]

 

[Subhadip]