Premium Decay in nifty
- Thread starter vagar11
- Start date
The timing to Option writing is most important.
Ideally, they are written well before expiry, generally, for the next series. Writing options near expiry is the suicidal story.
Many on TV say that so and so options are cheap, 10-40 rupees and can be written and pocket premium is hogwash.
The two scenarios are:
1. An option is written for Inr. 250 about 50 days before expiry.
Even on expiry day, if it jumps from 10 to 100, you are covered.
2. Same option written 5 days before expiry at Inr. 30 on expiry day jumps to same 100 and you know rest of the story.
Then even try to manage the acceleration by buying to cover, won't work.
To write options 2 or 3 series before expiry requires capital that only the < 1% have
Ideally, they are written well before expiry, generally, for the next series. Writing options near expiry is the suicidal story.
Many on TV say that so and so options are cheap, 10-40 rupees and can be written and pocket premium is hogwash.
The two scenarios are:
1. An option is written for Inr. 250 about 50 days before expiry.
Even on expiry day, if it jumps from 10 to 100, you are covered.
2. Same option written 5 days before expiry at Inr. 30 on expiry day jumps to same 100 and you know rest of the story.
Then even try to manage the acceleration by buying to cover, won't work.
To write options 2 or 3 series before expiry requires capital that only the < 1% have
Yes ,travi. BankNifty 19500PE was trading at Rs.250 intraday and ended WORTHLESS.
The timing to Option writing is most important.
Ideally, they are written well before expiry, generally, for the next series. Writing options near expiry is the suicidal story.
Many on TV say that so and so options are cheap, 10-40 rupees and can be written and pocket premium is hogwash.
The two scenarios are:
1. An option is written for Inr. 250 about 50 days before expiry.
Even on expiry day, if it jumps from 10 to 100, you are covered.
2. Same option written 5 days before expiry at Inr. 30 on expiry day jumps to same 100 and you know rest of the story.
Then even try to manage the acceleration by buying to cover, won't work.
To write options 2 or 3 series before expiry requires capital that only the < 1% have
Ideally, they are written well before expiry, generally, for the next series. Writing options near expiry is the suicidal story.
Many on TV say that so and so options are cheap, 10-40 rupees and can be written and pocket premium is hogwash.
The two scenarios are:
1. An option is written for Inr. 250 about 50 days before expiry.
Even on expiry day, if it jumps from 10 to 100, you are covered.
2. Same option written 5 days before expiry at Inr. 30 on expiry day jumps to same 100 and you know rest of the story.
Then even try to manage the acceleration by buying to cover, won't work.
To write options 2 or 3 series before expiry requires capital that only the < 1% have
Link for data and script
https://drive.google.com/open?id=0B7L3cH2mfRaAdTBZNTJPdXZ2ejQ
https://drive.google.com/open?id=0B7L3cH2mfRaAdTBZNTJPdXZ2ejQ
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