So anybody is actually in profits just trading Options

[Jeareh]

can you elaborate a bit more on the put/call ration?
do u buy or write options?

Hi PRST,

By definition you know what is put call ratio. It is about trade volume of put to call. But here, what i mean is the percentage of difference between put and call. When it is low, we can benefit whether market goes upward or downward.

I only buy options. Interested in writing options, but not now.

Happy Trading

 

[jain.er]

I have a simple query regarding options
say I execute the following trade
Sell 2 ATM call option IV = 30 , time to expiry = 40 days , Delta = -1 , Premium = 150*2 = 300
Hedge it with buying Fut. of the underlying delta = 1

Now market rises or falls by 100 points next day

What to do now ?

 

[NTrader42]

I have a simple query regarding options
say I execute the following trade
Sell 2 ATM call option IV = 30 , time to expiry = 40 days , Delta = -1 , Premium = 150*2 = 300
Hedge it with buying Fut. of the underlying delta = 1

Now market rises or falls by 100 points next day

What to do now ?

Rises by 100 points ==>

The Long future you hold will increase by 100 points so ur gain on this leg is 100. The ATM calls u sold are now ITM and the implied volatility would also increase, both Calls will increase in value by approx 60 each so u will be in loss of 120 points on this leg. So notional loss of 20 points and now ur position is not completely hedged as the delta on sold calls will be aprox -1.2 now, and ur position becomes bearish from being delta neutral.

Nifty decreases by 100 points ==>

The ATM calls u sold are now OTM and the implied volatility may reduce, both Calls will decrease in value by approx 40 each so u will be in gain of 80 points. The Long future you hold will decrease by 100 points so ur loss on this leg is 100. Also now the delta on sold options reduced to approx -0.8, , and ur position becomes bullish from being delta neutral.

Cheers

 

[jain.er]

so in short any large movement would kill me like anything

 

[NTrader42]

so in short any large movement would kill me like anything

yep, and then think of a 200-300 point move

Your position is completely hedged at a single price point. Now as the price changes the hedge relationship changes, you can benefit from shorting of options only if you can take care of the adverse price moves.

Suppose you are sure that 5000 will act as a resistance and price will not stay above it for long, then you can choose to short CE5000, now when/if the price starts trending up, you can hedge by going long on Nifty Futures, at the same time you have to ensure that you take off the future long position at appropriate time when it starts trending down.

When you short an Options to collect premium, it is a long term trade and you will have to manage it actively till or near expiry.

Thanks

 

[vamsisanaka]

I made money, options are less risky with unlimited profit..

once can double his money in a week, if you can guess the market moves..

 

[jain.er]

one more example ....

If today I sell 5100 CE assuming 5000 will act as a resistance . Then if tomorrow it opens gap up @ 5250 (like 10% up circuit) then I am finished ?

Another scenario if nifty opens at 5150 shall I buy Fut immediately as a hedge ?

Sorry to ask silly questions ...please help

 

[BrokerJi]

one more example ....

If today I sell 5100 CE assuming 5000 will act as a resistance . Then if tomorrow it opens gap up @ 5250 (like 10% up circuit) then I am finished ?

Another scenario if nifty opens at 5150 shall I buy Fut immediately as a hedge ?

Sorry to ask silly questions ...please help

Writing uncovered options are the riskiest position to get into, so depends how strong your market view is.
In your position it's better to buy a OTM option as hedge. So you can sell 5100 CE and buy 5300 CE. This way you'll compromise a little premium income but your maximum loss would be limited to 200 points (INR 10,000/-) for one lot.

BJ

 

[ajshare108]

I am a long term investor, putting my money with a horizon of 2-3 year. In this market I am since last 15-16 Years. but since last 2-3 years i start trading mainly in NIFTY. I try lot but could not get much success in Trading. after every try, finally I start shorting far way CE and PE for which I have to keep margin amount in my trading account along with MTM amount.

some one told me that If I will utilize margin amount which I can get against my long term portfolio, I have to keep only MTM amount in my trading account and the broker will not charge interest on margin amount which i am getting against my portfolio.

so I am just putting my query to all senior member that which brokering firm are not charging interest. so that i can get better deal with my broker.

although this is not the right forum to place this question, but hope senior member will reply,

 

[vartika]

yes i m making money in options

hi
can u pls help me out that how can i start my trading.
means through which company/broker i shd start.
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vartika