Hello Traderji and All members,
I am very new to options, though had traded futures many times.
My question is on option strategies and their risk. I came accross many strategies, but my question is for the trader who have practical experience in option trading. For example, we know if market is bullish one can make profit in going long in future. But in practical trading I have seen even if spot is rising, the future is static for a while - or basis(difference between spot and future) changes arbitarily, even from positive to negative , which can lead a trader to loss.
In the first image of attached file, sometime I found future and options are traded, in which if anyone take a long position on Put and a long position on future, can achieved a payoff diagram like first image of the attached diagram. In this case, is it really true that one can never make loss irrespective of where price goes? or ant catch can plan an important factor like volatility ?
Second image is of a short stradle, in NIFTY which gives a good range say almost 200 points between the break even points. We understand that one can be in profit if NIFTY is within that range. But, apart from range criteria, can there be something that can lead to loss even if NIFTY is within that range ? Volatility, early excercise, can any thing be faced ?
Thanks
I am very new to options, though had traded futures many times.
My question is on option strategies and their risk. I came accross many strategies, but my question is for the trader who have practical experience in option trading. For example, we know if market is bullish one can make profit in going long in future. But in practical trading I have seen even if spot is rising, the future is static for a while - or basis(difference between spot and future) changes arbitarily, even from positive to negative , which can lead a trader to loss.
In the first image of attached file, sometime I found future and options are traded, in which if anyone take a long position on Put and a long position on future, can achieved a payoff diagram like first image of the attached diagram. In this case, is it really true that one can never make loss irrespective of where price goes? or ant catch can plan an important factor like volatility ?
Second image is of a short stradle, in NIFTY which gives a good range say almost 200 points between the break even points. We understand that one can be in profit if NIFTY is within that range. But, apart from range criteria, can there be something that can lead to loss even if NIFTY is within that range ? Volatility, early excercise, can any thing be faced ?
Thanks
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