A Beginner's way to trade options.

[JAYATI 1976]

Thanks,amit. Hope we can learn something about option

 

[Smart_trade]

Posting Bank Nifty 60 min chart with trendlines drawn on it. Three good trades shown which warrant buying of calls/puts as indicated on charts....

Just trading these 3 trades will give you enough in the month in options trade.

Smart_trade

 

[FlowTrader]

Posting Bank Nifty 60 min chart with trendlines drawn on it. Three good trades shown which warrant buying of calls/puts as indicated on charts....

Just trading these 3 trades will give you enough in the month in options trade.

Smart_trade

Hello Sir

Nice chart. Gr8 example.

The problem with some option chains is the lack of liquidity and ridiculous spreads that one faces because of it.

This is the trade/volume data at NSE for banknifty options for month of April Call Options SP 5000

Date 		SP 	LTP 	Contracts 	OI 
01-Apr-2009	5000.00	0.00	0	0
02-Apr-2009	5000.00	0.00	0	0
06-Apr-2009	5000.00	60.00	14	300
08-Apr-2009	5000.00	60.00	0	300
09-Apr-2009	5000.00	75.00	6	400
13-Apr-2009	5000.00	117.00	21	1050
15-Apr-2009	5000.00	230.00	10	1200
16-Apr-2009	5000.00	150.00	74	2850
17-Apr-2009	5000.00	285.90	87	4750
20-Apr-2009	5000.00	180.00	28	5000
21-Apr-2009	5000.00	85.15	83	5250
22-Apr-2009	5000.00	47.00	45	6050
23-Apr-2009	5000.00	72.05	26	6050
24-Apr-2009	5000.00	150.00	121	5850
27-Apr-2009	5000.00	200.00	53	5600
28-Apr-2009	5000.00	30.00	67	5900
29-Apr-2009	5000.00	99.90	114	5700

The above volume does not look encouraging.

What is your experiance do we have enf liquidity in BN options chain to take the above trades ? How are the spreads?

 

[Smart_trade]

Hello Sir

Nice chart. Gr8 example.

The problem with some option chains is the lack of liquidity and ridiculous spreads that one faces because of it.

This is the trade/volume data at NSE for banknifty options for month of April Call Options SP 5000

Date 		SP 	LTP 	Contracts 	OI 
01-Apr-2009	5000.00	0.00	0	0
02-Apr-2009	5000.00	0.00	0	0
06-Apr-2009	5000.00	60.00	14	300
08-Apr-2009	5000.00	60.00	0	300
09-Apr-2009	5000.00	75.00	6	400
13-Apr-2009	5000.00	117.00	21	1050
15-Apr-2009	5000.00	230.00	10	1200
16-Apr-2009	5000.00	150.00	74	2850
17-Apr-2009	5000.00	285.90	87	4750
20-Apr-2009	5000.00	180.00	28	5000
21-Apr-2009	5000.00	85.15	83	5250
22-Apr-2009	5000.00	47.00	45	6050
23-Apr-2009	5000.00	72.05	26	6050
24-Apr-2009	5000.00	150.00	121	5850
27-Apr-2009	5000.00	200.00	53	5600
28-Apr-2009	5000.00	30.00	67	5900
29-Apr-2009	5000.00	99.90	114	5700

The above volume does not look encouraging.

What is your experiance do we have enf liquidity in BN options chain to take the above trades ? How are the spreads?

Yes that is a bit of a problem....except nifty,all other options are relatively illiquid.At the money options have some liquidity but spreads are wide so one has to keep trying to get the trade at in between bid and ask price.....and when the market moves deep in the money again the liquidity dries up....so booking profits become difficult.In this case we can take corrosponding position in futures and keep trying for option trade and once option position is squared off,liquidate futures also...

ST

 

[AW10]

thanx a lot , AW sir,

can't ask for more , got reply for your side...

its my wish to learn option trade from you & i remember how i used to push you to start a thread, hopeful that my wish fulfilled this way..

thanx & regards

vineet

Vineet. due to time constraint, I couldn't take the responsibility of opening a thread but I am always available to contribute few drops of my knowledge and experience wherever possible.

Happy to see this thread meeting its objective.

Happy Trading.

 

[dhinakar113]

Thank you ST sir, for giving a nice method with trend lines. I have been trading Nifty ATM or near money options intraday with reference to miniflow, but with limited success. I buy calls or puts according to the miniflow. Pl guide me whether I am on right path and how to improve it.

Regards,
Dhinakar

 

[Smart_trade]

Thank you ST sir, for giving a nice method with trend lines. I have been trading Nifty ATM or near money options intraday with reference to miniflow, but with limited success. I buy calls or puts according to the miniflow. Pl guide me whether I am on right path and how to improve it.

Regards,
Dhinakar

Nifty options have a very good liquidity.Considering the delta of ATM options,you should be able to make about 50 % of what traders trading miniflow with futures make if trading the same quantity.

Probably the answer lies in the quantity one trades.....If as per your mm,the quantity which you should trade ( calculating the difference of your entry and stoploss points ) comes to 3 lots in futures ,in options you should trade 6 lots as the option premium is going to go against you by 50% of futures loss in case the stops are hit.... with this modification I see no reason why trading miniflow signals with ATM options should not work (being a daytrade ,effect of time decay is negligible).

Best wishes,

Smart_trade

 

[Smart_trade]

Vineet. due to time constraint, I couldn't take the responsibility of opening a thread but I am always available to contribute few drops of my knowledge and experience wherever possible.

Happy to see this thread meeting its objective.

Happy Trading.

Feel free to post here AW10, consider this thread as your own thread. Knowledge multiplies by active participation and healthy exchange of ideas. Look forward to some great posts from you whenever you can spare some time ...

Smart_trade

 

[jatayoo]

LVG,

Straddle is a simultanous buing/selling of call and put of the same strike price....strangle is simultanous buing/selling of call and put of the different strike price....

We will be selling straddle in the first week, then after premiums decay,we will buy the straddle to take advantage of price movements.....In the last week we will play with 2 spreads (calls Condors) ....Lets see how it develops....

Regards,

Smart_trade

Very Interesting
Congrats ST 'DA' and Amit for starting the thread and for the selfless dissertation by ST 'DA' of the fine points.
I shall be a regular visitor to this forum and I shall try to pick up the principles of options trading as stated by ST 'DA'.:clapping::clapping::clapping:

 

[myvineet]

Vineet. due to time constraint, I couldn't take the responsibility of opening a thread but I am always available to contribute few drops of my knowledge and experience wherever possible.

Happy to see this thread meeting its objective.

Happy Trading.

no problem sir ,

sir plz post when you have time ..

your every post showing lot of knowledge & experience..

your every post is worth of that wait...

regards

vineet