A Beginner's way to trade options.

[myvineet]

PT bhai,

Aap to poore TJ me chhaye hue ho -- kuch idea aap bhi aage pesh kijiye, being very experienced and knowledgeable - or should I write the other way round - being very knowledgeable and expreienced.

Also I read on TJ someehere in your post that u trade only in options

SO

Why not a strategy from your end which will earn us a decent profit (not crorepati or lakhpati but decent).

On a serious note, is my strategy as confusing as the no of confused smileys in the post above?

Murtaza

no ,Murtaza.. not confusing at all...

we appreciaate that you share your strategy with us..

hope we will get more of that from you..

regards & thanx

vineet

 

[jamit_05]

ST,

Just putting a thinking cap on. If we trade the 60 min flow with the spot charts, and enter positions by buying out of the money options... will that be a bad idea?

Just thinking... the cost of an out of the money option in Nifty is around 100 Rs. depening upon how far it is out of the money. Now in 60 min we are expecting the market to move in our direction. So we should expect the option to be in the money. At the end of the day say if we get a good move move in our direction, and our option is in the money, we simply square it off and buy another out of the money option. Idea is that we keep only the premium for out of the money option on the table overnight. This will limit the risk to almost our stop loss in 60 min even in case of a gap opening against us.... Just thinking... not tested anything.

Rgds

Flock,

I might sound a little idealistic in the following, but that is not away from the reality.

I trade, like the most of us, trade unhedged in futures (miniflow).

However, options traders take positions in two different directions (For ex: buy one ATM call and sell one OTM call, a covered call basically or a strangle or a straddle).

If any of my option strategies rely on being one sided (naked) then it is as good as trading futures, so why bother.

For ex:
One gentleman, linkon (an awesome trader with good experience), places SELL on an ATM call and an ATM PE. He goes onto cover these by using futures. His goal is to pocket the premiums. This is solid, but the method has redundancies. The results will only be as good as his skills in managing the futures position...

On the other hand, if we can place strangles or straddles and learn to manage them with the changing scenario then I'd confidently say that I have diversified into trading options, else its all the same... just different condiments.

Therefore, I see little motivation in mixing options with futures but that is the best I can do thus far

 

[Smart_trade]

Selling straddle and protecting it by futures is a strategy to be done in stable markets....with the election results in this month and the expected volatility,overnight gaps....this strategy can kill you....I have some friends who lost fortunes in the Jan 08 fall and the overnight large gaps we used to have then....

I would not touch selling straddles before election results are out...we may buy the straddle just before the election results to take advantage of large swings expected in one direction ,but dont know which direction.

We will sell straddle once election results volatility subsides.

Smart_trade

 

[praveen taneja]

PT bhai,

Aap to poore TJ me chhaye hue ho -- kuch idea aap bhi aage pesh kijiye, being very experienced and knowledgeable - or should I write the other way round - being very knowledgeable and expreienced.

Also I read on TJ someehere in your post that u trade only in options

SO

Why not a strategy from your end which will earn us a decent profit (not crorepati or lakhpati but decent).

On a serious note, is my strategy as confusing as the no of confused smileys in the post above?

Murtaza

Murtaza bro u are right I trade in options only n my post was never here to make mockery of ur post and trading really sorry if u feel bad
Leave aside Zero se Hero but the whole month I trade on buying nifty support and selling resistence with hedging with ATM options mostly of next mnth after 15th
My stop loss for every trade is break of support or resistence -f(20)
My target for all trades is min 10% or friday close as I exit options to use time decay or save myself from time decay
I want to thank Mr. Amit Ghosh for teaching me this strategy.So far I am using it successfully but on expiry I change strategy
I visit this thread to find my mistakes of trading as this is how beginners should trade options but sorry do u feel a beginner can take so much pain n funds at start

 

[praveen taneja]

Selling straddle and protecting it by futures is a strategy to be done in stable markets....with the election results in this month and the expected volatility,overnight gaps....this strategy can kill you....I have some friends who lost fortunes in the Jan 08 fall and the overnight large gaps we used to have then....

I would not touch selling straddles before election results are out...we may buy the straddle just before the election results to take advantage of large swings expected in one direction ,but dont know which direction.

We will sell straddle once election results volatility subsides.

Smart_trade

:clapping::clapping::clapping::clapping:

 

[praveen taneja]

sorry for posting off topic here again
Give the Water in any small tree & care,
So that they grow Up for our better life.

Plant minimum a tree every year any where & Save earth...... its our Moral Duty of Humanity.

As it is such burning hot summer Due to Global Warming..We should Contribute to save our mother earth.

"Each One - Plant One"

Save Tree,
Save Water,
Save Energy,
Save World,
Save Earth,
&
Save Humanity.
------------ --------- --------- --------- --------- --------- ----
No Caste,
No Religion,
No Language,
No Boundaries,
Only......
"HUMANITY "

 

[Flock]

Flock,

I might sound a little idealistic in the following, but that is not away from the reality.

I trade, like the most of us, trade unhedged in futures (miniflow).

However, options traders take positions in two different directions (For ex: buy one ATM call and sell one OTM call, a covered call basically or a strangle or a straddle).

If any of my option strategies rely on being one sided (naked) then it is as good as trading futures, so why bother.

For ex:
One gentleman, linkon (an awesome trader with good experience), places SELL on an ATM call and an ATM PE. He goes onto cover these by using futures. His goal is to pocket the premiums. This is solid, but the method has redundancies. The results will only be as good as his skills in managing the futures position...

On the other hand, if we can place strangles or straddles and learn to manage them with the changing scenario then I'd confidently say that I have diversified into trading options, else its all the same... just different condiments.

Therefore, I see little motivation in mixing options with futures but that is the best I can do thus far

Amit,

No friend. First of all this is not an option strategy in the true sense of the word. We are not trying to buy or sell combinations here.

This is just a method to trade 60 min flow with lesser overnight risk than futures and lesser capital requirement. The risk per lot is limited to around 100 points if we are trading Nifty. Even in futures on 60 min your SL may be more than 150 points away and your orders are for the day only. So if we are long and have a 10% gap down the next day, using options our loss is limited to around 100 points(if we have done the MM homework that is).

Then there is the other advanatage that there is no MTM requirement.

Rgds

 

[myvineet]

friends...just find a excellent post from AW10 on how to manage a option trade acc to charts..

link is :

http://www.traderji.com/risk-money-...ble-stop-loss-options-trading.html#post305289

hope it helps

vineet

 

[MurAtt]

Murtaza bro u are right I trade in options only n my post was never here to make mockery of ur post and trading really sorry if u feel bad
Leave aside Zero se Hero but the whole month I trade on buying nifty support and selling resistence with hedging with ATM options mostly of next mnth after 15th
My stop loss for every trade is break of support or resistence -f(20)
My target for all trades is min 10% or friday close as I exit options to use time decay or save myself from time decay
I want to thank Mr. Amit Ghosh for teaching me this strategy.So far I am using it successfully but on expiry I change strategy
I visit this thread to find my mistakes of trading as this is how beginners should trade options but sorry do u feel a beginner can take so much pain n funds at start

PT Bhai,

I am NOT offended AT ALL (would never be offended if anyone is steering me in the right direction).

Yes maybe I posted in the wrong thread - never read the title properly - very few threads on options and as there are senior/experts here I thought my view re selling the Calls/Puts would be tested for probalilities.

Once again thanks for the guidance.

Will u also give the link of the thread for Mr Ghosh please.

Thanks

 

[praveen taneja]

PT Bhai,

I am NOT offended AT ALL (would never be offended if anyone is steering me in the right direction).

Yes maybe I posted in the wrong thread - never read the title properly - very few threads on options and as there are senior/experts here I thought my view re selling the Calls/Puts would be tested for probalilities.

Once again thanks for the guidance.

Will u also give the link of the thread for Mr Ghosh please.

Thanks

http://www.traderji.com/options/16794-option-buy-recomendations.html
Bro actually I want n request U all make it as simple as u can so all newbie including me can learn something here Really appreciate efforts of u all Thanx again God bless us all:thumb: