Help me wirite a call/put

[vinay666]

This could be a silly question, but to me it isn't (considering my knowledge of markets - as of today)

Yesterday I had written 2 lots of nifty calls, initially i was in the money, but my greed (financial constraints) did not permit me to book profits.

BUT to my bad luck, during the last hour market recovered, and it was out of money.

My friend had told me that if, anyone exercises his option (after market hours) and if it is randomly assigned to me I'd incur unlimited loss

so i booked loss and bought them back

friends, please tell me

1. at what price would it have exercised, &

2. would it be better if i had held on for a few more days, rather than booking losses intraday (till expiry, coz i have a felling that i will be in the money again)

you may assume that there aren't enough funds in my ledger

thank you all in anticipation

 

[Capricorn]

Nifty options are european and can only be excercised at expiry.

I cannot answer your other question , I have no idea whats going to happen.:lol: You will have to ask a seer.

 

[vinay666]

Thank you Boss!

So it goes to say that I was wrong to have bought back the call that i had written.

Does it mean I could hold on till expiry without fear of it being exercised by anyone? (as you said its European)

somebody please confirm

Thanks

 

[AnandK]

Thank you Boss!

So it goes to say that I was wrong to have bought back the call that i had written.

Does it mean I could hold on till expiry without fear of it being exercised by anyone? (as you said its European)

somebody please confirm

Thanks

Yes, you could hold them till expiry.

 

[vinay666]

:thumb:
thanks that solves my problem
:clapping:

 

[AW10]

Please please, don't write options without knowing what u are doing.. (And specially when u are running a tight account). If u don't understand the market trend, option pricing behaviour, the short option position would have blown your account on next day market open, if it opens against u.

Dear, risk mgmt is the first thing an option writers consider or they have big account of big ego to handle bigger losses.


It is right, that nifty option can't be excercised before expiry, but they can very well go against you.. and as market moves against you, your option will loose it premium as well as time value every day.. So It is very important for the option writer to understand how the prices of option will move for different movement of nifty.

When you wrote CALLS, you expect mkt to go down. You need to define the your parameter to listen to the market and decide at what level of nifty, u will say that it is not going down but going up.. That is first place when u shd cut your Short position.

Second is place amount based stoploss limit.. say if 20% or 30% of premium is lost, then u will cut your position.

Until, these 2 points are not met, u can very well leave your short position open (intraday or inter day), show patience, have confidence in your trading decision and enjoy the time decay.

Happy Trading.

 

[Arjun Bindra]

Hi friends,

As every gentleman here knows the premium when a new session is about to start is always higher. Lets take example of 2700 put, it's March put is trading at 12 odd bucks whereas Aprils is over 50!

Now if I short sell it for more profits till price comes according to market, I was told we have to pay margins. But my friend who told this had no further idea. So anyone here reading this, please help and suggest the method.

Lets say I short selled 2700 put @ nifty 2810 of next month at 50 premium, now my friend said I have to give 140500 (margin) and 2500 as premium. Let's say (hypothetically) market stays at 2810 and put's premium goes down to 20 in 2nd week of April, how much I get return? (2810*50)+(50-20*50) or something different?

If nifty goes up and I short selled put will it be a profit by margins too? If nifty goes down in same case will it be loss of some margin amount? Help me understand this confusing stage. Might helpful for others too!

reagrds,

Arjun

 

[vinay666]

Please please, don't write options without knowing what u are doing.. (And specially when u are running a tight account). If u don't understand the market trend, option pricing behaviour, the short option position would have blown your account on next day market open, if it opens against u.

Dear, risk mgmt is the first thing an option writers consider or they have big account of big ego to handle bigger losses.


It is right, that nifty option can't be excercised before expiry, but they can very well go against you.. and as market moves against you, your option will loose it premium as well as time value every day.. So It is very important for the option writer to understand how the prices of option will move for different movement of nifty.

When you wrote CALLS, you expect mkt to go down. You need to define the your parameter to listen to the market and decide at what level of nifty, u will say that it is not going down but going up.. That is first place when u shd cut your Short position.

Second is place amount based stoploss limit.. say if 20% or 30% of premium is lost, then u will cut your position.

Until, these 2 points are not met, u can very well leave your short position open (intraday or inter day), show patience, have confidence in your trading decision and enjoy the time decay.

Happy Trading.

Thank you for your wisdom and help,
:clapping:
looks like there are nice people around here @ Traderji!

 

[Capricorn]

Hi friends,

As every gentleman here knows the premium when a new session is about to start is always higher. Lets take example of 2700 put, it's March put is trading at 12 odd bucks whereas Aprils is over 50!

Now if I short sell it for more profits till price comes according to market, I was told we have to pay margins. But my friend who told this had no further idea. So anyone here reading this, please help and suggest the method.

Lets say I short selled 2700 put @ nifty 2810 of next month at 50 premium, now my friend said I have to give 140500 (margin) and 2500 as premium. Let's say (hypothetically) market stays at 2810 and put's premium goes down to 20 in 2nd week of April, how much I get return? (2810*50)+(50-20*50) or something different?

If nifty goes up and I short selled put will it be a profit by margins too? If nifty goes down in same case will it be loss of some margin amount? Help me understand this confusing stage. Might helpful for others too!

reagrds,

Arjun

Pls check with your broker for margin requirements. What you have mentioned is not correct it is normally not greater than 10-15 % of nifty.

What you should make in this case is (50-20)x50 for one lot. Ofcourse your margin will be released.

Cheers.