Low Risk Options Trading Strategy - Option Spreads

[tushar.shiva]

Hi,
if you leave contract open, exchange will exercise it, but charges are very very high .
For index option contracts which are in-money with difference more than 200 don't have much time value therefore for such contracts its better to exercise 3-4 days before expiry.

bala during final settlment on expiry day, all In-The-Money option are forecefully excercised by exchange. So even if you can't close it, this will be excercised anyway. You don't need to
give any instruction/order for it.

You always have chance to close it before this by squaring -off your position.
As mentioned by nac, that settlement has higher brokerage hence better to settle early. I would suggest maybe one day early to get fair sell price for your long position..
Otherwise, on the last day, buyers are not fool.. and their bid price takes care of higher brokerage charge and hence place their bid at lower price.

Happy Trading

 

[rrmhatre72]

Hi All,

I am dealing throgh ICICIdirect in option.
ICICI has option brokrage plan based on monthly volume.
I am paying brokrage of Rs125/lot (worst case) or Rs90/lot(Best case) for intraday square off.
If I take position & sqare it next day then it is Rs 210/lot(worst case) & Rs145/lot(best case).
I feel this is too high.
Pls suggest me better alternative where I can save on brokrage. What is the lowest brokrage can be expcted if I am dealing with 70-100 lots of nifty in a month?

 

[jaywings007]

Hi All,

I am dealing throgh ICICIdirect in option.
ICICI has option brokrage plan based on monthly volume.
I am paying brokrage of Rs125/lot (worst case) or Rs90/lot(Best case) for intraday square off.
If I take position & sqare it next day then it is Rs 210/lot(worst case) & Rs145/lot(best case).
I feel this is too high.
Pls suggest me better alternative where I can save on brokrage. What is the lowest brokrage can be expcted if I am dealing with 70-100 lots of nifty in a month?

You simply go to some threads in traderji where everything is discussed in detail.... off hand.. just go for RK global.. its charges are just Rs. 9 x 2 (per lot).. google.... and get all details...

 

[abigbull]

Mate : never do options in ICICIDIRECT .. the brokerage will just bleed u till amputation .. Sometime back i realised it the hard way after paying brokerage in thousands of rupees per month. Yes RK global as mentioned is less also explore RMONEY .. Experts pls guide as to how u urself trade options : is it through brokers or some brokerage house ?

 

[MaxX]

Mate : never do options in ICICIDIRECT .. the brokerage will just bleed u till amputation .. Sometime back i realised it the hard way after paying brokerage in thousands of rupees per month. Yes RK global as mentioned is less also explore RMONEY .. Experts pls guide as to how u urself trade options : is it through brokers or some brokerage house ?

I use RKGlobal .. works decently nowadays.. The advertized rate is 9 Rs/lot, but can be negotiated down to ~8 if you have a larger account. For options net price after taxes n brokerage is ~0.2 rupees less than the executed price.

 

[rrmhatre72]

I use RKGlobal .. works decently nowadays.. The advertized rate is 9 Rs/lot, but can be negotiated down to ~8 if you have a larger account. For options net price after taxes n brokerage is ~0.2 rupees less than the executed price.

Thanks MaxX,

I have taken quote from them. Following is additional expense on top of brokerage. Brokerage is Rs 14.5 (Inclusive of taxes)/leg
They have indicated that they have two different types of softwares.
1. Odin cost Rs 330/month as maintenance charges
2. Web based software cost Rs 110/month

Which one is better?
Also share experience on performance of software which ever you are using.
Seed, any technical issues, site hang etc.....

Pls share your experience about payout. I was told online request should be given to them & money will get transfer to my account after 2days.

 

[Pralhad]

I fully agree with you.. and hence I don't believe it on the face of it. IMO, This is theoratical definition. Only logic behind this is that Options writer are smarter then buyers i.e. smart money.. and hence people attach amount of OI/ change in OI to action of option writer i.e. smart money's action and hence give this interpretation of identifying support and resistence from OI.

In my view, above assumption is faulty for following reasons
- now-a-day, many big account, novice option trader (not so smart money.. i.e. HNI, private fund mangers etc, ) also jump into option writing. Big account size does not make them smart trader.
- Real smart money is really smart and they know it very well that there is time to buy options and there is time to sell. they know trading and risk mgmt lot better then CNBC presenters. If they are selling options then most of the time, it has other leg as well which we can't know.
- Options are very flexible and there are many multi-legged strategies people use by using other strike, other months, other instrument like stock or Futures.. Hence above interpretation is prone to error
just as an example, if I buy June 5200 Put and sell May 5200 put, what is my view on 5200 level ? Basically I am bearish as per my bigger timeframe view, which might look like short term bullish cause
I sold 5200 put. But in essence, I am just trying to pocket inflated premium at 5200 near mnth contract due to recent volatilty, If I am collecting 125 rs for this.. the I am not worried even if mkt falls to 5100.

So, is my position bullish or Bearish at 5200 ?

I leave it to you to figure it out. (maybe you already know the answer) ?

Happy Trading.

You have raised very good point, I will keep these limitation in my mind while forming biase based on Option OI. :clapping: :clapping:

@Broker, Brokrage and Terminal Related Issue

I request you, please discuss these issue in respective threads. Keep this thread for Option Strategy.

Regards,

-Pralhad

 

[rrmhatre72]

Hi All,

My view for June is rangebound between 4700 to 5300.
Pls advice me which stratergy is better?

1. Selling June5300call & selling June4700put with net Rs120
2. Selling 5000call & Put with net Rs330

 

[MaxX]

Thanks MaxX,

I have taken quote from them. Following is additional expense on top of brokerage. Brokerage is Rs 14.5 (Inclusive of taxes)/leg
They have indicated that they have two different types of softwares.
1. Odin cost Rs 330/month as maintenance charges
2. Web based software cost Rs 110/month

Which one is better?
Also share experience on performance of software which ever you are using.
Seed, any technical issues, site hang etc.....

Pls share your experience about payout. I was told online request should be given to them & money will get transfer to my account after 2days.

I use ODIN, quick execution. Payout works fine, takes a few days. From the past 5-6 months no issues with ODIN.. before that it used to sometimes hang, not connect etc.. but they seem to have resolved the issue. Anyway there is some topic on RKG here on the forums.. can use that.

 

[AW10]

Hi All,

My view for June is rangebound between 4700 to 5300.
Pls advice me which stratergy is better?

1. Selling June5300call & selling June4700put with net Rs120
2. Selling 5000call & Put with net Rs330

Why don't you produce the trade plan for both strategy ?

You will yourself, which one suits YOU.
I might have different views about the range, but you are trading your views.. so that is fine. Both strategies are for rangebound market, but if you do complete trade plan, then u will realised many other factors.

Happy Trading.