Today's up circuit has caught many option writers on the wrong foot. Usually put writers get caught , when mkts would be dn , this time it is the call writers squeezed.
Plain buy/sell futures has its own risk. But this option writing should be handled with care, else - like today.
Option writing is NOT for small traders/ retailers. Institutions can do it, because it is NOT their money.
I DIFFER TOTALLY
1. Any person should NOT be in the stock markets, leave aside the F&O section, without knowing the market and the conditions that govern them.
2. 16th May was the day of counting for the Loksabha elections. Anyone and everyone knew that there would be a gap.... either a gap-up or a gap-down.
3. Anyone who has WRITTEN PUTS has NOT been punished. Such person is happy and has made a lot of money because of his own correct judgement of the market. Those who wrote Calls got punished due to their own poor judgement. So, it is untrue that option writing is dangerous.
4. Anyone, who stayed away from both the options, but instead sold Futures was equally punished. It would be idiotic to say that future selling is always punished.
Therefore, it was the wrong judgement that punished the traders and it is incorrect to put the blame on option writing.... My opinion and I could be wrong.
Cheers!
SS