Option Buy Recomendations

[dhinakar113]

Dear Friends,

For Nifty Future traders who would like to trade as per trend check strategy posted in 1st post of the thread, Nifty levels for Monday are as under:

Resistence at 2870
Support at 2793

If you go short 1 lot then, buy 1 lot at money or near money call and if you go long 1 lot then, buy 1 lot at money or near money put to hedge. Reco. to trade as per trend check strategy posted in 1st post of this thread.

Regards

Ghosh ji,

I don't understand why we should buy at the money or near money put when we go long in Nifty, since we have stop loss in future trade for risk control and if the future moves up we will also make loss in the put position which will minimize the profit in the future trade. Pl clarify if I am wrong.

Regards

 

[manoranjan panda]

Ghosh ji,

I don't understand why we should buy at the money or near money put when we go long in Nifty, since we have stop loss in future trade for risk control and if the future moves up we will also make loss in the put position which will minimize the profit in the future trade. Pl clarify if I am wrong.

Regards

Dhinakar ji
We buy the put to protect us against sudden price movements, like Nifty opening gap down of 10%. Stop loss does not work in such cases, as the markets will shut down before stop loss is triggered.
Ghosh Sir, please correct me if my reasoning is wrong.
Regards
Manoranjan

 

[ghosh_ak34]

Ghosh ji,

I don't understand why we should buy at the money or near money put when we go long in Nifty, since we have stop loss in future trade for risk control and if the future moves up we will also make loss in the put position which will minimize the profit in the future trade. Pl clarify if I am wrong.

Regards

Dear dhinakar113,

Today market was unidirectional so you won't understand the importance of hedging. And I think you haven't also experienced the sharp fall where SL also jumps and trader is left with nothing.

Trader can be lucky sometimes but they can not be lucky always. If trader is certain of a direction then obviously hedging will reduce your profits. But are we always sure of such directions in market ? Need to ask this question to ourselves, you might get the answer then and will help you in understanding the importance of hedging.

Regards

 

[ghosh_ak34]

Why not short-sell to guard against time-decay? ---what say?

Go ahead and write options if you are so confident dear friend. But will reco. to think twice before you do so, as margins + MTMS might kill your trades, in case your trade reverses. Will reco. write options and hedge it too suitably.

Regards

 

[ghosh_ak34]

Dear Friends,

For Nifty Future traders who would like to trade as per trend check strategy posted in 1st post of the thread, Nifty levels for tomorrow are as under:

Resistence at 2970
Support at 2856
If you go short 1 lot then, buy 1 lot at money or near money call and if you go long 1 lot then, buy 1 lot at money or near money put to hedge. Reco. to trade as per trend check strategy posted in 1st post of this thread.

Regards

 

[ghosh_ak34]

What is MTMS ? Marked-to-Market ?

Yes! Its was MTMs, typo error.

Regards

 

[dhinakar113]

Dear dhinakar113,

Today market was unidirectional so you won't understand the importance of hedging. And I think you haven't also experienced the sharp fall where SL also jumps and trader is left with nothing.

Trader can be lucky sometimes but they can not be lucky always. If trader is certain of a direction then obviously hedging will reduce your profits. But are we always sure of such directions in market ? Need to ask this question to ourselves, you might get the answer then and will help you in understanding the importance of hedging.

Regards

Thanks for your reply, Ghosh ji.

But in my experience, we normally put 1 to 2 points room after trigger price to avoid jumping of the order without being executed. Moreover I understand from your thread that you are for winding up the position on daily basis and not advising to carryover the position without hedging. Then what is the need for some more additional hedging, at the cost of profits. Kindly enlighten.

Regards

 

[ghosh_ak34]

Thanks for your reply, Ghosh ji.

But in my experience, we normally put 1 to 2 points room after trigger price to avoid jumping of the order without being executed. Moreover I understand from your thread that you are for winding up the position on daily basis and not advising to carryover the position without hedging. Then what is the need for some more additional hedging, at the cost of profits. Kindly enlighten.

Regards

Dear dhinakar113,

I think you are mixing two different things. For options we should do hedging before you call it a day.

But for futures reco. to hedge with every trade in Nifty futures as future trading is risky.

Regards

 

[dhinakar113]

Dear dhinakar113,

I think you are mixing two different things. For options we should do hedging before you call it a day.

But for futures reco. to hedge with every trade in Nifty futures as future trading is risky.

Regards

Ghosh ji,

Ho, I have confused and misunderstood. Thank you for correcting.

 

[pkamalesh]

Hi,

I have purchased Feb 2500 PUT 2 days back at 34.45.

Today it is 14.80.

I took one more FEB 2500 PUT today at 13.95.

What do you think what will happen to this.

Thanks,
Sohan ( http://intraday.weebly.com )

Wait for a downmove..nothin more than that..hope ur position is hedged with a call...