Option Buy Recomendations

[stockBond]

shall we fall from here or after moving towards 5200 ?

I m holding nifty PUT options of Dec series.

really disappointed to see upmove on Friday. (thanks god I didn't buy Nov series PUT options)

 

[VIKAS 21]

Hello ghosh sir

sir me new in option trading
so my question may be look u like a kid's question, because u r ocean of knowledge. Still i m asking u question.
Sir as u have said that buy 2to 3 lot of call & put as per market direction
sir please explain it by an example.
Suppose sir i take 2 lots of 500call & market is going downward then which put should i select?
Sir should we take call & put of nifty only, not of stocks
is taking call/put of stocks is risky
sir if we are taking a call then how can we hedge it by taking put?
And also if we r taking delivery of a stock, then how should we hedge?

Thanx sir

 

[ghosh_ak34]

Hello ghosh sir

sir me new in option trading
so my question may be look u like a kid's question, because u r ocean of knowledge. Still i m asking u question.
Sir as u have said that buy 2to 3 lot of call & put as per market direction
sir please explain it by an example.
Suppose sir i take 2 lots of 500call & market is going downward then which put should i select?
Sir should we take call & put of nifty only, not of stocks
is taking call/put of stocks is risky
sir if we are taking a call then how can we hedge it by taking put?
And also if we r taking delivery of a stock, then how should we hedge?

Thanx sir

Dear VIkas,

First of all I would like to say, I am also learning and in fact I learn something daily. And my knowledge is still a small drop in the ocean. Everyday, I feel I need to learn more and more.

See if Nifty Spot price at 10:00 AM is at 4610 and Its price at 10:30 AM is 4632 or so i.e. 4632 (price at 10:30 AM) - 4610 (price at 10:00 AM) > 20. So, will buy 2 or 3 lots of Nifty call of S1 strike price and hold with SL=30% of the buy price for the target of 40% of the buy price.

In the next interval i.e. 12:30 PM, will again do the trend check. And if price at 12:30 PM - price at 10:30 >20 then, will hold my previous trade with trailing SL i.e. will increase my SL to higher level as premium of call option move high. And if price at 12:30 PM - price at 10:30 AM < 20 then, will buy put of S1 strike price with SL = 30 % of buy price for a target of 40% of the buy price and hold etc.

Do similar trend check at 3:15 PM and decide either to hold or hedge your position.

One can square off loss making option before SL is hit depending on once risk appetite. 30% SL works nice for me so have suggested this.

Strategy posted in 1st post is only for Nifty and its not true for stocks.

For stock options we need to see the liquidity, volatility etc. If one takes delivery of stock and one knows that stock trades in option too then, one can go for various hedging strategies such as covered call write, or depending on its stake in Nifty, if stock is in Nifty, take suitable postion in Nifty Future etc. depending on stocks contribution in Nifty etc. Its a fast topic and I am still learning this. So, one day if I feel I have learnt considerably then, I will go ahead and share the same here.

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 5160
Support at 5000

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 strategy posted in 1st post of this thread.

Regards

 

[naharchetan]

hi sir,
pls can you advise me on how the following holdings might move?
Nifty dec call 5700 bught at 10.00
Nifty dec put 4200 bought at 9.50
Bharti dec call 400 bought at 1.25
Reliance comm call 250 bought at 1

I bought the above stocks options since they have fallen a lot in the last few weeks and Nifty 2 lots (one call and one put) to be able to make profit by the 15th-20th of next month

pls advise

thanks

Chetan

 

[naharchetan]

rcom is also dec lot

 

[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 5135
Support at 5065

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 strategy posted in 1st post of this thread.

Regards

 

[ghosh_ak34]

hi sir,
pls can you advise me on how the following holdings might move?
Nifty dec call 5700 bught at 10.00
Nifty dec put 4200 bought at 9.50
Bharti dec call 400 bought at 1.25
Reliance comm call 250 bought at 1

I bought the above stocks options since they have fallen a lot in the last few weeks and Nifty 2 lots (one call and one put) to be able to make profit by the 15th-20th of next month

pls advise

thanks

Chetan

These are too OTM calls. These are not stocks that one can do bottom fishing that to with too much OTMs.

Bharti is in oversold zone so might see some technical bounce so may see some bounce back 2mr.

Nifty 5700 call and 4200 put - a far strangle that option traders will prefer to write rather than a buy under current scenario. See option traders buy strangle when a sharp movement is expected eitherway, but in that case too option traders do not buy too OTM options. So, make an exit.

RCOM call is also too OTM, try to make an exit.

Regards

 

[msunny31]

Hello Ghosh Sir,

I have read about writing a PUT but still could'nt understand it completely. I would really appreciate if you could answer my below questions.

Could you please explain me about writing a PUT option with an example?

Example:Nifty Dec Series 4700 PUT is at 32 premium currently. Current nifty level is 5100.
Now if I plan to write this PUT, then..

Q1) How much margin do i need to have in my account?
Q2) Will i get 1600 rupees(i lot of 4700 PUT) in my account immediately?
Q3) Can i sell the option immediately if it goes to some level, say 5000 or Do i need to hold it till the expiry?
Q4) In what cases will i incur losses?
Q5) How much will my maximum loss be?

Thanks,
Sunny

 

[ghosh_ak34]

Hello Ghosh Sir,

I have read about writing a PUT but still could'nt understand it completely. I would really appreciate if you could answer my below questions.

Could you please explain me about writing a PUT option with an example?

Example:Nifty Dec Series 4700 PUT is at 32 premium currently. Current nifty level is 5100.
Now if I plan to write this PUT, then..

Q1) How much margin do i need to have in my account?
Q2) Will i get 1600 rupees(i lot of 4700 PUT) in my account immediately?
Q3) Can i sell the option immediately if it goes to some level, say 5000 or Do i need to hold it till the expiry?
Q4) In what cases will i incur losses?
Q5) How much will my maximum loss be?

Thanks,
Sunny

Dear Sunny,

Writing an option means selling. And we write an option say put of a particular strike price. So, if one writes a Nifty 4700 put trading at premium of say 32 then, one is placing a sell order for Nifty 4700 put of series say Dec.

Below are my answers:
Q1) How much margin do i need to have in my account?
Ans: Margin is equilavent to Nifty Future margin. It varies from broker to broker though. If you hedge then, one gets margin discount due to hedging. Talk to broker or visit their site.
Q2) Will i get 1600 rupees(i lot of 4700 PUT) in my account immediately?
Ans: Yes. And to write an option you need to have the required. margin. Another point by default put writing is blocked by broker as put writing is very dangarous, when market falls put premium rises very fast. So, one needs to talk to broker to unblock it.
Q3) Can i sell the option immediately if it goes to some level, say 5000 or Do i need to hold it till the expiry?
Ans: There is no need to wait for any level or day to write option, it all depends on ones will based on TA, market factors, etc. Never write an option blindly, it might lead to heavy losses. And one might become bankcrupt.
Q4) In what cases will i incur losses?
Ans: Stated above if market starts falling put premium rises sharply and one starts loosing.

Q5) How much will my maximum loss be?
Ans: Unlimited.

Regards