Option Buy Recomendations

[sylar123]

I today did my First trade of PUT NIFTY JAN (1 lot) of 75. I was pretty unlucky in that put as just after my put, nifty started rising up and closed in green. I did the put around 2 pm.
I still have not book my loss. Should I book loss tomorrow? I am ready to loss all my premium but it really hurts to get first trade in loss of around 35%.

I need to know how sticky you follow stop loss? I mean do you use StopLoss provided by the online terminal or manually squareoff after hitting stop loss percentage?

 

[TraderJunkie]

I today did my First trade of PUT NIFTY JAN (1 lot) of 75. I was pretty unlucky in that put as just after my put, nifty started rising up and closed in green. I did the put around 2 pm.
I still have not book my loss. Should I book loss tomorrow? I am ready to loss all my premium but it really hurts to get first trade in loss of around 35%.

I need to know how sticky you follow stop loss? I mean do you use StopLoss provided by the online terminal or manually squareoff after hitting stop loss percentage?

Hello Friend,

I am more interested in knowing your thinking as to why you bought a PUT. Generally do not carry OPTIONS into the weekend, so I hope you get a chance to square-off tomorrow.

Whats the thinking my friend behind buying the PUT at the day's low when market was attempting a pullback.

 

[sylar123]

I could not see how the market was trying to pullback. Can you please explain how the market was in pullback mode?
Also how to learn about these factors. I am really novice and does not understand how nifty is behaving on charts.

 

[TraderJunkie]

I could not see how the market was trying to pullback. Can you please explain how the market was in pullback mode?
Also how to learn about these factors. I am really novice and does not understand how nifty is behaving on charts.

Look at the image attached and tell me what you think about it.

So things were pointing upwards - with last hour or so remaining (most volatile half for trading). Yes, markets could have tanked from there too. We cannot tell - and hence STOPLOSS is a MUST. Your 1st loss with SL is always smaller than holding a losing position. The losing position also palys on the mind and stops you from taking the right trade. Like for example, you could have immediately squared-off the PUT and gone long.

I did that today, my 1st trade was long that hit the SL. I then took 2 more trades that due to all being right turned into winners. Day trading is dangerous if you cant move fast and follow the trend. Emotions will play havoc as well. So its also a MIND GAME.

My dear friend - spend time studying OPTIONS, then try with small capital . There are excellent gurus on this thread and you should use this forum to learn. There is always a lot of time to make money, but don't lose it too fast under stress or desperate situations

 

[sylar123]

Look at the image attached and tell me what you think about it.

So things were pointing upwards - with last hour or so remaining (most volatile half for trading). Yes, markets could have tanked from there too. We cannot tell - and hence STOPLOSS is a MUST. Your 1st loss with SL is always smaller than holding a losing position. The losing position also palys on the mind and stops you from taking the right trade. Like for example, you could have immediately squared-off the PUT and gone long.

I did that today, my 1st trade was long that hit the SL. I then took 2 more trades that due to all being right turned into winners. Day trading is dangerous if you cant move fast and follow the trend. Emotions will play havoc as well. So its also a MIND GAME.

My dear friend - spend time studying OPTIONS, then try with small capital . There are excellent gurus on this thread and you should use this forum to learn. There is always a lot of time to make money, but don't lose it too fast under stress or desperate situations

I agree that I should have squared off as soon SL was triggered.
I have been reading about OPTIONS from past week and hence decided to go for it today. I engaged 4k in the trade which I believe is small for F&O. However my trader HDFCSec is charging too much brokerage 113 for each lot (both Sale/Purchase).
I am learning a lot from this forum and I am thankful to everyone which are really helpful here.

 

[pundit]

Let me try to answer this question so that it also clarifies my understanding. Would love to get Ghosh Sir's view too, generally on buying deep OTM options.

Before I try to explain - my short answer to your question is.

Cut your losses if that premium worries you. If you can afford to lose all of that premium, hold the call.

I don't think 5200 is even remotely likely and given how time decay will come into the picture, for you to get back at 44 would need the market to fall and swing even more than when you actually bought the PUT at 44.

After every 10 days or so, the call loses its intrinsic value by 25-28%. What does this mean ? The more time market spends in the current range (5600-5800) the faster your call will lose its value. You will also face problems of huge spreads as the call gets illiquid.

No one has a crystal ball to predict how the FEB series will end. But think about what you are betting on. 5200 ? Thats a 10% fall in 1 month.
Now why is that unlikely ? Consider the fundamentals - Indian market - even if it sees earnings compression from 19X to 15X - it will get - re-rated to 5500. For it to get down to 5200 you need the Indian markets to tank. Given that results are average to above average I do not see this happening atall.

- To understand what the range is , one has to observe what the call and put writers are doing. What are the most active calls that are been written. Broadly that forms the range. Currently not even the 5400 call is active. My understanding is on the lower side 5500 is the extreme (based on put call writing activity). In the very near term the markets may bounce on shot covering close to expiry next week, this will kill your call's intrinsic value further.

I sense a level of desperation in your PUT purchase here. Are you expecting a 100%-200% return from this PUT ? Seems like that to me, because if you would have purchased a slightly ATM or ITM PUT (5700 PUT and 5800 PUTs) you would have easily made 50% this week and what more, if markets still tank (which is what you ar ebetting on) your current 5700-5800 PUTs would be DEEEEEEEEEEEEEEEEEEEEEPLY in the money.

Options trading is a beast that will kill you if you dont understand the details. Its not just trading a security and direction, you are also trading volatility, time, interest rates and then their rate of change.

Sorry , I do not wish to sound harsh - but this is the harsh reality, if you are not comfortable losing that premium then you should not have taken the trade in the 1st place atall.

Hi TJ,
Can you tell me from where I can get the deep knowledge about options.

I just want to know what did u study..

Your knowledge sounds good in options.

 

[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:

Resistance at 5790
Support at 5645

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

 

[sylar123]

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:

Resistance at 5790
Support at 5645

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

I am new to this forum. I just wanted to make sure that these Resistance and Support are same as R1 and S1 as mentioned in the first post. Right or I misunderstood something?

 

[ghosh_ak34]

I am new to this forum. I just wanted to make sure that these Resistance and Support are same as R1 and S1 as mentioned in the first post. Right or I misunderstood something?

No, these are calculated differently. Its based on TA, market movements, global clues, Nifty consitituent movements, volatility, etc. In short its research based.

There is no fixed rule to calculate the daily support / resistance for Nifty future.

Regards

 

[sriugdh]

Hi ghosh_ak34, AW10, Traderjunkie,

Anyone of u please advice me on the following,

I bought Jan expiry 5800 CALL @ 20. Now it is 25. What should be my strategy before expiry. Should I carry it forward over weekends till monday or should I square off some time tommoro. Please give me a strategy for the same. Please help!!

Regards,
Sriram