Option Buy Recomendations

[sumeetsj]

Its just long and short. Well you can do current month and next month, calender spreads.

 

[TraderJunkie]

Its just long and short. Well you can do current month and next month, calender spreads.

Its actually not that simple to compare an OPTIONS strategy and try to mirror it with FUTURES - here's why.

Take a LIVE EXAMPLE (12:50 PM ,1st FEB)

Buy

slightly ATM/OFM CALL - 5500 CALL
slightly ATM/OFM PUT 5400 PUT

5500 CALL @ 94.55
5400 PUT @ 93.65

-----------
What is going to happen as the day progresses or even the week, the winning leg of this straddle will start adding value faster than the losing leg. It can be the PUT or the CALL. Why ? Simple - as either of the OPTION gets closer to and In the money, DELTA starts to approach 1 faster with time decay. Simultaneously, the losing LEG's delta reduces as it moves away from the strike price.

This means - your winning LEG generates more profits to cover for the losing leg by a good margin. It's not uncommon for the spread to get wider and wider as much as 30%-40%.

And similarly all other OPTION strategies with various LEGs attempt to generate a winning LEG to cover for the losing leg and more.

(I will update the data for the above example at EOD and also end of week to show that point).

Now - FUTURES - The spread hardly moves because the only variable is the premium and it does not swing as much. So for you to take such a call, you are going to invest at-least 60k in the strategy with a very low (if any) pay-off.

Another way would be to go for a HYBRID - short future, buy a call or buy a put and long future.

Basically its a game of DELTAs...

TJ

PS: Not to mention the margin investment - the above mentioned straddle is approximately costing 9k (1 call, 1 put) . If you try to do a calender spread with futures - you are investing 60k (span margin + MTM).

 

[TraderJunkie]

UPDATE 2:45 PM - Check how the spread has widened.

5500 CALL @ 87
5400 PUT @ 115.55

Loss on 5500 CALL = 94.55 - 87 = 7.5 points
Gain on 5400 PUT = 115.55 - 93.65 = 21 points.

Net gain = 21 - 7.5 = 13.5 points.

Hence by investing 9k , you made 675 rupees or 7.5%.

 

[rishabhawasthi]

Another way would be to go for a HYBRID - short future, buy a call or buy a put and long future.


This sounds very good sir..

I wanted to go short (on paper) on the market at 11.42 today at around (5452) as it had given a 38% ish kind of pullback from its fall of 9.40(5508) to 10.47(5426)..

here if employing this hybrid.. should i..

short future and buy 5500 call
or
long future and buy 5400 put

my question is..

which (call or future) should be taken in the direction one is aiming?

and waiting for your todays trades sir..

thankyou..

 

[TraderJunkie]

Another way would be to go for a HYBRID - short future, buy a call or buy a put and long future.


This sounds very good sir..

I wanted to go short (on paper) on the market at 11.42 today at around (5452) as it had given a 38% ish kind of pullback from its fall of 9.40(5508) to 10.47(5426)..

here if employing this hybrid.. should i..

short future and buy 5500 call
or
long future and buy 5400 put

my question is..

which (call or future) should be taken in the direction one is aiming?

and waiting for your todays trades sir..

thankyou..

You want to mirror the DELTA.

So if you long the future, buy a ATM PUT , it would have been a 5500 PUT today. Similarly if you short the future, buy a ATM CALL, would have been 5400 CALL today.

 

[ghosh_ak34]

Dear Friends,

We might see pull back tomorrow, before start of another fall till 5300/5200. There is a crucial support at 5350, once broken Nifty might see levels of 5200. But remember any pull back from now onwards will be very sharp and volatile so trade accordingly.

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 5500
Support at 5350

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

 

[pvs]

Dear TJ, I read u r using TAME for charting. Do we have to register in NSE to use TAME tool n also whts the charge for tht???


Cheers,
Pvs

 

[rishabhawasthi]

As far as i know no registration is required for using the TAME lite application..

If you are unable to open charts,this should work..

NSE Derivatives - get quote..

Underlying list..

Symbol - Nifty..

Click on Nifty in underlying column..

In the window which opens you can see a small chart icon beside NIFTY..

Click that chart icon to open the TAME lite charting tool..

Same for any chart you want..

Hope this helps..

 

[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 5490
Support at 5375

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

 

[pvs]

As far as i know no registration is required for using the TAME lite application..

If you are unable to open charts,this should work..

NSE Derivatives - get quote..

Underlying list..

Symbol - Nifty..

Click on Nifty in underlying column..

In the window which opens you can see a small chart icon beside NIFTY..

Click that chart icon to open the TAME lite charting tool..

Same for any chart you want..

Hope this helps..

is tht we dont have indicators with TAME LITE r do i miss something???

Cheers,
pvs