Options - My way of looking at it

[gmt900]

@Gmt900

Short call = put

http://www.theoptionsguide.com/synthetic-long-call.aspx

http://www.theoptionsguide.com/synthetic-long-put.aspx

Should I buy ATM call, 6500CE @ 410 ?

In that case, I can sit tight, if nifty keeps going down. Or decide to close trade when there is profit.

 

[Somatung]

Should I buy ATM call, 6500CE @ 410 ?

In that case, I can sit tight, if nifty keeps going down. Or decide to close trade when there is profit.

@Gmt900

If you still want to play the same month (JUN), then you could play again the same strategy or even a short strangle. Check the situation on Tuesday. If you are not shy about future trading, then you act according to market moves and go long Nifty when ever needed. If market falls, you watch and you do nothing, as you have your short call.

I do not want to pock around here in this thread, as the thread belongs to Pratapvb. So lets give his view about your situation with the strategies he mentioned so far in this thread. Have a nice weekend.

By the way: I think you have a thread running. Why not activate that one.

 

[pratapvb]

I use mainly ITM options for trend following. I am not an expert on various option strategies. The idea of this thread was to look at option basics and understand it in a different way.

So the thread is open to discussions as I said before to all

 

[pratapvb]

NF maxpain at 6500 with expiry next thursday

selling both a 6500 PE and a 6500 CE gives a combine premium of about 98

giving BE of 6402 and 6598

if one thinks that is the range till next week then a good trade to sell these option to get the time decay....loss below 6402 and above 6598....but if one is trading intraday also then one can assume one will be short or long as mkt approaches that giving the necessary protection if goes beyond

 

[jamit_05]

NF maxpain at 6500 with expiry next thursday

selling both a 6500 PE and a 6500 CE gives a combine premium of about 98

giving BE of 6402 and 6598

if one thinks that is the range till next week then a good trade to sell these option to get the time decay....loss below 6402 and above 6598....but if one is trading intraday also then one can assume one will be short or long as mkt approaches that giving the necessary protection if goes beyond

Could Max Pain change drastically in the next few days? Has it done it before?

 

[pratapvb]

Could Max Pain change drastically in the next few days? Has it done it before?

yes can change depending on how mkt moves...if moves wildly away.....maxpain was 6400 untill 2 days back...and at close the day before changed to 6450 and then yday close to 6500...as mkt was remaining above 6500 throughout

one or 2 times it has expired widely away also..when major news breaks the mkt and futher shorting happens to protect the position expiry around expiry day....

I monitor it daily now...and on last day I monitor it at 12pm 2pm and 3pm...to see

 

[jamit_05]

yes can change depending on how mkt moves...if moves wildly away.....maxpain was 6400 untill 2 days back...and at close the day before changed to 6450 and then yday close to 6500...as mkt was remaining above 6500 throughout

The same reason why I asked the question.

max OI on PE side changed from 64PE yest to 65PE today, this is generally seen as bullish... moreover max OI on CE side is at 66CE and it is seen that the levels of max OI are often breached to scare off small pockets... but sometimes it turns into a strong breakout...

 

[Gaur_Krishna]

Dear Pratapji,
Thanks for a classic explanation which is not bookish but practical.

I have a very naive doubt about the strategies.

What I want to ask is: When someone is trend following trader, then he is of the type that "Happy with whatever market gives...." Now how to fit this in the strategy when we say use perticular strategy if you are mildly bullish or strongly bearish.

Or it is like some minor pivot broken we are of mild opinion and when major pivot broken, we look for strong move and thus use the strategies accordingly

Thanks & regards,
Gaur_Krishna

 

[pratapvb]

Dear Pratapji,
Thanks for a classic explanation which is not bookish but practical.

I have a very naive doubt about the strategies.

What I want to ask is: When someone is trend following trader, then he is of the type that "Happy with whatever market gives...." Now how to fit this in the strategy when we say use perticular strategy if you are mildly bullish or strongly bearish.

Or it is like some minor pivot broken we are of mild opinion and when major pivot broken, we look for strong move and thus use the strategies accordingly

Thanks & regards,
Gaur_Krishna

that is why I don't use them.....I mainly use only 2

1. ITM for trend following and
2. selling straddle to benefit from sideways....will wind this up if trend resumes

I put those there for completeness and how things could be put together as required

 

[pratapvb]

The same reason why I asked the question.

max OI on PE side changed from 64PE yest to 65PE today, this is generally seen as bullish... moreover max OI on CE side is at 66CE and it is seen that the levels of max OI are often breached to scare off small pockets... but sometimes it turns into a strong breakout...

yes I will review this postion if BD of 6450 or BO of 6550 showing possiblity of trend.....as both are delta 0.5, 50 pts up or down should keep it neutral to price movement...and by monday I will have some time decay also and can get out easily