About a quarter back a friend suggested me this technique. He had a very simple technique regarding earning small amount of money out of options. This is what he does...
Say Nifty is at 5000 in the current month, he would short sell 4400 PE and 5600 CE of the next month and wait till the expiry (mostly). According to him due to the time decay factor both these call/put would eventually loose value and hence earn you some money without much risk. He says he is doing it since about a year now with moderate profits.
What are your expert views on this technique? I am a newbie to option trading so can't make up my mind regarding this.
Say Nifty is at 5000 in the current month, he would short sell 4400 PE and 5600 CE of the next month and wait till the expiry (mostly). According to him due to the time decay factor both these call/put would eventually loose value and hence earn you some money without much risk. He says he is doing it since about a year now with moderate profits.
What are your expert views on this technique? I am a newbie to option trading so can't make up my mind regarding this.