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nifty option writing |
nand67
White Belt
Joined: 28 Jun 2009
Posts: 4
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Post: #1  Posted: Wed Feb 29, 2012 11:09 pm Post subject: nifty option writing |
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Hi ALL,
Is there anybody in this forum who writes nifty options regularly. Please share your views on this subject.
Thanx |
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rrk2006hyd
Yellow Belt
Joined: 13 Oct 2010
Posts: 874
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| Post: #2 Posted: Thu Mar 01, 2012 5:01 pm Post subject: Re: nifty option writing |
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| asmibee wrote: | Hi ALL,
Is there anybody in this forum who writes nifty options regularly. Please share your views on this subject.
Thanx |
hi..i'm also looking for that..i read in some articals.saying that..writing options are aslo like shorting stocks..but brokers will charge..margin..for writing options..i do not know clearly..i'm also looking for information |
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vinay28
Black Belt
Joined: 24 Dec 2010
Posts: 11748
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| Post: #3 Posted: Thu Mar 01, 2012 7:39 pm Post subject: |
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| rrk, if you write (sell) options, you get money. very dangerous business for those who are not experts in it. best to buy options and pay |
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nand67
White Belt
Joined: 28 Jun 2009
Posts: 4
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| Post: #4 Posted: Thu Mar 01, 2012 8:18 pm Post subject: |
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Vinay28,
I either sell otm next month calls or buy deep in the money current month calls as per my trading system. In this way when one writes calls as per his/her system when one is bearish on the stock/index., one gets advantage of reduced time premium even one gets reversal signal within a few days. and instead of writing puts when one is bullish one can buy deep in the money calls so that even if one gets reversal signal one is protected from major losses beacuse in this case one is not paying more time premium while initiating the position.
asmibee |
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pkholla
Black Belt
Joined: 04 Nov 2010
Posts: 2890
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| Post: #5 Posted: Thu Mar 01, 2012 8:23 pm Post subject: |
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| vinay28 wrote: | | rrk, if you write (sell) options, you get money. very dangerous business for those who are not experts in it. best to buy options and pay |
vinay: very true. if u buy option, max you lose is purchase price + brokerage + tax. if u sell, unlimited liability. rgds, prakash holla |
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umesh1
Brown Belt
Joined: 24 Nov 2008
Posts: 1974
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| Post: #6 Posted: Thu Mar 01, 2012 8:46 pm Post subject: Re: nifty option writing |
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| asmibee wrote: | Hi ALL,
Is there anybody in this forum who writes nifty options regularly. Please share your views on this subject.
Thanx |
Hi All
I have been writing options regularly and have also been leaving till expiry no need to square up, and these sometimes achieve my monthly targets.Timing and strike both important ,if bearish write calls if bullish write puts,last week before expiry gives ample opportunities in trading such naked(since they are not covered or hedged) options.
Regards
Umesh |
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rajmohanmbamhr
White Belt
Joined: 13 Oct 2011
Posts: 444
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| Post: #7 Posted: Fri Mar 02, 2012 8:33 am Post subject: Options Writing |
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http://www.nseindia.com/index.htm
NCFM ON TOP HEADINGS(NEAR TO RIGHT END)
MODULES
OPTIONS TRADING STRATEGIES
DOWNLOAD
Last edited by rajmohanmbamhr on Fri Mar 02, 2012 9:02 am; edited 1 time in total |
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rajmohanmbamhr
White Belt
Joined: 13 Oct 2011
Posts: 444
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| Post: #8 Posted: Fri Mar 02, 2012 8:58 am Post subject: Options Writing |
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Dear Friends,
Option writing
Margin Required : Almost equal to the margin required for buy/sell the futures contract - Premium on writing(will be credited on next trading day only)
Risk Reward : Maximum Profit - Premium Received
Maximum Loss - Unlimited
If one person passively writing the option(not following technicals or News) the succees ratio will be 80% of times small profit and 20% time Mega losses..It is entirely opposite to options buying 80% time losses 20% mega profits
Theoritically options selling is more riskier than option buying but practically buying is more riskier than selling since the time value will evaporate daily will go in favour of option seller.
Follow the technicals along with the strategies in option writing will definitely give handsome profits
Regards
Raj
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hasten
White Belt
Joined: 30 Jun 2011
Posts: 216
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| Post: #9 Posted: Fri Mar 02, 2012 9:34 am Post subject: Re: nifty option writing |
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| asmibee wrote: | Hi ALL,
Is there anybody in this forum who writes nifty options regularly. Please share your views on this subject.
Thanx |
Writing out-of-money options allows you to garner small and consistent returns, during adverse market conditions. Read on to figure out what these options are and how you can make a quick buck on them.
Writing options
First, you must be familiar with option basics. An option can be either out-of-money, in-the-money or at-the-money. A call option is said to be in-the-money if the current market value of the underlying share is above the strike price of the option. Similarly, a put option is said to be in-the-money if the current market value of the underlying asset is below the strike price of the option.
{Hence, writing call and put options are considered to be quite risky as the losses can be unlimited, if the value of the underlying asset increases above the exercise price.}
Out of money options
Logically, you should write a call option when you expect the underlying stock to stay at the same level or fall. Similarly, you could write a put option when you expect the price to stay at the same level or rise. As an option buyer, your risk/ loss is limited to the premium that you have paid. On the other hand, as an option seller, your risk is unlimited whereas your gains are limited to the premiums that you earn(Hence, writing call and put options are considered to be quite risky as the losses can be unlimited,if the value of the underlying asset increases above the exercise price.
Many a times, it gets difficult for investors to exit positions that they have built over a period of time. At such times, they could look at selling ‘out of the money’ call options to hedge themselves and get an additional cushion on the portfolio values. Besides, a study of the options market shows that 80-90 per cent of options expire worthless. Hence, by following the strategy of writing out-of-money options, you can garner small and consistent returns, during adverse market conditions.
You can use option writing as Option Spreads as i explane in my earliar post (Low risk options trading using a strategy called Spreads.Default Low Risk Options Trading Strategy
The option markets provide the rare opportunity for the individual investor to be the bank, casino or legal bookie. In other words, you have the opportunity to take the bet rather than make the bet. Taking the bet refers to option writing—the direct opposite of option buying. The option writer is the one who takes and Guarantees to pay off on the bet made by the option buyer.
The beauty with an option writer over a casino or bookie is that you have the ability to close the casino door. In other words, you have the ability to close out your position and obligation at any time by buying back the option.
Anyway ,the actual reality is that,--option trading is more of a hedging tool (like an insuranse policy),than a trading tool.But I still strongly feel that when we can really come in harmony with the stock market,it can obviously be used as a trading tool,(in fact a intraday trading tool)and can be judiciously utilised for maximising the profit with a very limiited resourse.
(note :- Everybody tells that stay away from selling options.. Then you got to read further. Soon u will start seeing the advantage of spreads over naked long strategy)
Regards, hasten
Making money in trading is not the hard part, KEEPING it is !
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sairanga19
White Belt
Joined: 28 Nov 2009
Posts: 51
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| Post: #10 Posted: Fri Mar 02, 2012 10:00 am Post subject: |
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very nice work   |
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anandrathi12
White Belt
Joined: 01 Dec 2010
Posts: 38
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| Post: #11 Posted: Fri Mar 02, 2012 10:27 am Post subject: Re:nifty option writing |
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| hasten wrote: |
You can use option writing as Option Spreads as i explane in my earliar post (Low risk options trading using a strategy called Spreads.Default Low Risk Options Trading Strategy
Regards, hasten
Making money in trading is not the hard part, KEEPING it is !
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Hi haten ji,
can u plz provide a link where have you explained about Option Spreads as u mentioned here...
Thanks..
Regards,
Anand
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hasten
White Belt
Joined: 30 Jun 2011
Posts: 216
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| Post: #12 Posted: Fri Mar 02, 2012 10:58 am Post subject: Re:nifty option writing |
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| anandrathi12 wrote: | | hasten wrote: |
You can use option writing as Option Spreads as i explane in my earliar post (Low risk options trading using a strategy called Spreads.Default Low Risk Options Trading Strategy
Regards, hasten
Making money in trading is not the hard part, KEEPING it is !
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Hi haten ji,
can u plz provide a link where have you explained about Option Spreads as u mentioned here...
Thanks..
Regards,
Anand
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I have explained in nakum's thread
IN STOCK MARKET RISK = REWARD
You cannot take high return without taking high risk .
So High Risk = High Reward (Return)
and Low Risk =Less Reward (Return)
Low risk options trading using a strategy called Spreads.Default Low Risk Options Trading Strategy - Option Spreads (Now I advise any new option trader to start riding with this till they gain real experience with options and ready to take more riskier trades.)
You might be in for some surprises here by knowing
- that you can use PUTs to take bullish position and can use CALLs to take bearish position.
- that time decay can't hurt u
- that market can pay you partially for taking a trade and reduce your risk
- that you can execute trades with very high probability on your side and generate regular income
- that you can play go against market (contrarian ) with very limited risk
- that you can have a position in the market which has leg is 100% winner.
What are Spreads ?Spreads are Limited Risk / Limited Reward strategies. They can be constructed using either PUT or CALL options.
They are directional strategy - Bullish or Bearish
It involves 2 options trades - Buying Option at 1 strike and at the same time selling another option at different strike price.
(note :- Everybody tells that stay away from selling options.. Then you got to read further. Soon u will start seeing the advantage of spreads over naked long strategy) { copy paste from my post }
You can check here too {page number 3 post number 7 } http://www.icharts.in/forum/viewtopic,p,44574.html#44574
Regards, hasten
It always seems impossible until it's done. |
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