iCharts Discussions

[pkholla]

Vinay: I have a book called Fundamentals of f,o and other derivatives by HULL. He has given a CD called OPTIONS! with the book (=option price calculator)
Using Ans_kol tip and yesterday's option prices I get NF 5150.8 and 5315.2, 51Call 155.4 and 254.6 and 52 Put 151.9 and 62.1
Using annual volatility of call and put from NSE website (29.32%) and risk free interest rate of 6% (Bank FD rate?) I get from Hull options calculator: 51call 166.6 and 274.3 and 52 put 167.1 and 93.3
The options calculator (whether Hull OR website given by u) is a better predictor of option prices than yesterday's prices!
As rka2003 says we need to test our calculations and get feedback. Still if it works, this is a real step forward, thanks to ans_kol
Prakash Holla

[ANS_KOL]

RK- if there are say 22 trading sessions a month, my experience says around 15-16 trading days it will hit the trigger.but that is not an issue , the crucial part is profit booking according to me.let s see what november has in store?
JSG-no matter whatever the result, you have to stay calm and invested for a full year. actually this strategy is all about waiting for a major trend to develop, which is seen only around 3 times per year and at that time you can make a cool 600-700 points on each of them if not more.there will be whipsaws but you have to be patient to get the reward.
I am trying this for last 3 months and currerntly running around 300 points minus, but as you see market is not in any strong trend for last few months , so whipsaws are unavoidale.
see how special I am, I disclose my loss also, that too openly in a forum!!!!
pkholla- sorry, I never tried trading options so can not comment on your extension. but carry on with the conversation with others , I am also trying to understand things from your post.
thanks and regards.
ANS.

[vinay28]

Holla, a few additional points, particularly those like me who are beginners in this trade.

1. The calculators MUST be used regularly over a day and not just for eod data (I sometimes use it every 15 min. because I have a big "keeda") irrespective of whether you want to sell or not. You should also simultaneously watch chart of the option along with chart of nifty. Trust me, it gives a very good learning of how an option moves w.r.t. nifty, volatility and time. This is because, at any given time, the projected value of option for a given target nifty changes with not just time but choppyness of nifty also.

2. I suggest to use 15% interest because I found it gave a more accurate prediction of option price as time decays. Also, today, if you were really to borrow, you wouldn't get loan at 6% interest. Please don't take this as a hypothetical value as all financial analysis is done based on interest rate, whether you are actually borrowing or not.

3. I calculated option prices for nf values considered by you based on values of nf and Nov 5100 call and 5200 put at close yesterday and the various values are as follow:

Base values at eod 26th oct.: nf - 5229.15, 5100 call - 199.50, 5200 put - 107.85

Calculated values : IV 26.83% for call and call value at nf of 5315.2 - 260.63
IV 25.86% for put and put value at nf of 5315.2 - 73.99

As you can see they are different from your values. This is not only not surprising but they are also not sacrosant since they will continuously vary as time reduces and volatility varies over day(s). It is, therefore, important to keep on calculating projected option value as target approaches and time decays.

I have given above what I do and hope it makes any sense as I too have started option trading very recently. Please note that these calculators DO NOT tell you when to buy and sell, which is based on the strategy you follow. I would like to repeat what I said in my earlier post i.e. I found these calculators very accurate and I have often sold very close to highest value of option for a given target of course. On expiry day, however, choppiness was so high that I saw volatility varying from (if I remember right) 25 to 29%. Hence my advice for frequently calculating the values over the day.

[pkholla]

ANS Hi to you also
Vinay: I have only taken .06 because Hull calculator takes risk free interest rate for calculation. We pay more rate to bank on loan as we are considered risky! I have taken 29.32% annual rate of volatility for option as this is available on NSE website in option quote. I humbly accept what you have given in your reply, you have put some serious thought into the answer. Let us see what the market tells us as this is the ultimate brahmastra testing our theories and calculations. As rka2003 suggests let us test our calculation against market reality and fine tune and then only put our money
I am also enclosing projections for 1m futures of some individual scrips, based on ans tip and 27/10 data. Let us check market reality against this also and see whether we can make serious money here
Warm regards
Prakash Holla

[vinay28]

Thanks for your kind words holla. One doubt. Do you take eod volatility data from nse website or dynamic over the day? Provided nse gives dynamic value. If so, it is far superior in terms of accuracy.

[ANS_KOL]

friends,
one more observation regarding overbought-oversold strategy.I have noticed so many times that if no stop loss is placed and the same strategy is applied for 2-3 days , most of the cases it gives handsome return because your position size is getting more.
as you know I am talking about ranging market and markets range 80 %of the times and show strong trend in rest 20% times.
my problem is while I notice this huge possibility of profit , I don t know how to manage if all on a sudden a strong trend develop while we are applying this strategy.It may wipe out all of your trading capital as there is no stop loss.
friends , kindly think over it and any input is welcome.
pkholla, great job. while posting the strategy I never thought anybody will take this much interest in it.but you started thinking and working on it .people like you give so much enthusiasm to others and provide with new load of oxygen to continue the fight to make it big in trading world.
thanks friend.
ANS.

[Viktor]

Thanks ANS_KOL and wish you Happy Diwali. I checked the website again and navigated by following your steps but am stuck at "GET QUOTE". After that I could not find "SELECT SYMBOL". The symbol place holder does not accept the values "DAILY VOLATILITY". Sorry, if I am sounding stupid, but please guide me.

From the Daily Volatility value of 1.57%, how did you arrive at the value of 82.10. What is the calculation?

Thanks in advance.

[vinay28]

Ans_kol, a couple of doubts have bothered me about this startegy. How many days in a month have you noticed that both buy and sell prices are triggered? If only one of them is triggered, do you carry forward your position? What about new position on next day? Or is it only an intraday strategy and I have misunderstood?

Also, you have suggested a flat 50 point SL. May be that's why you also suggest not to keep SL. In case the strategy is not for intraday, do you apply same SL next day? What if we keep a SL based on some other strategy e.g avinash's strategy, which is for intraday?

One thing I forgot to mention in my reply to holla about options. The option price for SL also has to be regularly calculated and place SL with 1 or 2 rs. lesser than calculated value. Unless one decides to watch nf and then square off position once nf closes below SL.

[ANS_KOL]

[ANS_KOL]

[ANS_KOL]

For next trading day.
nifty future closing-5232.05
daily volatility-1.53%
therefore range-80.05

buy @5152(5150-5155) stoploss 5102.
sell @ 5312.1(5310-5315) stoploss 5362.1

I have mentioned 5 points range for those who are continuously in front of the monitor during trading hours. because you will find often you will miss the train because of mere 2-3 points.
eg. tomorrow the market may make a high of 5311 and reverse from there , in that case people placing sell order @ 5312.10 may miss the opportunity. but people who are in front of the screen can take action as the price come close to the trigger points.
regards
ANS.

[tanhadil1984]

[buffet71]

TO,ALL TRADERS, I want to focus an important area of trading i.e. TRENDLINE,irrespective all trade(stock-cash,future,),nifty(future,option),a single word the whole stock market.You will be surprised that the most easyest trading is INTRADAY TRADING,if and only if you are become expert of trendline setting.To do so you are just sitting before a real time chart preferably OHCL not CANDELSTICK, and five day chart( it will save you from whipsaw).Now you only think about SUPPORT-RESISTANCE LINE,FLAGS,PENNANT,TRIANGLES,RECTANGLE,H & S,REVERSE H & S etc. and your eyes are matching these with the real time chart.So,by this way you will find many confirmed breakout - breakdown.Most unique thing once you set one of this correctly on the chart (without EMA,MACD ) and later you set EMA & MACD,you will amazed that where these thing sets,exactly at that point EMA cuts and MACD cross-over. Remember one thing for MACD zero line is very very imp.Try yourself for few days.Those who are not interested ignore this . BUFFET71

[vinay28]

tanhadil, I have explained in detail in earlier posts about how to go about this. pl read it and if not clear, i will post screenshot

[tanhadil1984]