Nifty fell very sharply in touching as low as and then rebound back to level. This continued setting of uncertainty is posing discomfort for every style of investor. Being right is already difficult enough, but the cost of being wrong can be so much higher with high degree of volatility in the market. The option trading call that was recommended by many analysts and brokers yesterday was to buy put and call with assumption that one can gain on volatile move on either side.
Net investment of Rs. Here is a modified option strategy which works best in volatile market. Many might wonder that the profit was too less, but one should appreciate the gain this trade has made even in volatile market. Buying only call or put is just a speculation and speculation seldom works in stock-market.
Calculated risk management is the key factor in trading options. A smart option trader never buys just calls or put. He takes calculated risk and is prepared for any move which market makes. Calculate your risk before trading options. For instance, long call or put has premium risk, which means whole premium can be wiped if the market moves in opposite direction from the expected direction. Options trading involves high risk and you can lose a lot of money. Investing in options involves high risk and may not be suitable for everyone.
No statement in this blog should be construed as a recommendation to buy or sell a security or to provide investment advice.
One important feature of a successful trader is to understand, what in the real world, it takes to earn a rupee. Should you require the services of an experienced trader who is able to provide invaluable and detailed mentoring services to assist you in developing your trading skills, I would suggest you contact him to discuss whether his mentoring service would suit you.
Naren Sir, Nifty had currently stucked between on weekly basis. And the current trend is biased little upwards with a range bound scenario between A short strangle could be a best strategy in such a volatile market. Short strangle of PE I wish to revise my earlier comment,as on second look is not a very nice strategy -- and neither is the one suggested in the forum too attractive either.
Break even are at and at , with max profit at of Rs Loss of Rs beyond teh two breakeven points. Sandew,this is partly-positional trade, one should not wait till expiry, can book profit in the interim, wise way to trade options is to book profit within a week or so and exit and initiate another trade. I am still holding this position and expect to book profit next week.
Experience in trading options can help one in choosing right strike price, entry rate and exit rate. Update on Short strangle of PE Your email address will not be published. They are a derivative of price action, nothing more than a mathematical complex paralysis.
Where is the Volatility? Recently, Indian govt announced a particular scheme in their budget notes which took a lot of attention, especially gold merchants and speculators.
With gold prices tumbling since last […] Investing in Bad times — A Short Description of Contrarian Investing Global economic and geopolitical events lined up in a different way this time ever since commodity glut. This week is expiry for derivative markets with dried up volatility and Nifty spot managed to close above on weekly basis for the very first time.
The Bank Nifty fell 1. Banking stocks such […]. Hi Sandew, short CE and pe is good strategy, one could have made Rs. Leave a Reply Cancel reply Your email address will not be published.More...