Tag: Options Trading

The Weekend Effect

by Abid Hassan

Nothing happens in financial markets on most weekends. So an options trader will sell call options and put options and try to earn the time value decay for three nights — Friday Night, Saturday night, Sunday night. If it is a long weekend, the selling will be more, because of more time value decay. Due to selling, … Continue reading The Weekend Effect

7 Sins of Options Trading — Part 3

by Abid Hassan

6. Trading Illiquid Options Some Options are Illiquid. That is, the bid and offer don’t exist, or they are wide apart. Examples are Deep In the Money Options Next month, or next to next month Options Options of smaller stocks. How does this affect you? Let us take one example: The bid-offer on Castrol December 410 … Continue reading 7 Sins of Options Trading — Part 3

7 Sins of Options Trading — Part 2

by Abid Hassan

4. Not Selecting the Right Strike Price NIFTY is at 10000. NIFTY future is at 10020. Expiry is in 10 days. Scenario 1 You think NIFTY future will go to 10090 in 4 days. Which call option will you buy? 10000, 10050, 10100, or something else? Return on Investment for options of different strikes 9900 Call … Continue reading 7 Sins of Options Trading — Part 2

7 Sins of Options Trading — Part 1

by Abid Hassan

1. Buying options with a lot of money 1. Buying options with a lot of money The biggest mistake of all times. This often ends up in investors losing a big part, if not all, of their capital. NEVER do this. People do this because: They think they can make some quick money They lost big money … Continue reading 7 Sins of Options Trading — Part 1

Buy Put, Or Sell Call?

by Abid Hassan

You think a stock, say Infosys will move down. Options expire in 30 days Here is the question. Buy a put paying the premium, or sell a call and receive the premium? Assume that you will buy/ sell this option and hold until expiry. Break Even If you sell 900 Call, you will make 30 Rupees … Continue reading Buy Put, Or Sell Call?