How to (NOT) Trade Options in market crashes

NIFTY opened like a 300 point gap down two weeks back. Here is how you could have made (or lost) 15k with just 50 k capital in 10 minutes! Here is Balajee Ramachandran, our front end engineer and an Options Trading enthusiast, with his real life Options Trading Experience https://www.youtube.com/watch?v=0FLzxdRP3Kw The moral of this story … Continue reading How to (NOT) Trade Options in market crashes

Just how bad is STT?

The rules of STT in options work this way: Exercise of Options: Option exercise happens when you buy an option, do not square it off and it makes money on expiry. In this case, STT is charged on the underlying NIFTY price — which is around 10500 for NIFTY as of Dec 2017. The buyer of the … Continue reading Just how bad is STT?

The Weekend Effect

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

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