SEBI extends Trading hours to 11:55. Now what? — Part 2

Artists depiction of the emotions of an options trader when he is delta hedging an options portfolio during gaps In part 1, we mentioned that the implied vols are likely to come down if NSE implements the 1155 timeline for derivs trading. We explained that this is because the delta neutral option traders will make fewer … Continue reading SEBI extends Trading hours to 11:55. Now what? — Part 2

SEBI extends Trading hours to 11:55. Now what? — Part 1

Artist’s depiction of what traders think their life will be like after 1155. It does not happen in real life though “That was a total dick move” — Someone at SGX First things first. None of this might go through because SEBI has allowed this does not mean NSE or BSE will implement it. But, having said that, … Continue reading SEBI extends Trading hours to 11:55. Now what? — Part 1

Be a better trader. Part 1. Avoid Mistakes

Let me get to the point straight away. Stage 1 of becoming a better trader is easy. Avoid making BAD mistakes. No, I am not talking about mistakes where you lose a bit of money here or there. I am talking about mistakes which blow up your account. And believe me, most traders make big … Continue reading Be a better trader. Part 1. Avoid Mistakes

Buying options — The myth of limited losses

Everyone who knows anything about options will tell you this. Trying to get rich buying options is like building that caste in the air. I have no idea what that woman is doing staring at the castle though. “Option buying is better than options selling. At least the losses are limited” For years, people have been … Continue reading Buying options — The myth of limited losses

This one change can make you a profitable trader

The fundamental reason why retail investor loses money in Options trading is this: Retail investors are buying options most of the times instead selling options. Surprised? Well, yes, as surprising as it sounds, that is the number 1 reason. So if you want to dramatically improve your trading fortune, just do one thing: Decrease buying … Continue reading This one change can make you a profitable trader

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

7 Sins of Options Trading — Part 2

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

Buy Put, Or Sell Call?

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?