Discover and read the best of Twitter Threads about #optionstrading

Most recents (24)

#Straddles vs #Strangles ( Sell only )

These are the most common #Options strategies when one would start with #OptionsTrading.

Let’s understand from a broader perspective what’s the difference between these two.
Would not like to discuss the construction difference between them if you don’t know stop trading #options

#Straddles

You get higher premium so pnl would be higher compared to #strangles

But from where are you getting higher premiums is that your selling 0.5 #delta.
So probability of one going wrong is always 50% so to simply put one side is goin to get stuck in a #straddle but then market tends to #flucuate a lot so there is always the case of #meanreversion if you have selected the #strike rightly.
Read 14 tweets
#Options vs #Futures

Although both are #derivatives, Futures and Options are entirely different in terms of their potential #risk and #return , #leverage and how they work.

How different are futures and options?
#Rights vs #Obligations

In #Futures Trading, both the buyer & the seller are #obligated to settle the contracts on or before expiry ie cover shorts or longs or rollover to next contract, regardless of how the underlying asset price moves.
With #Options the buyer has the #Right, but not the #Obligation, to buy (call option) or sell (put option) on underlying asset. The option seller is #passive and must comply with whatever the option buyer does.
Read 13 tweets
#Option #Greeks Simplified

#Options are definitely more complicated than equity or futures.

Their prices don’t just go up and down.

They also fluctuate based on things like #time, #implied #volatility and #underlying stock movements.
#Options #Greeks Are Simply Mathematical Shortforms

Most of you would remember from school that mathematical formulas sometimes were #Greek letters like Pi and #Delta. The same is true for options.

Don’t let them overwhelm you or scare you.
They’re simply #mathematical words to explain some very basic principles.

#Greeks Describe the Behavior of #Individual #Options

Each #greek can help predict how it will behave under different circumstances and how options prices would change.
Read 22 tweets
#ITM Vs #OTM #Options Which to #BUY?

When selecting the right #option to #buy, a #trader has several choices to make. One is whether to purchase an in-the-money (ITM) or out-of-the-money (OTM) option.
While the goal for "#vanilla" #buyers is to have the option be in the money at expiration, the selected option depends on the amount the trader wants to spend and their risk tolerance, as well as their specific expectations for the underlying stock.
UNDERSTANDING #ITM Vs #OTM

Before delving into the pros and cons of each, let's look at what it means to be itm or otm.
A #call is ITM when the underlying stock is trading above the strike price.
Conversely it is OTM when the underlying stock is trading below the strike price
Read 16 tweets
Created Multi leg Chicken Iron Condor in Nifty On Nov Monthly Expiry

Buy 12300 CE X 30
Sell 11900 CE X 10
Sell 11800 CE X 10
Sell 11700 CE X 10
Sell 11400 PE X 10
Sell 11300 PE X 10
Sell 11200 PE X 10
Buy 10700 PE X 30

BE is 11100-12000. will adjust later

#optionstrading
Exited 11300 PE, 11200 PE, 11700 CE
Sold 11500 PE, 11600 PE, 12000 CE

Here is the new pay-off. Right now the whole strategy is in the net loss of 10K (50K capital)

Break even is right now from 11300 - 12100.

will adjust more if needed.

#optionstrading
Exited 11500 PE and Sold 11800 PE.
Exited 10700 PE (Bought one) monthly and bought weekly options at 11400

Here is the new pay-off. It looks like Iron-Fly at 11800 now.

Break-even is from 11472 to 12128

#optionstrading
Read 23 tweets
#OptionSymposium 4-5 Jan, 2020 at Bombay Stock Exchange. @quantsappsocial announces OptionSymposium 2.0. Option Symposium was the first event ever in the country to bring together a large option focused trading community. After the success of the last event where Traders, (1/n)
Prop Books, Analysts, Media Anchors, Brokers, Family offices, Advisory firms etc. came together in large numbers to share their knowledge & wisdom, we are again encouraged to bring together the version 2.0 with all our learning’s in-built. (2/n)
#ThoughtTheme it’s our responsibility to give our best in getting the right knowledge & after doing some genuine hard work & meeting 80-90 #OptionTrading giants Nationally / Internationally, we have shortlisted speakers where our team itself would love to sit in audience (3/n)
Read 7 tweets
#Election2019 result to announce soon. A quick #OptionBacktesting of past elections throws some interesting data

Result Date : 13-May-04,16-May-09,16-May-14
Entry Date: 2 days prior to result
Exit Date: 1 day after result
Lot size: 75

#OptionsTrading (1/9)
Strategy #1 Long Straddle : Buying ATM Call and Put
Total PNL : Profit 18559

@shubham_quant @BHVN153 @Tinagadodia

#Optionstrategies #DataAnalytics ...(2/9)
Strategy #2 Long Strangle: Buying 1st OTM Call and Put
Total PnL: Profit Rs.16838
#OptionsTrading #OptionStrategies #OptionBacktesting ...(3/9)
Read 9 tweets
I have received lot of queries on #OptionsTrading.
Specially on the trades that I take on expiry day where option prices move 10 times in last one hour. Let me tell you that this happens only 1 in 3-4 weeks.
Few pointers that I look at.
Expiry day trading in options few tips. I hope it will help others.
So what I look for is following 3 things.
1. Open Interest Build Up on expiry day
2. Trend of the market from start of the day
3. how to trade
3. Time when breakout or breakdown of critical levels happen
#OpenInterest Build Up
#Optionwriting has become very popular & there is heightened activity of the same on expiry day. This is clearly visible through OI buildup in specific strikes where OI goes up significantly & price goes down. Now these strikes become our boundaries
Read 10 tweets
Sharing some thoughts on beginners who start trading short options.

Previously shared this on a closed WhatsApp group of friends.

#optionstrading

(1/n)
Short option structures like Straddles and strangles have a high win rate.

A 15 delta Short strangle will end up with typically higher than 85% of trader's as winners.

This is the biggest attraction for traders new to #optionstrading

(2/n)
This is also how a lot of options trading trainers sell to their prospective clients on the effectiveness of their #optionstrading systems.

But this high win rate comes at a cost.

(3/n)
Read 11 tweets
As simply as this.

Using options over Futures doesn't allow you any additional edge in your directional Trade.

The Market doesn't pay for choice of traded instrument when the trader idea is Directional move of underlying.

(1/n)
The only difference comes from government mandated costs for the different instruments.

(2/n)
Unless you are trading extrinsic Value, which in essence is a trade now not on direction but on volatility, there is no difference between using an option or future.

(3/n)
Read 14 tweets
2018 Year in Review - The Personal Edition.

Met some fantastic traders and thought leaders.

You know who you are.

(1/n)

#2018YearinReview
Grew the #OptionsTrading book despite some tough months.

February and November were the best.

September the worst.

(2/n)

#2018YearinReview
Got on stage to share some ideas on how I approach #OptionsTrading not once but twice.

Thanks, @Definedge and @quantsappsocial.

(3/n)

#2018YearinReview
Read 8 tweets
BankNifty – RBI Policy Week of 06Dec vohicapital.com/trading/bankni…
Concepts of "probability of touch" are used in trades like the one mentioned in this post.

When touch happens, there is no need to stay in the trade anymore.

The $BankNifty Hive of Flies taken off today with a touch of spot to 26650
Usually no need to look for re-entries, but with the spike up to 26750, took a re-entry into a lower #HiveOfFlies trade on $BankNifty for #RBIPolicy day.

Payoff on 05-Dec.

Nothing to do on these unless 26850 is breached tomorrow before event.

#OptionsTrading
#RiskDefined
Read 4 tweets
#BANKNIFTY #BANKNIFTY_EXPIRY_1NOV2018 #EXPIRY_1NOV2018 #OptionsTrading
MAXOI STRIKES 24000PE 25500CE
MAXOI ADDED STRIKES 24300PE 25700CE
SPOT 24959.7
2018-10-29 15:30:30
#BANKNIFTY #BANKNIFTY_EXPIRY_1NOV2018 #EXPIRY_1NOV2018 #OptionsTrading
MAXOI STRIKES 24000PE 25500CE
MAXOI ADDED STRIKES 24500PE 25500CE
SPOT 24922.4
2018-10-30 09:18:19
#BANKNIFTY #BANKNIFTY_EXPIRY_1NOV2018 #EXPIRY_1NOV2018 #OptionsTrading
MAXOI STRIKES 24500PE 25500CE
MAXOI ADDED STRIKES 24200PE 25500CE
SPOT 25049.8
2018-10-30 09:23:19
Read 228 tweets
#BANKNIFTY #BANKNIFTY_EXPIRY_1NOV2018 #EXPIRY_1NOV2018 #OptionsTrading
MAXOI STRIKES 25000PE 26000CE
MAXOI ADDED STRIKES 24900PE 26000CE
SPOT 25066.4
2018-10-19 09:18:49
#BANKNIFTY #BANKNIFTY_EXPIRY_1NOV2018 #EXPIRY_1NOV2018 #OptionsTrading
MAXOI STRIKES 25000PE 26000CE
MAXOI ADDED STRIKES 24500PE 26000CE
SPOT 25056.4
2018-10-19 09:22:19
#BANKNIFTY #BANKNIFTY_EXPIRY_1NOV2018 #EXPIRY_1NOV2018 #OptionsTrading
MAXOI STRIKES 25000PE 26000CE
MAXOI ADDED STRIKES 24500PE 26000CE
SPOT 25231.2
2018-10-19 09:28:19
Read 77 tweets
#MARUTI #MARUTI_EXPIRY_25OCT2018 #EXPIRY_25OCT2018 #OptionsTrading
MAXOI STRIKES 6500PE 8000CE
MAXOI ADDED STRIKES 7200PE 7500CE
SPOT 7166.0
2018-10-15 15:30:30
#MARUTI #MARUTI_EXPIRY_25OCT2018 #EXPIRY_25OCT2018 #OptionsTrading
MAXOI STRIKES 7000PE 8000CE
MAXOI ADDED STRIKES 7100PE 7500CE
SPOT 7137.6
2018-10-16 15:30:30
#MARUTI #MARUTI_EXPIRY_25OCT2018 #EXPIRY_25OCT2018 #OptionsTrading
MAXOI STRIKES 6500PE 8000CE
MAXOI ADDED STRIKES 6500PE 7000CE
SPOT 6901.0
2018-10-17 15:30:30
Read 4 tweets
#INFY #INFY_EXPIRY_25OCT2018 #EXPIRY_25OCT2018 #OptionsTrading
MAXOI STRIKES 600PE 800CE
MAXOI ADDED STRIKES 680PE 800CE
SPOT 703.5
2018-10-15 15:30:30
#INFY #INFY_EXPIRY_25OCT2018 #EXPIRY_25OCT2018 #OptionsTrading
MAXOI STRIKES 700PE 750CE
MAXOI ADDED STRIKES 700PE 750CE
SPOT 692.0
2018-10-16 15:30:30
#INFY #INFY_EXPIRY_25OCT2018 #EXPIRY_25OCT2018 #OptionsTrading
MAXOI STRIKES 650PE 750CE
MAXOI ADDED STRIKES 710PE 720CE
SPOT 705.5
2018-10-17 15:30:30
Read 4 tweets
#RELIANCE #RELIANCE_EXPIRY_25OCT2018 #EXPIRY_25OCT2018 #OptionsTrading
MAXOI STRIKES 1000PE 1300CE
MAXOI ADDED STRIKES 1000PE 1140CE
SPOT 1137.8
2018-10-15 15:30:30
#RELIANCE #RELIANCE_EXPIRY_25OCT2018 #EXPIRY_25OCT2018 #OptionsTrading
MAXOI STRIKES 1000PE 1200CE
MAXOI ADDED STRIKES 1140PE 1160CE
SPOT 1166.0
2018-10-16 15:30:30
#RELIANCE #RELIANCE_EXPIRY_25OCT2018 #EXPIRY_25OCT2018 #OptionsTrading
MAXOI STRIKES 1100PE 1200CE
MAXOI ADDED STRIKES 1080PE 1200CE
SPOT 1151.0
2018-10-17 15:30:30
Read 4 tweets
#SBIN #SBIN_EXPIRY_25OCT2018 #EXPIRY_25OCT2018 #OptionsTrading
MAXOI STRIKES 240PE 280CE
MAXOI ADDED STRIKES 200PE 270CE
SPOT 263.2
2018-10-15 15:30:30
#SBIN #SBIN_EXPIRY_25OCT2018 #EXPIRY_25OCT2018 #OptionsTrading
MAXOI STRIKES 240PE 280CE
MAXOI ADDED STRIKES 265PE 215CE
SPOT 270.4
2018-10-16 15:30:30
#SBIN #SBIN_EXPIRY_25OCT2018 #EXPIRY_25OCT2018 #OptionsTrading
MAXOI STRIKES 240PE 280CE
MAXOI ADDED STRIKES 255PE 275CE
SPOT 261.0
2018-10-17 15:30:30
Read 4 tweets
#NIFTY #NIFTY_EXPIRY_27DEC2018 #EXPIRY_27DEC2018 #OptionsTrading
MAXOI STRIKES 11000PE 11500CE
MAXOI ADDED STRIKES 9500PE 11000PE
SPOT 10458.4
2018-10-15 09:21:19
#NIFTY #NIFTY_EXPIRY_27DEC2018 #EXPIRY_27DEC2018 #OptionsTrading
MAXOI STRIKES 11000PE 11500CE
MAXOI ADDED STRIKES 9500PE 10700PE
SPOT 10447.8
2018-10-15 09:25:49
Read 78 tweets
Don't get into #OptionsTrading with less than 25L if primary engine is #OptionSelling

2/n
Don't create focus on return in trades.

3/n
Read 20 tweets
The beginning of an expiry series is a good time to sell options.

#OptionsTrading
When you sell options, you want to profit from erosion of option extrinsic value.

This is the highest, the further away you are from expiration.

#OptionsTrading
Instead if you want to profit from a move in the underlying price, you simply buy or sell the underlying.

Or buy the option with high intrinsic value and low extrinsic value.

A lot of option buyers will prefer to buy a 60-70 delta option for trend following.

#OptionsTrading
Read 3 tweets
$Nifty almost takes out the ATM straddle in one session.

Are we in for a slow grind up like 2017.

$Nifty and $BankNifty IVR almost at all year low levels.

Interesting to see Twitter folk still trying to sell index volatility.
As for my book, apart for some #putcalendars got a couple short vol trades that are setup to flip to long volatility by mid September series. These are going to need some dynamic delta adjustments.

Short vol candidates remain in single stock Sep series.

#OptionsTrading
Just for reference, the $NIFTY ATM straddle is now less than 0.8% of the spot.

Last week of expiry.
Read 3 tweets
Traders need to check their ledger not daily MTM PNL statements.

Selling of deep ITM options to hide and carry forward losses is a common practice amongst unscrupulous "sub-brokers" illegally managing others money in #OptionsTrading.
There are no mandates from @SEBI_India on allowing "sub-brokers" or any party to trade and manage client funds in #OptionsTrading.

Certainly no mandate to take leverage of the sorts usually taken.
@SEBI_India Even AIF Category 3 norms don't allow leverage upwards of 2.

Beyond that, even an AIF cannot solicit funds from the public openly.

More on these norms here:
sebi.gov.in/sebi_data/atta…
Read 4 tweets
We are discussing $FB options on the @GreeksCap #GSRCommunity room.

Come and join us there.

greekscap.com/gsrinvite

#OptionsTrading
We put on a bull put spread for Aug expiry at 160/155 on $FB for a credit of about $0.9

@Naveen_Joshi was gungho and went with a 1:2 Put Ratio with 165/160 PE $3.15 cr.

#OptionsTrading
Sorry typo this was the 165/160 put spread for 90 cents.
Read 3 tweets

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