Ambarish Hindocha
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LET US SHARE & LEARN-THE ELEMENT OF OPTION

Ambarish Hindocha at 08:54 AM - Jun 24, 2014 ( ) Views: 4,631

19 31

I know very well that now-a-days Mudraa members are lost their interest for active participation in any kind of learning.Day by day,members who used to give stock option tips for small traders are decreasing.Paresh Sir  regulary provides stock option tips successfully.

Although,I strongly believe that everone should try to learn how to do  successfull trading in stock option.Why ? The answer is here. 

    6700 CE            
Date Open High Low Close Settle Price Contracts Turnover (in lacs) OI
11-Apr-14 139.9 143 112.35 128 128 74393 253877.37 3081250
10-Apr-14 150 177.7 131.8 149.85 149.85 63576 218048.28 2935850
09-Apr-14 100.8 163.8 90.85 153.25 153.25 177998 606517.48 3228050
07-Apr-14 102.55 117.05 73.7 88.35 88.35 233209 791375.65 3243300
04-Apr-14 121 127.05 100 104.4 104.4 118761 404470.46 3229150
03-Apr-14 148.3 149.9 109.8 128.3 128.3 89199 304371.07 3186100
02-Apr-14 140 149.75 122 143.65 143.65 89093 304405.1 3049900
01-Apr-14 139 149.9 103.05 125.35 125.35 155915 531781.18 3093200
31-Mar-14 137 148 114 136 136 130597 446239 3672050
28-Mar-14 116.9 130.9 103.7 124.45 124.45 131852 449302.21 3297350
27-Mar-14 104.05 128.05 90.35 105.9 105.9 101716 346366.98 3487500
26-Mar-14 116.95 117.8 92.9 101.45 101.45 44072 149971.64 2139500
25-Mar-14 90 99.8 80 96.25 96.25 21446 72846.86 1637950
24-Mar-14 68.1 99 62.2 94.05 94.05 29230 99220.39 1517100
22-Mar-14 60.95 62.45 56 57.95 57.95 3148 10638.85 1288300
21-Mar-14 69.7 71.5 61.45 62.2 62.2 9699 32813.62 1292250
20-Mar-14 70 79 60 63.6 63.6 13738 46488.5 1242850
19-Mar-14 85 92.95 76 80.8 80.8 7942 26937.2 1194300
18-Mar-14 88.2 106.4 76 81.8 81.8 10998 37336.71 1108850
14-Mar-14 68.5 89.3 60 84 84 8847 29950.97 1121400

The above is one example.Thus,option has a power to create wealth.but how?

What is the element behind this kind of Hanuman Jump? 

1.Chart pattern?

2.Open interst data?

3.Increasing of contracts?

4.Increasing of turnover?

5.Building up of long position?

6.Simultaneously changes in stock/sector/CE-PE's chart?

7.Creating of position in out of money call?

8.Anything else?

Mudraa members and seniors are invited to share their valuable suggestion.Please participate actively and positively.Please don't say that option is for hedging.Paresh sir has given so many successfull option tips.So,it is working.Jay SaiRam.


(1 to 20 out of 50) - Latest Replies on Top | First | << Previous | Next >> | Last |
Shaila Prabhu at 12:15 AM - Mar 23, 2015 ( )

Sir, Thanks. Really overwhelmed by the amount of info here. 

Ambarish Hindocha at 06:56 PM - Mar 22, 2015 ( )

One more thing,this kind of stock should be in short covering zone.

Unfortunately,it is not due to lack of contracts.

If price & open interest is down & volume is up then it comes under the purview  of short covering.

Jay SaiRam.

Ambarish Hindocha at 06:49 PM - Mar 22, 2015 ( )

Observation

If any stock as per RSI,is in oversold zone & there is a highest buildup in open interest as well as contract in nearer PE then is it the sign for reversal?

This is happened in SBI.

The RSI of SBI is 22 & the 280 CE of SBI(CMP-278.25)has not only highest change in open interest but also highest contracts amongst all CE/PE's.

Is it not an interesting & useful information?

Moreover,Bank Nifty is also ready for bounce back.

Let's wait for Monday.

Jay SaiRam.

Ambarish Hindocha at 09:50 AM - Sep 21, 2014 ( )

Paresh Sir,thank you so much for the article.

We need to learn much more about option trading.So,please be continued to post whenever you feel free.

Once again thank you sir.

Jay SaiRam.

Sankaran Viswanathan at 06:57 PM - Sep 20, 2014 ( )

Thank you for  a very informative article.

Paresh Ratan Kundu at 11:01 AM - Sep 20, 2014 ( )

10 Traits of A Successful Options Trader

Options are one of the most versatile instruments in the financial markets. They are flexible in that they allow you to leverage your position to boost returns, manage risk by using them for hedging, or to make profit from upside, downside and sideways movement in the market.

Despite its many benefits, options trading carries substantial risk of loss, and it is very speculative in nature. It's not for everyone and not everyone can become a successful options trader. Like any other business, becoming a successful
 options trader requires a certain skillset, personality type and attitude. This article will help you understand the 10 must-have characteristics that you need to become successful at options trading. (From picking the right type of stock to setting stop-losses, learn how to trade wisely.

Numeracy - Keep Sharpening Your Quantitative Skills

1.
 Manage risk: 
Options are high-risk instruments, and it is important for traders to recognize how much risk they have at any point in time. What is the maximum downside of the trade? What is the implicit or explicit position with respect to
 volatility? How much of my capital is allocated to the trade? These are some of the questions that traders will always have to keep in their minds. Traders also need to take appropriate measures to control the risk. In particular, if you are a short-term options trader, you will regularly come across loss-making trades. For example, if you hold a position overnight, your bet may go bad because of adverse news. At any time, you need to be able to minimize the risk of your positions. Some traders do so by limiting their trade size and diversifying into many different trades so that not all their eggs are in the same basket. An options trader also has to be an excellent money manager. They need to use their capital wisely. For example, it wouldn't be wise to block 90% of your capital in a single trade. Whatever the strategy you adopt, risk management and money management cannot be ignored. (Risk is inseparable from return.

2. Be good with numbers: 
While trading in options, you are always dealing with numbers. What's the implied volatility? Is the option
 in the money, or out of the money? What's the breakeven of the trade? Options traders are always answering these questions. They also refer to option Greeks, such as the delta, gamma, vega and theta of their options trades. For example, a trader would want to know if his trade is short gamma. It is important for the traders to be able to easily calculate and interpret numbers. You don't need to be a rocket scientist, but you should train as an aspiring "quant jock." (Understanding price influences on options positions requires learning delta, theta, vega and gamma.

Behavioral – Develop the Right Attitude

3.
 Practice discipline: 
To become successful, the options traders must practice discipline. Doing extensive research, identifying opportunities, setting up the right trade, forming and sticking to a strategy, setting up goals, and forming an exit strategy are all part of the discipline. A simple example of deviating from the discipline is to go with the advice of the herd. Never trust an opinion without doing your own research. You can't skip your homework and blame the herd for your losses. Instead, you must devise an independent trading strategy that works for your situation.
 

4.
 Be patient:
Patience is one quality that all options traders have. Patient investors are willing to wait for the market to provide the right opportunity, rather than trying to make a big win on every market movement. You will often see traders sitting idle and just watching the market, waiting for the perfect timing to enter or exit a trade. The same is not the case with amateur traders. They are impatient, unable to control their emotions, and they will be quick to enter and exit trades. 

5.
 Match your trading style with your personality:
Each trader has a different personality; therefore, each trader should adopt a trading style that suits his or her traits. Some traders may be good at day trading, where they buy and sell options several times during the day in order to make small profits. Others may be more comfortable with position trading, where they form trading strategies to take advantage of unique opportunities, such as time decay and volatility. And others may be more comfortable with swing trading, where traders make bets on price movement over periods lasting five to 30 days.


Learning – Become an Active Learner

6.
 Read and understand news: 
It is crucial for traders to be able to interpret the news, separate hype from reality, and make appropriate decisions based on this knowledge. You will find many traders who will be eager to put their capital in an option with promising news, and the next day they will move on to the next big news. This distracts them from identifying bigger trends in the market. Most successful traders will be honest with themselves and make sound personal decisions, rather than just going by the top stories in the news.

7.
 Learn from losses: 
The Chicago Board of Trade
 recently reported that 90% of options traders make losses. What separates successful traders from average ones is that successful traders are able to learn from their losses and implement what they learn in their trading strategies.


8.
 Be an active learner: 
The financial markets are constantly changing and evolving; you need to have a clear understanding of what's happening and how it all works. By becoming an active learner, you will not only become good at your current trading strategies, but you will also be able to identify newer opportunities that others might not see or that they may pass over.

Administrative – Develop the Right Routine

9.
 Plan your trades: 
An options trader who plans is more likely to succeed than one who flies on instinct and feel. If you don't have a plan, you will place random trades, and consequently, you'll be directionless. On the other hand, if you have a plan, you are more likely to stick to it. You will be clear about what your goals are and how you plan to achieve them. You will also know how to cover your losses or when to book profits. You can see how the plan has worked (or not worked) for you. All these steps are essential to developing a strong trading strategy.
 

10.
 Maintain records: 
Most successful options traders keep diligent records of their trades. Maintaining proper trade records is an essential habit that can help you avoid making costly decisions. The history of your trade records also provides a wealth of information that can help you improve your odds of success.


The Bottom Line
Top options traders get a thrill from scouting and watching their trades. Sure, it's great to see a pick come out on top, but much like sports fans, options traders enjoy watching the whole game unfold, not just finding out the final score. These characteristics will not guarantee your success in the options trading world, but they will definitely increase your chances at it.

 

 

Source: investopedia

Ambarish Hindocha at 10:19 AM - Sep 20, 2014 ( )

Using the Greeks to Buy a Call

Buying stock is a relatively easy process. If you think it is going up, you buy it. But when using options, there are several additional layers of complexity and decisions to be made - what strike?, which expiration? We can use the Greeks to help us make these decisions.

First we can look at the delta. The at-the-money call will have a delta of .50. This tells us two things. One, the option will increase (or decrease) by $.50 for every $1 move in the underlying stock. If a stock is trading for $25 and the 25 strike call (delta of .50) is trading for $2, then if the stock goes to $26, then the option should be worth roughly $2.50.

Out-of-the-money calls will have a delta of less than .50 and in-the-money calls have a delta greater than .50 and less than 1.

Two, the delta tells the probability of expiring in the money. A deep-in-the-money call will have an option close to 1, meaning that the probability that it will expire in the money is almost 100 percent and that it will basically trade dollar for dollar with the stock.

Theta is greatest for the near-term options and increases exponentially as the call approaches expiration. This works against us in buying short-dated options. It also gives us the least amount of time for our position to work out. Buying longer-term options - at least two to three months longer than we plan on holding the option - usually makes sense from this perspective.

We must balance this out with the vega of the call. The further out in time you go out, the higher the vega. The practical import of this is that if you are buying options with higher implied volatility (often the case before earnings, or when professional money managers are purchasing in big blocks), you have more exposure using those longer-dated options.

So, we are still left with the question of which option to buy. The answer, as with most things, is which one will give you the most bang for the buck. First, for any given underlying, look for the option with the lowest implied volatility. This will have the lowest relative theta and vega exposure, and will be the best return on investment.

The next step is to do a comparison of the delta, theta and vega relative to the actual options price. Deep-in-the-money calls have the highest delta and lowest theta and vega, but they are probably not the best compared to the price of the option. They also have the most total capital tied up and thus at risk.

Far out-of-the-money options, on the other hand, can also have low vega and theta, and always have a low delta, but again, those values may not be the best relative to the price of the option. And their probability of profit is very low.

"Near the money" options, two to three months out (depending on how long you want to hold the option) usually provide the best relative delta, theta, and vega compared to the price of the option - the most bang for the buck. Most option traders do not do this much analysis to just buy a call, and that is exactly the reason that doing so can make you a more profitable trader.

(Copy Paste material)
Jay SaiRam.

Ambarish Hindocha at 10:27 AM - Sep 18, 2014 ( )
From : Ambarish Hindocha at 10:39 AM - Sep 14, 2014 4 days ago )

THIS IS FOR LEARNING & BACK TESTING OF OPTION DATA ANALYZING PURPOSE,ONE CAN DO PAPER TRADING.

As per the most of indicators(technicals as well as option data)available  with me,it is found that  Sun TV 348.60 is in bearish trend.

Let's watch & wait.

Jay SaiRam.

------------------------------------

Made low of 334.00 Jay SaiRam.

Ambarish Hindocha at 12:43 PM - Sep 14, 2014 ( )

Too many people try to jump into an option without having a good understanding of what it actually is. Occasionally there will be times when the stock goes up yet the call or put option that they bought didn't go up with it, or even went down.

Why does this happen? Well there are a number of factors that go into options. Factors such as time decayvolatility, and price movement all get lumped together into every option. That is why it is normally a good idea to have a firm understanding of the option Greeks.

The Greeks can estimate how much each of these factors will influence the price of the option and can be used to Deepen your understanding of options

Often people trade options without having a clue as to what they are trading. By understanding what they are and how they move you can make wiser decisions when picking the right option to trade.

 

There is never anything wrong with learning just a little bit more.

Greeks give you a better understanding of how an option will move, you have more realistic price targets. Of course not even the Greeks will give you the exact amount an option will be worth, but they do give you a much better estimate then "I'm going to buy a call and make a lot of money".

 (Copy paste from  Suhas Prabhu's thread)

Jay SaiRam.

Ambarish Hindocha at 10:39 AM - Sep 14, 2014 ( )

THIS IS FOR LEARNING & BACK TESTING OF OPTION DATA ANALYZING PURPOSE,ONE CAN DO PAPER TRADING.

As per the most of indicators(technicals as well as option data)available  with me,it is found that  Sun TV 348.60 is in bearish trend.

Let's watch & wait.

Jay SaiRam.

Ambarish Hindocha at 09:16 AM - Sep 08, 2014 ( )

During the time of mornig walk,a judge saw that one person has killed the other one on the road.

Co-incidentally,this case was started in the court of this eye-witnessed judge.

During the course of court procedure,the judge was very surprised to see that police has arrested some other person for this purpose.

All the evidences are against this arrested person.

He was punished to send jail for 15 years.

The judge was very upset and he want to know the reason behind this kind of incident 

so,he called the man in his chamber and told that I am 100% sure that you are innocent because at the time of murder,I was there..but due to evidences against you,you are punished.Now, tell me why this happened?

A man cried and told that before this incidents,I have killed 7 persons and every time I was realized innocetly.I thought that I am realized  innocently because there was no evidences agaisnt me .It was because my KARMAFAL(Result/reaction of any activity)was not mature.This time,although,I am innocent,I am going to be punished ..because my KARMAFAL is now mature.

The 

same 

principle

 is 

applicable 

to CE/PE trading.

A future of stock in which I am trading in CE is in long build up,

Chart is in uptrend

Open interest of stock as well as CE is incresing with enough volume

PCR is in favour of bull

than why my CE is not incresing  ?

because

KARMAFAL of CE is still not mature?

How  ?

Stock is in uptrend but now it needs to take some rest(Profit booking)

EMAs are crossed but MACD is in negative zone

Expansion of EMAs are decresing

RSI is still not in oversold zone

Price candle is within bollinger line

Past 2 days low of stock is not above 20 SMA(Am I right Umeshbhai ?)

Our entry cost is little costly

Shoud we not wait for maturity of KARMAFAL of our CE ?

Jay SaiRam.

Ambarish Hindocha at 09:13 AM - Sep 08, 2014 ( )

During the time of mornig walk,a judge saw that one person has killed the other one on the road.

Co-incidentally,this case was started in the court of this eye-witnessed judge.

During the course of court procedure,the judge was very surprised to see that police has arrested some other person for this purpose.

All the evidences are against this arrested person.

He was punished to send jail for 15 years.

The judge was very upset and he want to know the reason behind this kind of incident 

so,he called the man in his chamber and told that I am 100% sure that you are innocent because at the time of murder,I was there..but due to evidences against you,you are punished.Now, tell me why this happened?

A man cried and told that before this incidents,I have killed 7 persons and every time I was realized innocetly.I thought that I am realized  innocently because there was no evidences agaisnt me .It was because my KARMAFAL(Result/reaction of any activity)was not mature.This time,although,I am innocent,I am going to be punished ..because my KARMAFAL is now mature.

The 

same 

principle

 is 

applicable 

to CE/PE trading.

A future of stock in which I am trading in CE is in long build up,

Chart is in uptrend

Open interest of stock as well as CE is incresing with enough volume

PCR is in favour of bull

than why my CE is not incresing  ?

because

KARMAFAL of CE is still not mature?

How  ?

Stock is in uptrend but now it needs to take some rest(Profit booking)

EMAs are crossed but MACD is in negative zone

Expansion of EMAs are decresing

RSI is still not in oversold zone

Price candle is within bollinger line

Past 2 days low of stock is not above 20 SMA(Am I right Umeshbhai ?)

Ambarish Hindocha at 09:52 AM - Sep 06, 2014 ( )

Is it open interest which can force the price of CE/PE to go up?

Is it data of turnover ?

Is it PCR ratio ?

Is it balance of call -put data ?

No...No   ...No  

It is a mean point whereas the price is too much fair and according to the rule of Nature,price must have retraced

It is a laxman rekha of RSI  where no more space to go more up or more down

It is a one-way whereas price must have started to go

It is a fair price where buyers are eagerly wait for buy it

It is like a pen with market value of Rs.10 and having a refill of Rs.10.(It is called Padtar Bhaav in Gujarati)

It is a lower bottom which has recently finished lower top..

Jay SaiRam.

Bhavani Sankar at 03:39 PM - Sep 01, 2014 ( )

Buy Reliance 1100 CE September series above 5

S/L @ 3.00

Buy Trigered @ 5.10 and went high Upto 7.00

Today Lows 3.15....LTP @ 6.00

Call Closed

Bhavani Sankar at 10:31 AM - Sep 01, 2014 ( )

Buy Reliance 1100 CE September series above 5

S/L @ 3.00

 ............

The above Option Call is Purely Intraday.

Upto Tiz time High is 4.40....Low is 3.65....

Bhavani Sankar at 08:05 PM - Aug 31, 2014 ( )

Buy Reliance 1100 CE September series above 5

S/L @ 3.00

 

 

Ambarish Hindocha at 09:20 AM - Aug 16, 2014 ( )

Buy Reliance 1100 CE September series@6.70

 stop loss-2.00  

Target-16......26......34+ 

Jay SaiRam.

Ambarish Hindocha at 10:21 AM - Jul 13, 2014 ( )






I am sorry that I am not able to paste the chart of 7550 PE which has given EOD breakout by 3/13 EMA.@135 .Thus,nifty & nearer PE both has given breakout.However,data of 7550 PE is not as much as strong.Let's wait and watch.In 13300 PE of bank nifty,there is also data breakout(CMP-37.00).Keep watch it for paper trade.Jay SaiRam.

Ambarish Hindocha at 09:54 AM - Jul 12, 2014 ( )

This is one of the weakest weekly closing since March 2013.

Moreover,stocks of PFC,Crompton & Bhel are intraday down by 8-10% .

FII has also in a seller bench.

Almost all the index except I.T. & Pharma are below 3/13 EMA in EOD basis.

Be alert.

Jay SaiRam.

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