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OPTIONS - SOME IMPORTANT POINTS
| From : Radhakrishnan M at 08:05 PM - Jul 29, 2010 (19 months ago) |
Do not pump all your capital in options alone, now days plenty of people loosing money only because of this method.
Do not carry over options you bought unless until there is momentum in the stock (either downward or upward) that too on week end (Friday)
Do not have myth that you can become crorepati by trading only in OPTIONS.
Always keep in mind that option has unique time value. It decreases day by day when it nearing expiry.
Do not expect movement in Rupees in some momemtum stocks like IFCI, SUZLON and NAGARJUNA FERTILIZERS. You have to expect profit in paise.
Over trading is highly risk in market that too very dangerous in options
Have guts to book loss options if stock or nifty moves against your position.
Another most important point in stock options is lack of liquidity. It means the options should have some good volume in trading. Example - RELIANCE, TATASTEEL, ICICIBANK, DLF, UNITECH, SUZLON and IFCI.
If market wide open positions reaches 95% in particular counter, you can only square off your position. In such a case you cannot average your position.
Better be a paper trader on options before jump in to trade.
More over every one is human being. Err is human. If calls given by a particular person fails sometimes, do not blame. Compare his previous performance.
As far as JULY series, my guess is option writers (SHORT SELLERS) might have made some good profit comparing to options buyers.
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Thank you Nitin ji. Infact today morning I sold 5400 PUT around 98 and covered at 53. But only 2 lots.
Dear Dilip
Let the market open GAP UP or GAP DOWN. But my suggestion is do not trade in options for the 1st hour. Do not do plenty of trade in OPTIONS on single day.
My Suggestion is if market opens GAPDOWN catch 5400 CE around support at 5380 with a STOPLOSS of Rs.10/= per lot (That itself comes to Rs.500/=) and try to book profit as per your comfort level 5415 and 5422(Check NIFTY levels accordingly). If you are lucky enough you can book at higher level if nifty breaches 5425 level on higher side.
But my strategy is if market goes down I will SHORT 5300 PE in morning
Dear Radhakrishna, Hi
Good post keep it up.
What will you suggest CE OR PE (perticularly in the money) for August series. Your kind reply is requested before market opens tomorrow.
This will help me as a learner and other friends like me also.
Please do reply.
Regards
Dilip Nilekar
Well said .....Please all adhere to this points. A good compilation.
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