RULES FOR OPTIONS TRADING.

From : Vikas Kulkarni at 07:51 PM - Jun 24, 2009 ( )

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now days most of members attract towards f&o trading.some of them wish to trade in options bcoz it require less capital as well as it carry less risk against future.but most of them(95%) dont know the right way of trade in this sector and bcoz of that they get loss.for those who have basic knowledge of options as well as they trade in options but cant get profit.to help those traders-from today we should post 5 rules(1 per day) for trading.we request to option trades pls. work on this,try to adopt this in ur trading.other advice is-first observe these rules and then fallow it.here we assume that traders have basic knowledge of options so we give only rules not discription.
these rules are very simple as well as try to present in simple language.
RULE-1

ALWAYS TRADE IN `AT THE MONEY' CONTRACTS.90% TRADERS GET LOSS BCOZ OF TRADING IN `OUT THE MONEY' CONTRACTS.
if u currently dont trade as per this rule then u can observe(can make paper trading also)and adopt in your trading.

VIKAS KULKARNI

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RULES FOR OPTION TRADING by Vikas Kulkarni
1	ALWAYS TRADE IN `AT THE MONEY' CONTRACTS.90% TRADERS GET LOSS BCOZ OF TRADING IN `OUT THE MONEY' CONTRACTS
2	CHOOSE UR UNDERLYING FIRST.PRICE OF CONTRACT IS DEPEND UPON UNDERLYING.VOLATALITY IS ALSO MAJOR FACTOR,SO CHOSE UR UNDERLYINGS FROM LARGE CAP AND LIQUID COUNTERS.SET UR PRICE TARGET FOR UNDERLYING NOT FOR CONTRACT. (if u wish to buy call/put of icici bank,then icici is underlying security of that contract.so u have to decide ur target price of icici first and then only u can decide,in which contract u have to trade)
3	DONT BUY ANY CONTRACT,ONLY BECAUSE IT LOOKS CHEAP. (most important thing is-demand and volatality.reffer rule no.2nd also)
4	DO NOT BUY ANY NAKED CALL/PUT IN FIRST WEEK OF NEW SERIES AND BETWEEN 9.55 am TO 12.30 pm.
5	IN NIFTY OPTIONS-KEEP SL OF 15% FOR INTRADAY,AND 25% FOR POSITIONAL (if u had bogut any nifty contract @100 then ur intraday sl. should be 85.and positional sl. may 75)
6	DONT TAKE ONE SIDE POSITION IN SPECIFIC STOCK, IF U EXPECT ANY NEWS. (in these days there r various news from ril,rnrl,rcom,gmr,omc's and others.if u take any one-side position long/short and if market take that news totaly apposite than ur expectation,then it may cause loss for u.)
7	SELLLING OF OPTIONS CONTRACTS IS RISKY ONE,THERE ARE VARIOUS MARGINE REQUIREMENTS FOR VARIOUS STRATAGIES.SO,CONSULT UR BROKER BEFORE TRY THIS. (short fall of margine may reasion for squareing-off ur position.by which u can take loss also)
8	DONT SALE NACKED CONTRACTS IT MAY EAT ALL YOUR CAPITAL (in now days most traders try to sale call/puts at high price and wait till time impact bring price down.it is good.but you must cover it by buying higher strike price call or lower strike put)
9	DONT USE MORE THAN 25% OF YOUR TOTAL CAPITAL IN OPTIONS

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RULES FOR OPTIONS TRADING.

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