Always Chose Liquid Counters to Trade Options

Simply put, liquidity is all about how quickly a trader can buy or sell something without causing a significant price movement. A liquid market is one with ready, active buyers and sellers at all times.Here’s another, more mathematically elegant way to think about it: Liquidity refers to the probability that the next trade will be executed at a price equal to the last one.Stock markets are generally more liquid than their related options markets for a simple reason: Stock traders are all trading just one stock, but the option traders may have dozens of option contracts to choose from. Stock traders will flock to just one form of DLF stock, for example, but options traders for DLF have perhaps six different expirations and a plethora of strike prices to choose from. More choices by definition means the options market will probably not be as liquid as the stock market.Of course,

OPTION STRATEGY PACKAGE

We have posted a sample strategy Nifty strangle strategy  on our blog. If you wish to get more such rocking!!!(5-7)  strategies in a month join our option strategies package. The traders having lack of time but interested in trading will love this package which gives LOW RISK HIGH RETURNS.

Price of our OPTION STRATEGY PACKAGE :

Monthly:     5000

Quarterly:   10000

Half yearly: 18000

Yearly :      35000

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BOOK PROFIT IN IDFC STRATEGY

IDFC strategy given on 25 oct 2012 is  giving  profit of  3.1 Hope you have booked profit. IDFC 160 NOV call is trading at 10  and  IDFC 170 NOV  call is trading at 4.65 now.More about Option Call Put tips on google+

HOW TO HEDGE FUTURE WITH OPTION

      I.            Buy corresponding number of options as your Future positions. For example, if you have a position size of five futures contracts, purchase five corresponding options to completely hedge your position. Also, make sure the expiration month of the options you purchase matches the expiration date of the futures contracts you own.

  II.            Select a strike price that fits your accepted level of risk tolerance. When you purchase an option, you must specify a strike price. The closer the strike price is to the current futures price, the more expensive the option.

THINGS TO KEEP IN MIND WHILE TRADING OPTIONS

Below given are the DO’S while trading in options

1.Always deal with the market intermediaries registered with Sebi/Exchanges

2.Provide complete and correct email address and mobile number while opening                   trading / demat account.

3.Trade wisely ,create your own trading strategy depending upon the conclusions drawn from the various sources.

4.Insist on a Contract Note for every trade....

Petronet Strangle Option Strategy

LEG1: BUY PETRONET 140 CALL @ 2.5

LEG2: BUY PETRONET 130 PUT @ 2.5

COST =5

LOT SIZE =2000       

 RISK PER LOT = 10000

RETURN = UNLIMITED

Read More For Pay off table.......

NIFTY STRANGLE STRATEGY

OPTION CALL PUT STRATEGY

Volatility is back in market. For coming sessions we recommend Nifty strangle strategy:

NIFTY STRANGLE STRATEGY

LEG1: BUY NIFTY 4700  PUT @ 32

LEG2: BUY NIFTY 4900 CALL @ 55

COST =87            

 RISK PER LOT = 4350

RETURN = UNLIMITED

DLF SHORT STRANGLE STRATEGY

OPTION CALL PUT STRATEGY

Option calls premium have time value in it. Tomorrows trading session is followed by very Long weekend. To en cash this situation we recommend Short Strangle strategy in DLF as it is trading around its average Price.

DLF SHORT STRANGLE STRATEGY

LEG1: SELL DLF 200 PUT@5.70

LEG2: SELL DLF 220 CALL@4.70

CREDIT RECD =(5.70+4.70)*1000=10400

OUT LOOK  5-7 Days

Continue to Hold With SL of 3 Rs

OPTION CALL PUT TRADING

KEYS TO SUCCESS IN OPTION CALL PUT TRADING

1) Don’t Average There is a reason for the expression that ” the trend is your friend.”  Don’t fight it and most of all Don’t assume that it will turn itself around. Averaging down into a losing trade is a sure way to lose your money.

2) Trade when the market goes up and when it goes down. Most traders know how to buy calls. They know how an when to buy  when they believe that the market will go up. But there is an equal amount of money to be made when it goes down. You have to be comfortable investing in both calls and puts. Again look at the trend and if it reverses get out of the trade.

3) Trade logically. Fear based trading is a sure way to lose money. Fear creates paralysis. It keeps you from pulling the trigger and getting out of a trade.

4)Trend: The objective of successful options strategies is to create profit. It is opposite of what many believe. You are not there to buy low and to sell high, but to buy high and to sell higher, or to sell short low and to buy lower. Look at the trend.

5) Sell markets that show the greatest weakness; buy markets that show the greatest strength. Again look at the trend. You are not here just to buy into strong markets. You are here to make a profit either way.

6) Trading is not compulsory:You do not have to be in a trade all the time. There are times when the markets are flat or in a sideways trend. This is not the time to enter a trade. Stay out of the market!

7) No one can predict the market. Your options strategies should always include entry and exit points. Have a stop loss point in mind for each trade before you enter it. This is where most people get it wrong. You must be willing to put exit points in and stop losses as well.

You will win many trades but you will also lose some. No one is infallible. The main thing to remember is that you must trade long enough and minimize your losses enough to continue trading for those big winning trades.

6 Golden Rules For Option Trading

6 Golden Rules For Option (call put) Trading

1. Clear Vision Of Target

We must always remember that reward and risk go hand-in-hand in trading and that we cannot expect to achieve high returns without planning for high risk (i.e. draw-downs). Your objectives and goals will be very specific to you, but they must have the following characteristics to be useful:

Be measurable
Be achievable
Be worthwhile
Be positive  

2. Discipline

This is most important part of option trading. In order to realize the full potential of your trading systems it is critical that you take every trading entry, adjust every stop, and close out every trade as and when your system says you should do

3. Never add to a losing trade

Averaging is Options could prove to be very dangerous as there is always time factor.

4. Don’t take too much risk

Risk associated in every Option call should be very low and well calculated before entering any trade.

5. Minimize all trading business costs

You should select your broker carefully and should be aware of all the cost associated with each trade.

6. Be well educated
Keep a track of borad meetings ,any possible major event in market Etc because they create huge effect on Option pricing