ADJUSTING A LOSING TRADE

TO GET FREE OPTION TIPS FILL UP THE FORM GIVEN HERE>>>>
RISK MANAGEMENT
When you own a directional trade that is not working (i.e., the price of your underlying asset is moving in the wrong direction or too much time has passed), eventually you must do something to mitigate risk. The basic choices are: exit the entire position, reduce the size of the position, or make a trade that reduces risk Such trades are known as adjustments.
For example, an adjustment may be necessary when you sell a put spread and the stock price falls:
Bought 5 XYZ Jul 15 '16 80 puts
Sold     5 XYZ Jul 15 '16 90 puts
The stock was $96 when the trade was made, but now (two months prior to expiration day) XYZ is $91.
It is reasonable to be nervous about the future value of this position. The position is long (i.e., Delta is positive) and getting more positive (due to negative Gamma) as the price falls. You already are losing money and that loss will increase if the stock price continues to decline. It is time (or perhaps it is already past time) to do something about risk.
In this scenario, it may seem that the best strategy is to sell call spreads (to turn the position into an iron condor) to gain negative delta. It is true that this adjustment offsets a portion of your downside risk because if the market continues to fall, the call spread will lose value and provide some gains to offset the expanding loss from the original put trade. What makes call selling so attractive is that it provides positive theta, and all premium sellers love positive theta. Also, adjusting the put side in this scenario locks in a loss -- and traders hate doing that. It feels much better to sell calls so that the trader can make money from the adjustment, even though the entire position continues to bleed and little has been done to alleviate the amount of money at risk.
However, the primary attractiveness of selling call spreads as an adjustment is that it increases the potential reward. When your trade is underwater, it is tempting to make an adjustment that has the chance not only to recover the current loss, but to add additional profits. Please, ignore that temptation. 
When a trader is already long delta because he/she is short naked puts and the stock is falling, the same principle applies. I urge that trader not to sell calls or calls spreads as an adjustment method. It is far more effective to adjust the put position because that is where risk is.

THE RESERVE BANK OF INDIA SLASHED REPO RATE BY 25 BASIS

The Reserve Bank of India slashed repo rate (at which banks borrow money from the RBI) by 25 basis points but kept cash reserve ratio and statutory liquidity ratio unchanged.
 FOR TWO DAYS FREE TRIAL OF OPTION FILL UP THE FORM GIVEN HERE>>>>

DIVIDENDS AND COVERED CALL WRITING

EXERCISING A CALL OPTION FOR THE DIVIDEND

QUESTION

"In covered call writing, the ex-dividend date can be more important than the expiration date. If the call is exercised, there is no dividend for the covered call writer. It is possible to have a negative return."

 REPLY
When the call owner exercises and collects the dividend, you should NEVER have a negative return. If you discover that you have no profit (or very little profit), then you did not collect a sufficient premium when writing the call option. In other words, you made a serious error.
FOR EXAMPLE:

Stock is $52 per share and pays a $0.50 dividend.
Ex-dividend date comes before the call option -- the one that you sold -- expires.
Let's assume that

·         You write a call (any expiration month) with a $50 strike price

·         You are assigned an exercise notice and sell your shares at $50

·         You do not collect the dividend

Then - you still earn a profit anytime that you sell the call and collect a premium that is more than $2.00 (the option's intrinsic value) -- as long as you are eventually assigned an exercise notice.
It is a very big mistake to sell any option when there is no profit potential. Never depend on collecting the dividend when the option is significantly in the money.  Sure, you may collect the dividend, but do not count on doing so. The option sale -- all by itself -- must be enough to guarantee a profit if you are ever assigned an exercise notice. If the stock price declines and the option expires worthless, then no profit is guaranteed because there is risk of losing money with any strategy that involves stock ownership because it may undergo a large price decline.

RBI CUTS REPO RATE BY 0.25 % TO 6.50 %

The Reserve Bank of India slashed repo rate (at which banks borrow money from the RBI) by 25 basis points but kept cash reserve ratio and statutory liquidity ratio unchanged.

IRON CONDOR: PRE-TRADE CONSIDERATIONS

TO GET TWO DAYS FREE OPTION & FUTURE TIPS FILL UP THE FORM GIVEN HERE>>>>>
IRON CONDOR TRADING
Question from a reader: How can I discover the type of iron condor that is suitable for my personal comfort zone?
Reply: There are several items to consider when using this strategy. You will discover that there is no blueprint for an exact, rule-based position that suits your needs. You can afford to be flexible when trading the iron condor.
UNDERLYING
Diversification is important for any investor, and especially when selling premium (i.e., collecting cash for an option spread). If you prefer to trade individual stocks, I suggest owning four or five simultaneous positions.  
I prefer to trade index options because that eliminates the risk of trading individual stocks which are always susceptible to an unexpected news release.  Another benefit is that trading a single iron condor on an index makes it much easier to manage risk (i.e., adjust positions) -- if and when the market is undergoing a significant price change.

SBIN STRAP STRATEGY FOR RBI CREDIT POLICY

BUY 2 LOTS  210 CALL  @4

BUY 1 LOT 180  PUT    @3

Total investment=22000

Pay off table:

CASH-SECURED PUT OPTIONS

SELLING NAKED PUTS
Selling puts is not a high-risk strategy. It is no more risky than buying stock.
Despite everything you may have heard to the contrary, put selling is a strategy worthy of consideration by almost every investor who buys stock. The very bullish trader who expects to see a large upward change in the stock price represents the single class of investor who should not sell puts.
PRUDENCE
The so-called "prudent investor" is told that buying stocks is a good and conservative investment idea. That investor is also told that selling put options is far too risky. Let's compare two investors who make a trade today:
·         The stock buyer pays for the investment in three days, when the trade "settles." If the stock price moves higher, the trader earns a profit. If the stock price declines, the stockholder incurs a loss. Very straightforward and easy to understand.
·         The put seller collects cash upfront when making the sale. He/she puts up collateral (to meet the margin requirement) to guarantee his/her ability to pay for the stock -- if and when it becomes necessary. If the option expires worthless, the collateral is released and the trader keeps the cash premium as the profit.
In other words, the stock buyer pays for shares at the time of the trade and the put seller promises to pay for stock at a later date. They each have the same risk: If the stock price undergoes a steep decline, each loses money.  This is not a risky proposition for the put seller who understands that he must not sell more than one put for each 100 shares he is willing to own.
Selling too many puts is a risky proposition, but selling too many represents poor risk management skills by the trader. it is not a reflection on the prudence of the strategy.
The put seller agrees (a binding contract) to pay $30 (the strike price) for shares at a later date, but only if he is required to do so. He collects $100 (premium, or option price) for accepting this obligation.  If the stock rallies, both earn a profit. However, the stock holder's potential gain is unlimited while the put seller cannot earn more than the $100 premium that he collected.

OPTIONS FOR BUSY INVESTORS

MARCH 31, 2016
LAST DAY FOR HOLI OFFER..!!!!

This HOLI add colors of profit in ur trades....!!!!!

Buy any 3 packages equity/mcx @10000 PM.
 

OR any one package @ 10000 quarterly
 

To pay visit
 

wealthwishers.com
 

Call : 07225909997,08982086510

 
OPTION STRATEGIES FOR LONG-TERM INVESTORS
BOTH INVESTORS AND TRADERS CAN USE OPTIONS.
The generally accepted difference between investors and traders is that investors make portfolio changes far less often and that they have the time and patience to allow their investments to grow. In other words, investors are not interested in instant gratification whereas traders prefer to make a trade, collect a quick (a few minutes to perhaps a couple of weeks) profit and exit the position.
Traders seek stock-market profits by selling as soon as a profit target is met. They never get married to a position. Nor do they have loyalty to the company whose stock they own. They often ignore the nature of the company itself, relying on charts to make buy/sell decisions. Some traders own positions for as little as a few seconds, while others may wait as long as two months for a position to work. 
There is also another major difference. Trading is a full-time job because there is a continuous need to monitor positions and to make important decisions.
Investing is something that anyone can undertake. Don't misunderstand. It is not a simple process. Instead it requires that an investor finds the time to do the necessary work for making important decisions. Unless you want to pay someone to manage your portfolio by buying mutual funds (a poor choice), ETFs (a good choice) or hiring a financial advisor, the successful individual investor does his/her homework. 
INVESTORS tend to hold positions for years, decades, or even an entire lifetime. As a consequence, they make few investment decisions. Investor portfolios should be examined on a regular basis (at least yearly) with the goal of unloading stocks that no longer deserve a spot in the portfolio. Alas, that seldom happens and many buy and hold investors believe in holding forever.
Timing is not a big issue because paying a few cents more per share, has little effect on the long-term results.

LAST DAY FOR HOLI OFFER..!!!!

This HOLI add colors of profit in ur trades....!!!!!!!!

Buy any 3 packages equity/mcx @10000 PM.

OR

 Any one package @ 10000 quarterly

To pay visit

 

wealthwishers.com

Call : 07225909997,08982086510

THE IRON CONDOR TRADER'S MINDSET

HOW THE IRON CONDOR TRADER EARNS MONEY
Every option strategy comes with the possibility of earning a profit. There is also the possibility of losing money -- and that represents the risk of trading. Whenever you initiate a trade, you should have some expectation of the likelihood of incurring a loss when seeking the potential reward.
Most traders have a market bias -- they initiate a trade when expecting that the overall stock market (or at least the price of the individual stock being traded) will move higher or lower. Such traders adopt a bullish or bearish strategy.
Other traders have no specific bias. They look at the market in one of two ways:
·         They have no opinion on market direction and by default, adopt market-neutral strategies.
·         They expect a non-volatile, non-directional market and elect to adopt market-neutral strategies.
The iron condor is one such strategy.
Definitions
·         Bullish Strategy: Earns a profit for the trader when the market moves higher.
·         Bearish Strategy: Earns a profit when the market declines.
·         Market-neutral Strategy: Earns a profit when the market trades in a relatively narrow range and all rallies and declines are small.
There is one other important consideration for traders:
Bullish and bearish traders earn money from market movement; i.e., they correctly predict whether the market rises or falls.
Market-neutral traders earn money from the passage of time -- but only when rallies and declines are small enough that they do not generate a loss that is larger than the positive time decay. Ideally, the trader waits for Theta to work its magic. 
How Does a Trader Make Money from the Passage of Time?
Options are wasting assets, and (all else being equal) lose value every day. Theta measures the decay rate.
Traders who buy options must have their market opinions come true -- sooner rather than later -- or else the options bought will lose too much of their value while the trader holds onto the position and waits for his/her prediction to come true. 
Option sellers don't have that problem. They make money every day -- unless the underlying asset (stock, ETF, index) moves too far in the wrong direction. [Call sellers do not want the stock price to rally and put sellers do not want the stock price to fall.]
Iron Condors: Risk and Reward
Let's examine a typical iron condor.
Buy 1 INDX Jan 16 '15 1240 call
Sell 1 INDX Jan 16 '15 1230 call (These two options form the call spread; premium $0.95)
Buy 1 NDX  Jan 16 '15 1110 put
Sell 1 INDX Jan 16 '15 1120 put (These two options form the put spread; premium $1.05)
Let's assume that the premium collected is $2.00 per share, or $200 for one iron condor. 
The Iron Condor Trade
The losing situation: When the stock moves too near the strike price of one of the options that you sold, its price increases rapidly and the iron condor loses money. Sometimes there is a good offset: If enough time has passed, and if the time decay is large enough to offset the entire increase in value, you may still have a profitable position. 
When the trade is not working
If the index (INDX) price nears 1230 (the short call option) or 1120 (the short put option), the corresponding spread gains significant value and the whole iron condor position would cost more to exit than the $200 collected when the trade was originated. As a result, the position is losing money or is "underwater." 

HOW TO TRADE A SPREAD

THE BASICS
Options are special. They are unlike other investments because they were invented (circa 600 BC) as a tool for reducing and managing risk. In other words, one person (the option buyer) pays for the right to transfer a specific risk to the option seller. The seller charges a fee (premium) and agrees to take on that risk in return for the cash.
Think of put options as being similar to an insurance policy whereby an investor can guarantee the value of a specific investment by purchasing a put option. As a reminder the put owner has the right to sell the underlying asset at a specific price (the strike price) at any time before the put option expires, thereby eliminating any further loss when the stock price is below the strike. That is very similar to how an insurance policy works. (If your house burns to the ground, you can sell it to the insurance company for the insured sum.)
When dealing with call options, in return for paying a premium to buy the option, the buyer gains all upside movement (above the strike price).
The seller accepts the risk of losing a large sum if the stock price surges. For example, if you sell the right to buy 100 shares of a given stock at $50 per share to another investor, then you must deliver that stock if and when the call owner elects to exercise his/her rights. If that stock is trading at $70, you must buy stock at $70 and sell it to the call owner at $50. That is a loss of $2,000 (minus whatever sum you collected when selling the option).
THE SPREAD
it is possible to gain protection against losing a large (essentially unlimited) sum when selling options. The way to do that is to trade a spread, rather than just selling calls or puts. The spread is a hedged (risk-reducing) position. Let's see how it works.
In addition to selling the call option, per above, let's assume that you also buy a call option on the same underlying stock, with the same expiration, but with a strike price of $55 per share.