Agenda of Live Session on Option Strategies and Bank Nifty Weekly Expiry Trading Trick
Agenda:
1) Key Points
2) Brief overview about previous session
3) PCR – Intraday analysis
4) Max Pain – More info
5) Option Selling – Weekly income – Intra/Positional
6) Option Selling – Monthly income
7) Payoff generator
8) Option buying – BNF Weekly expiry
9) Option Hybrid strategies
10) Assignments
All the links used as part of the session is available in the PPT.
Download the PPT from here: https://drive.google.com/open?id=1W1PVEn5y09hUWBs7p6ySJD-oGULFTbgS
Download sample assignment report:
https://drive.google.com/open?id=1ZBpYCLpr-dbm5EYkkPtLDkc59Jyu65pW
Download options pain calculator:
https://drive.google.com/open?id=1z02Xt8Xq887Ok2CY9RNwgoLw35zBB7ZY
Option Trading Mistakes that you should avoid:
Lack of understanding options: Many traders jump into option trading without really understanding the reasons behind the movement of options or the maths behind it. Little attention is paid to details like how much does an option move with respect to the underlying share or index, the Greeks that are used for calculation of option prices. Generally few traders know which strike price will offer the best risk reward trading opportunity is case of a small move or large ones.
Going for Jackpots: The beauty of trading in options on Expiry is that you enter in a highly leveraged position with a limited downside risk scenario as the premium paid is the maximum loss which is also cheapest due to almost negligible time\other values in option premium. This may look like a jackpot, but it is like a lottery. You will never win at the end.!
Buying out-of-the-money options: Lack of understanding options results in retail traders buying options which are out of the money for the simple reason that they are cheap. An occasional win trade results in the trader getting fixated to buying out of the money options. In most cases even when the trader is right in his trade he loses money in the out-of-the-money trade since it requires a very sharp and fast move for these options to become profitable. It has been found out that trading in out of the money options is one of the biggest reasons for option trader loses.
Not having an exit plan: Traders lose money because they do not know when to exit from an option position even if they are right. The fact that holding on to a position as time passes, erodes the value of the option is rarely understood. Similarly since the amount involved in options is small traders do not trigger the stop losses. They tend to hold to the trade in the hope that a move in their direction will result in a profitable exit. Ones an option goes out of the money as the underlying stock or index moves away from it, it would require a big move for it to come back to its breakeven level.
No clue of an event calendar: Option prices tend to over-react when an event is approaching. Investors read the rising value in options as a sign of a big move in its direction.
Writing options without proper risk management: Many times novice trader tries to behave like a professional trader and gets in the act of writing option where returns are limited while risk is unlimited. But he imitates the pro only partially. While a professional trader is either properly hedged in his position or keeps an iron tight risk management system of stop losses in case of a move against his position, a retail trader leaves his option writing position open. It just takes one wrong trade in this direction to wipe out months of gains for the trader.
Lack of understanding of time decay: Another big factor that plays against a retail trader is lack of understanding of time decay on option prices. For as option price to rise the underlying stock or index needs a move in line with the option bet and fast. A grinding move plays against the buyer of an option. As time passes options lose value faster. Many retail traders hold on to their trade or take new bets close to the expiry of the market, because option prices are cheaper during this period. But most trades close to the expiry period turn out to be losing ones, unfortunately a novice trader holds on to his position since the amount involved is small. It’s these seemingly small loses are what cause the most damage to a novice trader.
Need more information on option trading? Watch our YouTube videos at https://www.youtube.com/c/MarketSecrets to learn how to trade options & how to use Max Pain data to take positions.
Agenda:
1) Key Points
2) Brief overview about previous session
3) PCR – Intraday analysis
4) Max Pain – More info
5) Option Selling – Weekly income – Intra/Positional
6) Option Selling – Monthly income
7) Payoff generator
8) Option buying – BNF Weekly expiry
9) Option Hybrid strategies
10) Assignments
All the links used as part of the session is available in the PPT.
Download the PPT from here: https://drive.google.com/open?id=1W1PVEn5y09hUWBs7p6ySJD-oGULFTbgS
Download sample assignment report:
https://drive.google.com/open?id=1ZBpYCLpr-dbm5EYkkPtLDkc59Jyu65pW
Download options pain calculator:
https://drive.google.com/open?id=1z02Xt8Xq887Ok2CY9RNwgoLw35zBB7ZY
Option Trading Mistakes that you should avoid:
Lack of understanding options: Many traders jump into option trading without really understanding the reasons behind the movement of options or the maths behind it. Little attention is paid to details like how much does an option move with respect to the underlying share or index, the Greeks that are used for calculation of option prices. Generally few traders know which strike price will offer the best risk reward trading opportunity is case of a small move or large ones.
Going for Jackpots: The beauty of trading in options on Expiry is that you enter in a highly leveraged position with a limited downside risk scenario as the premium paid is the maximum loss which is also cheapest due to almost negligible time\other values in option premium. This may look like a jackpot, but it is like a lottery. You will never win at the end.!
Buying out-of-the-money options: Lack of understanding options results in retail traders buying options which are out of the money for the simple reason that they are cheap. An occasional win trade results in the trader getting fixated to buying out of the money options. In most cases even when the trader is right in his trade he loses money in the out-of-the-money trade since it requires a very sharp and fast move for these options to become profitable. It has been found out that trading in out of the money options is one of the biggest reasons for option trader loses.
Not having an exit plan: Traders lose money because they do not know when to exit from an option position even if they are right. The fact that holding on to a position as time passes, erodes the value of the option is rarely understood. Similarly since the amount involved in options is small traders do not trigger the stop losses. They tend to hold to the trade in the hope that a move in their direction will result in a profitable exit. Ones an option goes out of the money as the underlying stock or index moves away from it, it would require a big move for it to come back to its breakeven level.
No clue of an event calendar: Option prices tend to over-react when an event is approaching. Investors read the rising value in options as a sign of a big move in its direction.
Writing options without proper risk management: Many times novice trader tries to behave like a professional trader and gets in the act of writing option where returns are limited while risk is unlimited. But he imitates the pro only partially. While a professional trader is either properly hedged in his position or keeps an iron tight risk management system of stop losses in case of a move against his position, a retail trader leaves his option writing position open. It just takes one wrong trade in this direction to wipe out months of gains for the trader.
Lack of understanding of time decay: Another big factor that plays against a retail trader is lack of understanding of time decay on option prices. For as option price to rise the underlying stock or index needs a move in line with the option bet and fast. A grinding move plays against the buyer of an option. As time passes options lose value faster. Many retail traders hold on to their trade or take new bets close to the expiry of the market, because option prices are cheaper during this period. But most trades close to the expiry period turn out to be losing ones, unfortunately a novice trader holds on to his position since the amount involved is small. It’s these seemingly small loses are what cause the most damage to a novice trader.
Need more information on option trading? Watch our YouTube videos at https://www.youtube.com/c/MarketSecrets to learn how to trade options & how to use Max Pain data to take positions.
Need help in becoming a professional and an independent trader? Want to trade options like a Pro? Then, Contact us at https://t.me/MarketSecretsTeam through telegram or Email us at marketsecretsrevealed@gmail.com
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