https://www.quora.com/What-is-option-trading
https://www.quora.com/What-is-a-good-rule-for-determining-the-strike-price-to-sell-a-put-option
selling option is good , because it come to zero value
https://www.quora.com/topic/Options-Trading
https://www.quora.com/topic/Options-Trading
https://www.quora.com/What-is-a-good-rule-for-determining-the-strike-price-to-sell-a-put-option
Let's assume that you are gung-ho on a stock and expect it to rise from Rs 90 per share to Rs 125 in about three months. In the futures market, it is trading at Rs 100. If the contract size is 1,000 and margin requirement is 20%, you have to keep Rs 20,000 as security (which is later returned) for buying the contract.
If your prediction comes true, you make a profit of Rs 25 on each share or Rs 25,000. If you had operated in the spot market, you may have been able to buy just 222 shares of the scrip for Rs 20,000 and earned just Rs 7,750 (See Profit Potential). An alternative would be to buy a call option for the stock and exercise it when the share crosses your target.
Let's now assume that you expect a particular share trading at Rs 120 per share and expect it to decline to Rs 80. You place a put option or buy the right to sell 100 shares of this stock after a month.
At a strike rate of Rs 100 for a premium of Rs 5 per share, your investment comes to Rs 500. If the share price actually declines to Rs 80, you buy the share from the cash market and sell it to the option writer for Rs 100. As you have paid a premium of Rs 5 per share, your profit per share will be Rs 15. For 100 shares, your profit will be Rs 1,500 (Rs 2000 less Rs 500). You lose just Rs 500 if the shares do not decline
ramadevi. quora
I am a Chartered Market Technician (USA) and backtested atleast 1000+ technical Strategies. Now some of the things we learn is pure junk and needs to removed from our heads.
So i have learned various strategies from Various traders.
- 2004–2009- I was a Trader (student) and went bankrupt a couple of times. That’s was my biggest learning curve, i understood that in Financial Market its what not to do that is more important than what to do. (Risk Management)
- 2010- Jp Morgan -White Guy who would wear a hat to office at JP Morgan and always a yellow Tie(London). He had 10 coffees a day. He waited for Black Swans, he was always long volatility. He would buy deep out of the money options and hold it in various markets around the globe. (THATS IT) He believed that markets always underestimated volatility, and believe me i have seen his equity curve, it was unbelievably amazing. In last 10 years, he had only 4 losing Quarters and that he had never had a negative return. The trick is to diversify, because you will be wrong in 8 out of 10 trades as the options expire worthless, but the 2 trades you make money in, that would be more than sufficient
- 2011 - MF Global - I have already shared this strategy on Qoura and i personally am 100% confident on this one cause i have used it for years. The one which i used to personally use was TRADING THE GAP. I have BackTested this strategy in various markets including the Nifty futures stocks, S&P 500 and FTSE 100.
Since i used it a lot in Indian Stock Markets, i will be using Indian data for this for the Answer. The Idea is to find out companies that will have a trend day or a large candle either Black (down) or White (up)
We are Hunting for a Trend Day, which is a very recurring pattern in the Stock Market. This is what a trend day looks like.
- 9.15 a.m.–9.25 a.m. - Find Stocks that Have opened with a GAP up or Down of more than 2%. Out of 200 FNO stocks, you have cut down your selection criteria to 3–4 stock. There is some news in this stock, or some large investor wants to buy large quantities in this stock and hence the GAP.
- 9.25 a.m–9.30a.m. - There will be 3 data point available 1) Volume. 2)High 3) Low. Volume has to be higher than previous days volume in 10–15 mins. Now keep a buying Stop Loss above the days High. Example yesterday stock A closed at 100, today it opened at 103 and in the first 10 mins made a low at 102.55 and High of 103.5. As soon as it crosses its 15 minute high of 103.5 buy it.
- 9.30am–3.30pm - Once the Buy order is triggered, Keep days low, or weighted average price (available on all trading software like zerodha, Sharekhan etc for free) as your Stop Loss. Keep Riding the stock until its 3.15 or your trailing stop loss is triggered.
Thats it, Very easy strategy with mind blowing results . This works on the Reverse Side as well when the stock opens down 2%, thought the results are better if you do it long only.
We have done a blacktest of this strategy taking for 1,000 trades and i have used it extensively when i was a trader.
The Results for the long only data were as follows
Trade Win% after Transaction Cost- 48%
Trade Loss% after Transaction Cost- 52%
Profit per Trade - 2.3%
Loss Per Trade- 0.7%
You have a automated Stop loss which is your weighted average price, as price of the stock increases during the day, so does your weighted average price (Stop loss). Use this system for a month, i never faced a draw down of more than 10% in my trading career.
You might be thinking if i was such a good trader, why did i move to start my company Stallion Asset which is into Long term investments?
This Strategy works only if you have less than 20–30 Lakhs rupees, because after that you start affected the volume of the stock, the stoploss doesn’t get triggered properly.
Incase you have any doubts on the Strategy, feel free to comment below.
Stallion Asset is an SEBI Registered (INH000002582) Independent Equity Advisory Company backed by experts who have huge experience in wealth creation in the Indian Stock Market. We are Specialist in buying high quality midcap companies that are often ignored by the analyst community. We have delivered 288% in last 3 years, and consistently created wealth for our clients.
amit quora
