All the strike prices are in loss

Trading
1

Dear Friends,

Please clarify me regarding this : Today after some initial gains, Nifty 50 made downward movement.
So, conceptually buying the put options should be profitable. But i saw a strange pattern : all the strikes
whether Put or Call were in loss. I want to know the reason. Below is the screenshot. Please help me friends.
image

2

  1. Firstly, all options are overpriced from day 1 of April. Calls more than Puts ofcourse. So anyday you dont have a big change in close price, all options will go down because finally most of them have to be ZERO.

  2. In last 2 weeks of the month, all options decay fast. So again time decay works faster in this second half. Only 0.3% downfall in index means time decay may erode more than the gain due to downfall

  3. Tomorrow Friday is holiday. So option buyers may have exited because they dont want to go through 3 days of time decay. Hence price goes down for all options.

3

  1. Time decay - only 4 working days left for expiry

  2. OTM put options - the put options in your watchlist are OTM options. Especially 11600 and 11550 are far OTM options considering the contract will expire in 4 days

4

Hello @Newbie420 : I have some doubts… Referring to your point #1, the april that you mention means
every April or just this April.
2. When time decay works faster in the last 2 weeks of a month, in such case what should be the strategy
one should follow to do trading during last 2 weeks of the month ?

5

Monthly contract expires on the last Thursday of every month.

For April 2019, monthly contract expiry date is 25th April 2019.

These contracts will expire in 4 trading session from today not 2 weeks.

6

Thanks @AnandaRaj yes you are correct. But please let me know how to trade in this duration

1 Like
7

Dont , become option seller or if you really wanna be buyer do in the money options which are not overpriced.

1 Like
8

Do intraday or trade next month contracts

9
  1. How can there be same strategy for April every year? Just in March we saw huge move. So it made bulls psycho and the call premiums were so overpriced on April 1st.

Also election is coming near, so VIX increases and call/put premiums both generally go higher. And since FII already done its buying in March, and no new cues in market, index will do timepass like this only.

  1. Answered above
10

Common @blazesprings VIX is at HIGH above 22 hence all OPTIONS are OVER PRICED this is not the time to buy OPTION.

TO KNOW how to identify how much OPTION IS Over Priced & how Options Pricing works Plz Exploit Zerodha Varsity, Google search, etc.

NO FIX strategy works in MKT we have to adjust our strategies time to time and all FUND manages do the same.

@Newbie420 has already explain to you in RIGHT manner.

:slight_smile:

11

@Newbie420 @lotus : Bro, what should be the value of India VIX to indicate normal option pricing
and what is the threshold value beyond which it indicates overpricing ?

12

Expiry week is no different than other weeks. Only problem is premium gets eaten very fast. Carry your positions only if you are confident and ready to accept the risk.

1 Like
13

Normal is 12, Above 20 is very high

You can check VIX historical chart

1 Like
14

Thanks for the info but bro what is the normal value range ?

15

This happens when you trade with half baked knowledge…you need to read a lot for at least a year to do options trading.