These days my team and I are building Sensibull, which aims to take options trading to everyone. I strongly believe that with the right tools, proper risk management, and discipline, anyone can trade options!
I was an Options Trader practically all my working life. I have traded options equity, FX and Interest Rate options with ICICI Bank, IIFL etc. I studied Computer Science from NIT, Calicut, and PGDM from IIMA.
I largely (rightly or wrongly) believe I know a thing or two about option math and practice. Feel free to ask me anything
Note: The thread will remain open until 16th January, Thursday.
Edit: Extended till 20th Jan Sunday on popular demand
Yep, that’s true. But there are professional gamblers as well who win big sometimes and lose little sometimes. Most of the time they fold and playing only when risk-reward favours them with optimum bet sizing .Overall they are in big profit.
Also, your statement presumes that a person has to be an option buyer all the time. If you carry options all along for a long time, yes you risk to lose often. But you can choose the timing of buying your options. And that is the biggest advantage to the buyers compared to sellers. Sellers need to be short for a number of days to maximize theta decay. And that’s a risky proposition.
This is a false statement. Construct your sentences properly if you meant something else.
Also, Option buying can be a loss making method in the long run but so is option selling.
It’s the mix of both in required amount that can protect your capital apart from your skills
How to get a feel of greeks by looking at the option price? I have heard few experts saying that the greeks are factored in the option pricing so they can select appropriate strike price by looking at the option price. This is in reference to weekly index options. Will appreciate if you can point in the right direction. Thanks!
BTW - Love the EasyOptions part in Sensibull - It should have more instruments. Also it would be great if the target date of the view can be customised instead of the next expiry date. Is that possible to implement? Would like to know your thoughts.
I’ve been studying options from varsity, online videos and now Sensibull. I’m an options buyer till now. I’ve made 30-40% ROI in a single day many times but somehow after that I’m finding myself in loss because of only one trade.
Most of the time the mistake was due to greed and over trading. I’m very confident about my trade but it’s just the one trade that wipes everything.
I want your suggestion whether I stick with buying or should go to selling.
Also is options buying profitable in long term ?
If you are trading Intraday, there is no Theta decay.
If you are trading Low Theta options, there is no Theta decay - Which is deep ITM options. They were earlier unattractive because of STT and the illiquidity because of STT trap. Now you can trade them easily. To give some more detail, the Nifty 12350 put was available at 110 when Nifty was at 12250, with two days to go on Weekly expiry. So you can buy that and play direction
General meta, you can trade ITM option on weeklies which is about 100 point ITM with very little Theta impact. It is a great replacement for futures. The best part is it has an inbuilt stoploss of 100 odd rs
Your site is awesome and was very useful to me. I am trader who major monitors via mobile. When are you coming with mobile app… What irritates me is to login in mobile browsers to view kite and sensible both…
Kindly let me know when is you app coming ready to use beta version also
Can you create wealth by trading options? Yes. Can you be wealthy by trading options? No.
Systematic options selling in an inefficient market like India can give you long term Theta gains. At least that is what we believe. Otherwise we would not bother with building the platform, honestly
Here is the short story. Assume that you know how to get a trade right 6/10 times. And you sell options to execute your view. You will make money on your direction 6 times. On some occasions even when the direction is slightly wrong, you will make money on Theta. If you equate the POP (Probability of Profit) of an OTM sell option at 60% you will lose money if you get both direction and time value wrong. Which has like a 0.4*0.4 = 0.16 probability. That means there is an 84% win rate.
Okay, that math was oversimplified BS, but you get the meta
Hai Abid Dear,
I have read and heard that algo trading is best in market, many are successful using algo platforms even for options trading where a retail trading like me will not be able to code the same. Like streak, will be sensibul developing a platform for automated options trading strategies without coding from user end? Then sensibul will be the most successful platform for retail investors like us!! Hope you will reply and thanks a lot and lots of love to sensibul team for always trying to make retail investors be in profit
This reminds me of an incident when I was a first year trader in ICICI Bank. It was one of my first poker nights with the regular trading gang, and my then boss Sravan told me, "Dude, just one advice. Fold very very often."
Much like poker, one of the most important things to do in trading is to be super selective of trades. The less you trade, the more high quality your trades will become. If you trade random ideas, or marginal weak trades, then you will lose capital. Also, when the right trade comes along, you will be stuck in the wrong trade. Kind of sounds like dating, right?
And much like relationships, you and trading should have time away from each other. Take frequent breaks, and you will see the overall quality of your trades will skyrocket.