Ask me anything about trading options and options strategies

Hello,

My name is Abid.

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 :slight_smile:

Note: The thread will remain open until 16th January, Thursday.

Edit: Extended till 20th Jan Sunday on popular demand

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how one could approach option buying and implement the strategies in a way that can reduces the effects of theta decay? is there any practical solution?

I understand that completely, and I am option seller myself, I am just asking for different strategies and approaches one could apply to make money in option buying for the days when one is highly bullish/bearish in the markets

Debit spread or credit spread ? Which is best ?

Low IV debit
High IV crdit

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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

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Advices for people entering into Options ?

Started learning about Options using Sensibull Virtual Trade & Varsity and used Kite to trade on weekly options.
Made my first profit today after studying for about 3-4 weeks! :slight_smile:

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For weekly nifty options when to short Fri or mon and when to cover.And when to go long.

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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 ?

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How to conclude on Fii position in F&O daily data?
How can I predict index movement using option chain live data?

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When sensibull mobile app are coming?

9 to 5 job, less chances to use laptop or desktop only thing we have is mobile.

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Sir, just one thing, is it POSSIBLE to become wealthy by trading just options??

Hey Vishal,

  1. If you are trading Intraday, there is no Theta decay.
  2. 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 :slight_smile:

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In the long run, for catching average sized moves, credit spread.
In the short term, for catch big, spectacular one hit wonder moves, debit spread.

Credit Spread = High Probability of profit, Low reward / risk
Debit Spread = Low Probability of profit, High reward / risk

Basically high chance gives you low reward/ risk and vice versa. Bit of like life, isn’t it :slight_smile:

I have made a very detailed video on this - https://youtu.be/mZlbRFRAhDg

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Hey Abid,

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

Hey,

We will launch the following in a mobile app very soon

  1. Positions
  2. Easyoptions
  3. Strategies Wizard
  4. Advice

Will announce the dates soon. Glad to know you find us useful :slight_smile:

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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 :wink:

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 :slight_smile:

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Hey,

This is our team’s highest priority. If you have a friend who is an app developing stud, please refer him or her to us, and our app will come out better & faster

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Sir How can we understand call option is trading with high premiums.if call premium is high ,what info it gives.share knowlege the same for put option also.