Honestly I am very conflicted on this one. We decided to not take up back testing. This is because:
I am told by people who trade options in hedge funds that backtesting on options with medium to long term horizon is not as useful as people think it is. These are people who know what they are talking about, and I chose to trust them.
As retailers, it is very tough to stick to backtested systems, maintaining the exact position size, delta etc.
Finally, very few retail investors use backtested options systems.
We will watch backtesting space though for any options opportunities.
Hey Abid…Sensibull has been doing a great job.Thanks for the platform.
OI Charts can be made even more easier , at times when I go near the bar it doesn’t show what price the Call OI or Put OI is accumulated at.
Can you please make more awareness on options trading using USD INR…as of now I could just a video ( still the best I have seen) …more would be really great. ( Can even recommended under free advice )
I love the advise part and follow interestingly however for retailers it is absolutely difficult to trade these many positions with such a hefty margins since these are two legs position.
Can you try to minimize positions by fine tuning by probably trying to improve the winning ratio.
You could also try to put more index positions which helps retailers to go with less margins.
In my opinion strategies on advice are structured with high winning probability hence the high winning percentage. If this is compromised the win rates will decrease
@Sensibull I know people recommend to trade in Options using some strategies such as strangle, straddle etc. I want to know for a trader who basically play in weekly expiry using theta decay - from risk perspective what’s the difference between short strangle and short naked otm? What kind of strategies (naked with SL vs others) are recommended for traders who trades in weekly expiry options?
I am strongly in support of taking options trading to everyone but don’t you think that the lot size constraint will be a problem for people who are just getting started ?
Eg: I have 3l capital with 3k exposure per trade and 5 trade at a time, making 5% exposure max.
Please help on stock/indices selection process?
What should I rely on, Indicators, IV, historic data, OI, OC, what what what??? what should be my selection procedure?
Are there any specific techinals I should look? or price movement?
What is the home work i should do a night before I take the trade?
My priority of trading, Intraday, swing, positional(strategy) and Investment(hopefully someday, somewhere… Please keep in mind while answering the question.
Market is trending up and the call price are increasing exponentially but put price is not coming down in similar proportion .
Market is trending up and the call price are increasing linearly and also put prices are decreasing fairly compensating the increase in the call price
Question : Is there a way to know which of the above two situation is existing (for eg using Iv to know which of above two situation the market is in )?
Also when these two situation occurs ? (e.g. 1st one is implemented using Algos by market makers to always keep the price of straddle above minimum limit , 2nd one is when algos are not involved in options )
Yes, In India auto execution is not allowed for retailers by regulators, they define Auto trading as where order is generated and executed without manual intervention, so if order is generated based on some signals and before it is released to exchanges, human intervention is required.
The regulatory framework about margins in India is about to undergo a huge change. This I believe will usher in an era of unprecedented retail participation in the derivative markets
You can, as long as that limit price is available in the market.
But I would not recommend it. Most experienced traders avoid trading the open. It is a complete crapshoot. And option prices can be anywhere on options. So unless you are fairly experienced, and very sure of what you are doing, do not trade the open.
If you are trading short time frame, here is what I would do
Look at candlesticks and volume charts of F&O stocks
Volume and volume profile matters a lot
Short list some three things you will follow for deciding entry - Can be moving averages, candles etc (which is what I use)
Look at OI, general direction of the index etc only as an additional data point. OI is never a good standalone thing, especially in stocks. Underlying volume is the king here.
Enter if there is an entry by way of confirmation of a support or resistance, which is confirmed by price action (big volume candles, signals, wicks, etc)
USDINR is a good entry point for beginners. Bank nifty is the next cheapest alternative. Single stocks are pricy. But if the margining systems in India are going to change soon, this would not matter. You can do spreads for real cheap. Let us hope that happens
Directional
If you want directional trading, go for the strike with the highest delta, that is a deep in the money strike. The only catch is liquidity, Usually multiples of 500 are liquid.
IV play
In this case you are betting the IV will fall. So go for the strike with the highest Vega. Vega is a measure of how much the option price will change with the change in IV. This is usually the ATM strike
Theta
Trick heading. There is no Theta intraday
On a serious note, there is some Theta intraday on the expiry day, but not really worth playing that game. I like playing expiry with sime idea of support and resistance and shorting options directionally. Example: If I think BNF wont go above 32500, I will sell 32500 CE
