Hey guys needs advice for a option trade going wrong


Hey guys, need advice.,
This is for naked call option selling…

When you have short call position in bank nifty and like today i.e. May 12th …at 2 pm it suddenly moved upwards …so cal premium were going higher and higher so you see MTM loss …what do you to fix it …you will book loss and close the position or you will adjust?

if you choose to adjust …how will you fix it?

Trying to save on the great PR Sundar’s ‘adjustment trade’ seminar cost :slight_smile:?

Not really…

Adjustment trade can be in many ways. To cap ur loss u may square off and immeciately buy a call option at same strike price when u book loss. This will work if bank nifty goes still further after u booked ur loss.

Or u can buy a cheap far OTM call option and wait to see movements.

Or u can simply write at still higher premium and keep booking small porofits as bank nifty fluctuates and comes down.

U can write another put if u are confident bank nifty going to remain high

But as i already told only few days back avoid option writing all together. It is not meant for retail investors and it will eat capital in event days

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But what about non event days? can retailers choose to stay away from event days and can make some money?
Also asking from an example…lets say I sold OTM put option for bank nifty …how do I hedge that naked sell put?( I am bulling but just in case ) its about expiry tomorrow.

U have sold put at 19000 lets say. So u have to buy put option at say 17500 . By hedging this , incase bank nifty closes at 19800 ur profit is
Premium collected for 19k writing put MINUS buy put option17500.

The profit is reduced as u have bought a farther OTM put for hedging.

If u do 100% hedging at same strike 19000 p&l will be zero.

Ok so is this called bear put spread ?

Basically selling strike of put will be less than the strike (OTM) and buy strike would be further less (in other words further OTM) correct?

also you said if u do 100% hedging PNL will be zero but why would someone do this at same strike? why waste brokerage …taxes …time and energy?

Also which tool/website you use to build option strategy …i.e. to check max loss …max profit etc.

Option Opstra

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:grinning: to be frank i dont do F&O. Only for knowledge purpose I read. Just an active investor.

Dont know why but my intuition wants to warn u. Never sell options no matter what. 99 times u may escape but that 1 time will prove fatal.

Thanks for your concern about me.
I appreciate your time and knowledge about options.