How to trade in options with same Win rate as in Futures?

General
1

I am currently doing Intraday and BTST trades in FnO stocks, and making considerable profit. I am trying to learn options, need help.

But I am not taking more than 1.5x leverage in FnO due to fear of losing all my money, If nuclear war or something happens.

I like the concept of option buying, as they give peace of mind in terms of maximum lose.

I want to do the same trade in options instead of FnO. For example, If my view is Reliance will go Up tomorrow, I currently buy Reliance future. But when I buy Reliance in options, I don’t make profit because

1.) Bid-ask spread, it is too much, and eats all my profit many times. If I can earn 1% return in FnO, I am unable to earn same proportion of return in options. Sensibull shows, If Reliance goes up by 1%, you can earn 10% using this option during Intraday, but I don’t actually, because of bid-ask spread or maybe some other factor, that I dont understand.

2.) Option price decrease because of decay (does not seem like a big deal)

2

Probably you should post the example of the trade which you took so that it can be decoded better…

its possible that you are choosing wrong strike price and hence though reliance indeed goes up, the option price doesnt go up as much…

2 Likes
3

If your looking for same return like futures there is another alternative available in options that is synthetic futures.

Synthetic futures are done by using options . If ur view is to market to go up then you buy ATM CE and Sell ATM PE… By doing this you can over theta which will be zero

If you feel like market is bearish then you Buy ATP Put and Sell ATM CE .

Pay of graph of synthetic future is same as Futures .

bid and Ask price are unavoidable in options no one can avoid it is like cost of business.

If u don’t want to do synthetic future there is another option.You can Buy deep ITM because theta decay of Deep ITM is very less but pay off graph not same as future.

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4

I will give exact example after Monday’s trading session, thank you.

1 Like
6

@RahulSharma95 all of what Laxman has shared or a bull call spread (when you are bullish).

  1. Simply buy 4-5 strikes in the money, since theta decay is lower at deeper ITM strikes.
  2. Buy a synthetic future(Buy ATM call and sell ATM put), this protects you from theta decay.
  3. Buy a call few strikes in the money and sell ATM(or near ATM) call.

good luck!

7

This is because the strategy you were using to trade in futures is not working with options. In order to earn from options you will have to make certain changes to your strategy and then work along.