Intraday Trading - Expiry Week

[silentbull]

Hi
I am a beginner in F&O.

Yesterday I did a intraday trading of BANKNIFTY expiring on 25th by doing a

Sell CE and buy CE of the same strike price. I got around 1k profit.

1. Firstly, is it ok to do intraday trading during expiry week as I read in some blogs it is not advisable or not allowed?

2. I did it only for testing with minimum lot of 5 for learning . i assume as it is intraday all the positions are squared off yesterday and doesn’t have any effect since the expiry is today.

3. I read Selling CE might incur unlimited lossess. I guess it doesn’t matter since it is intraday. Please let me know

Please let me know whether I need to worry as the expiry is today and will i be getting any loss .

[ShubhS9]

@silentbull

Firstly, is it ok to do intraday trading during expiry week as I read in some blogs it is not advisable or not allowed?

Nothing like that. You can do Intraday trading in Options in expiry week as well, though stick to Index Options as they are liquid and don’t have physical delivery obligations.

@silentbull

I did it only for testing with minimum lot of 5 for learning . i assume as it is intraday all the positions are squared off yesterday and doesn’t have any effect since the expiry is today.

All Intraday positions are squared-off on same day and have no effect the next day.

@silentbull

I read Selling CE might incur unlimited lossess. I guess it doesn’t matter since it is intraday. Please let me know

This is true. Be it Intraday or Positional, Selling Options be it CE or PE carry unlimited risk as there is no limit to how much their price can rise. In Intraday you can use Stop-Loss to limit your losses, or you can hedge your naked Short Position by Buying option few strikes away from your short position.

@silentbull

Please let me know whether I need to worry as the expiry is today and will i be getting any loss .

You don’t have to worry about anything.

Give this module a read to know more about Options.

[silentbull]

@ShubhS9

This is true. Be it Intraday or Positional, Selling Options be it CE or PE carry unlimited risk as there is no limit to how much their price can rise. In Intraday you can use Stop-Loss to limit your losses, or you can hedge your naked Short Position by Buying option few strikes away from your short position.

Hi
Are you telling me that even during intraday Selling options of CE will incur unlimited risk and loss. If i have squared off, then there is no risk isn’t?

[ShubhS9]

If your naked Short Position isn’t hedged or you haven’t put Stoploss, even in Intraday there is change for unlimited losses.

Once you square-off your position there is no risk.

[silentbull]

Thanks ShubhS9.

I don’t know what is naked short position. But I did a trade on options

Sell BANKNIFTY CE 22500 at 160 price for 320 Qty

Buy BANKNIFTY CE22500 at 145 price for 320 Qty.

Hope I am doing this correctly and have no loss as it is intrday. Please confirm?

Out of interest, in the above scenario, if i don’t square, it will still end up auto square by 3:00. So, can you explain me how i will incur unlimited lossess and if so how much roughly based on the above figure.

Just trying to be cautious in future trades.

[ShubhS9]

@silentbull

I don’t know what is naked short position. But I did a trade on options

You have long way to go in learning Options, I’d suggest you to first get proper understanding about Options and then trade, if you trade without proper knowledge you will blow your whole capital. So first learn, then trade. You can start on Varsity.

@silentbull

if i don’t square, it will still end up auto square by 3:00.

If it is MIS or CO order, your open position will be squared-off by 3:25 PM.