Long Term options writing

F&O
1

Hi all,
i am trading for while,
have got issue can anyone guide me on this issue.
i have sold nifty 25000ce on dec series of 2024 for 140rs,
now premium increase to 565rs, almost 4 times.
i have get mail for margin call.

what shall i do any tips…/
when will required margin will reduces, now ard 2.05lakhs/ lot to sell…/

2

If you are convinced that nifty won’t cross 25k by dec, fund your MTM losses by bringing in extra cash or hedge this by buying some nifty OTM calls

Is the quantity huge?

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3

ard 70% confident that 25k CE is still long way for 10months ,
but now ard 70k MTM loss (4 lots),
not much option to bring extra cash, if hedge with 27k CE will need more cash ard 170rs/ lot(8.5k),
26k ard 320/lot(16k).

need to know when will margin amount come down…/
now 2lakhs/lot margin money…/

4

If you have already got the margin call, you may have to add funds. The broker may be compelled to square off the position if the funds are not added. Talk to their customer care or raise a support ticket for clarity.

For CE premiums to fall Nifty50 (underlying) has to drop or stay flat for a while.

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5

Hi, arrange money for 30 days, if the contract is less than 9 months, the margin will drop significantly

Or just exit 1 lot for now and then add back after march

2 Likes
6

Fill in the MTM margin. By the way , I’m curious to know what made you sell such deep OTM call ?

3 Likes
7

It probably appeared safe and easy money to the eyes :sweat_smile:

I have done something similar in my starting years too, the dec options move too much, often beyond our comprehension due to the time left

8

Most people follow this because no worries of gapup and gap downs, some people do calendar spread by buying long term option and selling monthly contract.

9

dont forget that there is a huge event of Elections in between, though the results are known to everyone, but it can may move index to further 10-15%

2 Likes
10

Exit, because it is dangerous before election.

11

R u using kite for this? I don’t think kite allows nowadays to buy such otm for long-term. Only intraday. So I don’t think ull be able to hedge by buying 27k ce. Or m i wrong ?!

12

to bring down your margin requirements pledge your holdings, you can check with your broker how much leverage will they give in FnO trades and what will be the haircut

13

ok thanks, i try to hold for next 30 days…/

14

yes, like @Krishnakumar said, looks like safe and easy money…/

15

yes,but can able to hedge my position by buying 27kCE…/

16

YA YA, how many years are you trading…/ just curious.

17

Entered March 2020. Trading since 2021. Profitable

18

wow… super … good job…

selling or buying…/

any books do u read abt options,
how u learn about it …/

19

Selling
Zerodha varsity, I trade something similar to what shreyas bandi does

How I learnt? I paid 4L in charges and 3 yrs of my time practising with a smaller capital :sweat_smile:

I’m very conservative with my thoughts and expectations and hence took a very long time before I started scaling to trade with higher capital

Some advices

  1. Trade with 100% collateral, don’t care about the returns you make. Equity will continue growing anyway at 12-15% over longer time. Your only job is to make sure you don’t blow up.
  2. Make sure you don’t lose significant money on 1 day. Max loss 2-3% at the very worst days
  3. Keep expectations low, the rewards will surprise you surely. I aim for 20 CAGR (equity + trading) but ended up making close to 40% this year.
  4. Maintain a journal to review your progress how it goes
  5. Don’t worry about charges, zerodha is going to eat a lot of your money, but you can be happy since they are doing lot of good stuffs via rainmatter :rofl: :rofl:
  6. Take enough time to scale, even after 3 yrs I have only pledged 50% of the overall portfolio. It takes significant time to get used to seeing the mtm fluctuations and not take decisions hastily

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This is my first year where I made decent money
2021-2022 ended some 10k profits ( paid some 1L charges)
2022-2023 ended minor loss of 20k (paid some 1.5L charges)
2023-2024 is in decent profits not huge like what you see on twitter, but this is satisfactory for me personally

Remember : If you make 1% profit at the end of the year, you beat 89% of the traders. If you make 8%, you are better than 95% of the traders. If you make 20% you outperformed 97% of the population who trades :slight_smile:

Long post, hope what I said makes some difference in the pov of how you see markets / trading

1 Like
20

really thanks for your view and idea

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