Reliance call options

F&O
1

Hi everyone!

I have an existing position for RELIANCE MAY 1420CE which was bought at 40 premium & current price is 31 & RELIANCE MAY 1500 @ Bought at the 12/-and current price is 7. Only 3 days remained on expiry. I am seeking for valuable suggestions about trades I’ve taken if the price of reliance will go up tomorrow slightly or consolidate in limited price zone as existing price, what will be the effect on premiums as I cannot afford if both premiums expire worthlessly

2

If you can’t afford a loss then why you did you initiated trade with out any stop loss or any hedge? isn’t your own fault?

3

I know i may have to afford loss , but my que is if underlying strike price remained near ATM say 1420? what is probabilty to of option premium price effect tomorrow (2 days before expiry)or wednesday . Will theta works very fast in last 3 days?

4

keep a SL always. If reliance dorsnt go up Tuesday exit drom the option with loss

5

Yes, it does and eat into time value. Also no one can predict accurately what may happen, it’s just a guess on some macros/fundamentals/technicals etc.

6

Theta has eroded a lot of premium in it. Do not trade what you cannot afford to lose.
If it helps you sleep better - there is a possibility of RELIANCE moving up to 1450-1460 or even 1495 levels in the early 15/30 minutes of trade on May26. But the possible up move may be temporary.

7

Sir when you buy otm option the underlying should move like rocket in your direction otherwise you loose premium crazyly

8

This response is like add insult to an injury @nithin
@siva you have to remember when you were a child and you were also learning.
Some people learn from their own mistakes rather others.
Remember this is supposed to be a community and we are suppose to be HEALTHY community member.

1 Like
9

Hey, I am answering this as an individual, he should know that it is a mistake to trade with out a stop loss or should not trade if one can’t afford a loss, that is the point I want to convey strongly to him, I hope that is okay.

1 Like
10

The questions first -

  • Why did you buy these calls? What made you feel bullish about Reliance.
  • If you are bullish about Reliance, what made you feel that price will go up before May expiry?
  • Was it just a gamble or there was some logic behind you being bullish about Reliance.
  • What % of your portfolio did you buy these options with since you are saying you can’t afford these premiums expiring worthless?

If it was just a gut feel trade (gamble) and you bought these calls and then bought some more because the first one started making a loss, two most important rules to follow when trading options using gut (gamble)

  1. Have a stoploss always.
  2. Buy options with only money you can afford to lose. Buying options is almost like buying lottery tickets. If you had Rs 1lk with you, how much of lottery tickets will you buy?

If it wasn’t a gamble and you are bullish Reliance for some other reason, it is best to buy longer dated options. You will give yourself more chance for the options to make some money if your bullish idea is right. But even then make sure to buy options only with money you can afford to lose.

What can you do with your calls?
It is a gamble, you have to take that decision. But make sure to have some stoploss. Premiums in the last 3 days can erode really quickly.

2 Likes
11

People don’t even think about loss while initiating a trade & that’s the biggest reason why they loose. I am unable to understand how people buy option with the money they can’t afford to loose & when the probability is too high against them.

12

they should use spreads to minimize losses