Hi All
This is my first post. As a new trader with 6 months in options buying, I have seen a video where people are selling far OTMs for shares which doesn’t have much movement in a month (±10%). Can someone recommend which shares are good for option selling which can fetch good profit with low volatility. Few in my mind are Reliance, Airtel, PNB, Titan,Axis Bank.
Inputs appreciated.
Thanks
Sumit
There is no one stock that can be recommended. The choice of stocks to trade should come from independent analysis of various factors like Theta decay, High IVR or IVP options, liquidity risks in options chain etc. You may use tools like Opstra to back test your strategies.
“Doesn’t have much movement” can be one approach among many others …
Whatever you choose, do make sure not to assume that it will stay like past only. Sometimes, it might shift to high volatility and losses should be acceptable. Best to test past data to understand this.
And trade small initially.
Too many people with very less experience start with too much money and then later come here dejected with reports of losing lots of money. Just search the forum and you will find many.
Depending too much on youtube might be harmful. Its fine as a source of idea, but we need to verify it ourselves. Anyone can say anything in yt, and groups of people can do stupid things too which might work in short term. Markets dont give easy feedback and in short term its hard to know right from wrong.
I don’t know your situation, but just a warning just in case.
Most people lose in trading and only 1-2% make more than FD over 3 years. - SEBi, Zerodha ceo.
Good luck.
Earlier I forgot to mention, since you are selling options now, don’t use your cash directly to sell the options. Use “cash equivalents” instead. By using cash equivalents you can earn up to 6-8% returns annually depending upon where you invest your cash. On the other hand idle cash in your brokerage account yields you nothing!
See “What is pledging?” for more details