What causes violent move in last hour or so what can a seller do to protect

F&O
1

I have seen multiple times sellers loose money on last 30-60 mins violent move - (they call it gamma move)
So who causes this gamma move - FII / DII / PRO or?

And what can an option seller do to protect ? One can say put SL for the double the amount of your selling price in system to it will automatically trigger but many times after hitting SL it comes back to zero so SL is safe but it also loose profit many times… so what is the best thing an option seller do ? @viswaram @VijayNair

2

The violent jump you see in premiums (OTM) esp. in the last 20 to 30mts when there is no particular movement in underlying is mainly due to a LACK OF LIQUIDITY.

There are 2 ways to handle this

  1. stay out of illiquid strikes
  2. engineer a stop loss based on underlying movement and not on the premium of OTM strikes (eg: stop me out if the spot moves 100pts against me…)
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