What is the most suitable period to buy options, start of the month, 2nd week, 3rd week or 4th week?

General
1

Because of time value, I find the options are very costly during the start of the month.

So as per you, what would be the best policy with respect to options, at what time of the month to purchase it?

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2

i believe that the option buying should be done during volatile period only. Vega increase would compensate considerably for the Theta decrease.

The occurrence and stay of Volatility differs for each underlying and can occur during any period of the month.

For Index, my observation is, volatility would be short during the start of the month and would be of considerable amount from the third week till the expiry week.For stocks, the volatility would be short any time during the month unless it is in strong up/down trend for the whole month.

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3

These are only two best weeks to buy NIFTY options i.e. Start of the month week and last week.

  1. In start of the month, there is not much depreciation in option value.

  2. In last week all depreciation has been done and therefore options are very cheap.

4

You find a detailed answer to your question here -

Make sure you read through the comments as well.

1 Like
5

There is no such time as perfect to enter into options market. Rather, if you are a Nifty Options Trader, then the best time would come at the peak/trough of the nifty index movement (see nifty index historical chart). it is called swing trade. However, you require plenty of patience before you decide the best time to jump into. Since, the current market is in bull run, at certain point of time, the market run will stop & tries to consolidate. Then, the correction in the market will take place. In a bull market, usually nifty might correct some-ware between 100 to 200 points. If you can identify these levels, then, depending on the situation, you can buy either put option ( for bear market) or call option (for bull market). either-way you can make profit.

Solution:

1.Track Nifty Index Movement

  1. Track global markets

  2. Track news that affects/influence market movement

  3. start with low quantity in options trade with a strategy

  4. track your trade performance & analyze it. Then tweak your strategy to maximize your winning

for a basic strategy on capital management please refer below thread

http://tradingqna.com/1266/what-best-strategy-that-follow-always-options-index-trading#a1305

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6

As per my observation, in start of the month, the option value does not stay steady (even though theoretically it should have only a small decrease during start of the month). particularly for stock options even though the stock price stays in a narrow range, range bound, the option values drops significantly during first 5 days.
Example I bought a TCS OTM 2800 CE option for 16 rupees during 1st Nov, around 4th Nov the price went to almost 8 rupees, with the underlying TCS have risen in positive direction by around 60-70 points, close to 2500.

7

I was talking about NIFTY options because large number of people buy nifty options at start of the month… But in the case of stock options depreciation is nearly same for all weeks of the month.

8

Oh ok. I will try with Nifty Options at the start of the month.