I want to write index options worth Rs 1 crore to Rs 30 crore both in the near and the medium term expiry contracts. So, i want to know whether the market allows me to do that on a normal trading day? What will be the best strategy to accomplish this ?
Hmm… premium worth Rs 1 to Rs 30 crore is a big range. Rs 1 crore shouldn’t be a problem, but Rs 30 crore is quite a big position. Best way to get out of such big positions is through multiple orders. Exchange anyways have a restriction of 100 lots per order.
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yes i know about that 100 lots limit and i also know that we can only trade 5 % of the open interest on a particular day. What i want to know is that whether options writing on a level of Rs 30 crores even after using multiple orders is sustainable on a daily basis or not ? The reason for this question is that after using all kinds of trading strategies, i find options writing the most efficient of all techniques. So, if it is sustainable at a level equal to my trading capital, i will go for it… I mean NSE is a quite big exchange, and Rs 30 Cr is not a very big sum. I heard that people trade hundreds of crores in options everyday.
30 crores in premium = Approximately 40000 lots (if nifty premium is at Rs 100). Look at this option chain on NSE, the active ones trade around 2.5lk to 3lk lots (declared one sided by exchange), so around 5 to 6lk lots per day. If one person is trading almost 10% of the total traded volume, it is not very easy is it? I don’t think u can do intraday with such volume. Btw if you want to receive option premium of 30 crore you will need a margin of atleast Rs 100 crores in your account for option writing. : https://nseindia.com/live_market/dynaContent/live_watch/option_chain/optionKeys.jsp?symbolCode=-10006&symbol=NIFTY&symbol=NIFTY&instrument=-&date=-&segmentLink=17&symbolCount=2&segmentLink=17
Thanks Nitin ji for the swift response. I will then like to know what will be the premium that i can bet without thinking about liquidity in the market.