Writing options sureshot way to lose money

I want to warn retail traders. Take a print out and paste it anywhere. If u play with options selling covered or naked, it does not matter one fine morning ur capital wil be wiped out. U may earn regularly for 364 days but that fatal black swan event day u will lose huge huge

Only stick to option buying

U may disagree me but time will tell u the trutg and u will recall this post

Option writing is for hnis and institutions. Not for people like u and me

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There is something called as hedging and stop loss :slight_smile:

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@ksksat
I am analyzing the option writing using various spread strategies, including the calendar spreads. They seem fool proof, unless… Your may have to share us what exactly happened, so we can be more careful.

I am aware the sudden dry out of liquidity, and tremendous increase in the bid ask spread can bite. The volatility can sky rocket for no reason, and hurt the writer pretty badly. Theta is anyway helping the writer, if you are staying out of the money.

What else???

@Srinivas_Ramakrishna its not that i dont know these terms…

option writing is for huge institutions and hedge funds

If u want to genuinely earn rental income from ur portfolio write call option at comfortable strike price and own that lot size of the stock in demat your portfolio so u r ready to give delivery incase ur writing expires in itm

Genuine hedging will involve buying a put option like an insurance

@Qrious_Kamal to be frank i never deal in f&o

But whatever spread u use when things move out of control with wild gap up or gap down the losses will mount

Either buy option using straddle strangle technique or simply write option if u have shares in demat for call writingor funds ready to take delivery in put writing

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Can you explain?

You deploy risk defined and you know beforehand how much you going to loose. How the capital will be wiped out?

Either you have no knowledge of Options, or you created this post for fun.

Care to enlighten us what went wrong with you?

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Hey Krish,
What happened

@Suneel1. @Suhel_Khan let me tell clearly.
I never touch f and o

Suhel my option knowledge is zero. I never claimed i know things. U check my previous posts. I used capital in generic sense. U guys carry on writing. No worries but there will come a day u will remember me.

Certain things we need not touch our hands to realize the heat of fire.

Whole f and o is weapon of mass destruction. In that writing options is still specific recipe to destruction.

2009 UC 2004 LC 2020 LC how many come if we dont get the lesson no words to say.

My gut feeling is this year another wild jerk plus or minus is awaited.

that is why I have stopped writing options for 1-2 weeks. Tensions with China, market going upwards without any reason. Let things settle first.

Depends, risk is there everywhere think of scenario in investment like JP associates, DHFL, Yes bank it’s still unlimited risk.

Options mostly people do go wrong is they dont exit and book at correct time and the stop loss they do not keep. This happens even with me but with hedge funds and FII they are ready to book a loss and move on to different stock but with retailers the emotion plays a lot

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Hi,

As u say naked option selling is very risky.
But defined risk strategies like spreads are foolproof. No need to get scared. Traders implementing it day in and day out.

U have to get scared only if you break your own rules.

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Its a weapon of mass destruction only if you dont know how to play with it.

Please search risk defined option strategies to understand more about it. Just a blanket statement wont do any good.

In life, whatever you do there are risks, it is about how you control the risk/ or manage it.

Most of the time, people lost heavily because of lack of control on the greed or they go with the emotions/hope.

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@ksksat buddy, let me just point out 1. what we know for sure, 2. what are my guesses, & finally 3. What is the Truth.

What we know for sure:

  1. You know zilch about options in general and options writing in particular.
  2. You yourself have never traded FnO (If we blindly believe your self declaration.)

What I am guessing:

  1. Not in very recent past you tried your hand at option writing without knowing anything about the subject. You completely messed up your position sizing and fcked up completely.
    OR
  2. Regular Social Sites like facebook or tweeter were not enough for you and hence you came here passing around casual statements, hurry judgements.

Now let us dissect your own statements and find glaring contradictions in them.

You claim you know nothing and still dare to curse others! Who are you to predict bad futures for others? I dunno if you know hindi but this is called “baddua dena”! This is bad manners! You can warn as per whatever you think is possible as per your limited knowledge, but saying this like you are some sort of prophet or oracle is utterly disgusting.

Now let me give you some gyan. There is something called “spreads” in options trading. Our risk is limited even if tomorrow everything goes to zero or infinity.
I suggest a loud mouth like you to learn first before passing out ill-conceived judgements based on some stupidity you come accross tweeter or Youtube.
Pathetic!

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This is what happens when you try to insult theta gang!

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This shit has been going on since ages on SM like tweeter, facebook and youtube.
Investors vs Traders
Option Writer vs Option buyers.
Positional vs Intraday
Traders vs Scalpers
PA vs Indicators.

And its mostly tweeter Gurus who wanna sell their courses that feed such dung in retailers minds. I have seen a guy who has just 30k in trading account and who is just “learning to trade” from a Option writing Furu, abusing a options buyer/scalper who earns in 4-5 figures (or losses) daily. See the audacity! what is he gonna write in 30k margins!
I mean passing around such prophetic statements ( YOU WILL REMEMBER ME)! I mean"Abe hai kon tu? Ke tereko yaad kare!

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:laughing::rofl:
Most of the options expire worthless, that’s why we do option writing with protection of spreads! But, I don’t think he understands that, because as he said “option knowledge is zero”. So, can’t blame him. I am pretty sure he will start loving it when he starts making money out of it!

“The light music of whisky falling into glasses made an agreeable interlude.”
― James Joyce, Dubliners :grin:

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We make money if market does not move!
Wait!
We make more money in case of Black Swan.

:money_mouth_face::money_mouth_face::partying_face::partying_face:

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Index only. Works better in low vol env.
Neutral Delta.
Negative Gamma.
Positive Theta
Negative Vega.

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@maddy_Des well articulated. I do short guts and short strangles on weekly expiries, primarily in NIFTY. I have had a 90% success rate over the last few years. In my experience Short Guts works best when the movement on either side is on the extreme, and Short Strangles are very effective and successful when the Index / underlying instrument expires within the OTM CE & PE strike prices range. It is possible to generate at least 4% monthly return on capital on most months

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@maddy_Des… sir, plz give any option trade example covering above qualities which you told