Articles in the Futures and Options Category
Let me clarify few things about options to help your trade options better.
Try to gain fundamentals knowledge of options, trading strategies, etc and after ensuring that you have complete knowledge start trading options. Never trade without learning completely about options.
Almost all option strategies involve some degree of risk, decide your risk level and then trade options. Please avoid taking naked option position such as sell call or sell put
“There are two kinds of investors, be they large or small: those who don’t know where the market is headed, and those who don’t know that they don’t know. Then again, there is a third type of investor – the investment professional, who indeed knows that he or she doesn’t know, but whose livelihood depends upon appearing to know.”
Zero cost collar or zero cost option is an option technique to safeguard the gains obtained on holding stocks. This is very simple option strategy which can be used safely to protect the profit accrued on holding stocks. This can be used by investors who do not wish to trade intraday or positional trades and invest in blue-chip stocks for long-term gain. Most of us buy insurance for our life but fail to buy insurance for stocks which we hold for long-term investment. In case if you own a stock that has increased considerably in value since you bought it?
Anyone who continuously observing the March Series could tell that 4800 PE March series is being written from the day one of the start of march series. Also the high open interest in the march 4800PE indicates the same. But equally there is a significant huge OI addition in 5100 CE series also which indicates the possibility of writing 5100CE
Over the last two years, NIFTY has shown high degree of volatility. Nifty fell very sharply in 2009 touching as low as 2539 and then rebound back to 5310 level. This continued setting of uncertainty is posing discomfort for every style of investor. Being right is already difficult enough, but the cost of being wrong can be so much higher with high degree of volatility in the market.
Many retail traders do NIFTY trading by predicting market directions, For instance, some retail traders are bullish on NIFTY and expecting NIFTY to rally after budget, others are bearish and predict NIFTY to touch 4600. These are directional trades and are very risky if done without hedge. Never trade NIFTY future without hedging as you may incur huge loss if NIFTY does not move as per your prediction. What is the solution for this problem? Can NIFTY be traded without knowing market direction? Yes, you can trade NIFTY options without …



