BC OPTIONSLEARNINGS

Sarang Sood
@SarangSood 2 years, 9 months ago 403 views

Low VIX doesn't necessarily mean ideal time for option buyers. If premiums aren't falling consistently during the day in low VIX, it usually gives those small delta & IV spikes, just enough to irritate both option buyers & sellers. Same happens when VIX is ultra high.

@SarangSood Sarang bhai according to you what number of vix is ideal for option buyers and what is that for option sellers? And is there any common number which is ideal for both?
— Dhaval bhatt (@Dhavalb55011726) July 14, 2021

More from Sarang Sood

Sarang Sood
@SarangSood

10 mistakes in my 14 years of trading as an option seller 🧵

1. Staying neutral all the time. Majority of the years i have been a neutral option seller. I now realise that having a little sense of direction would have given me an added advantage with better utilisation of capital & also leverage (till the time it was available).

2. Too much importance on adjustments. Initially like most of the new option sellers, i had this notion that i can perfect my adjustment skills for any market conditions. Ofcourse i was wrong. Market is supreme & we need to respect it at times.

3. Not giving importance to greeks. For initial 6 years i didn't even know the existence of greeks. Since i started using them, option selling has become rather less complicated on the contrary of what most people believe.

4. Having too much confidence on the certainty of theta decay. Enough is said about it already. Theta decay is not an edge.

Sarang Sood
@SarangSood

FINDING EDGE IN OPTIONS

24/08/15: Nifty gap down 250 points & another 250 after that. Previous few months return gone, but since I'm quick to take my losses, was saved from ruin. Before that my only edge in option selling was adjustments & my forever edge of following PA. (1/n)

I soon realised that theta decay with sound adjustments is not an edge, which i earlier thought was & which gave me good returns over the years. After that i went deeper in understanding volatility behaviour, how/where it manifests & all the discrepancies in option chain. (2/n)

With finding edge in logistics i mean how to keep the greeks in check, SL in place & optimum ways of adjustments with minimum slippages. So the main aim here is to write theta without following vol behaviour & having any actual knowledge of what's going on in the markets. (3/n)

A dedicated trader can learn all this in few years & it is something which is 'obvious' to become successful. But majority can't reach this level, as this also requires consistent hustle in live markets. All the seminar/webinar business teaches you till this level only.(4/n)

If you get passed this level though, the real work starts, when you have to find your real edge. This can't be taught in a webinar. It needs serious introspection of your trading skills, psychology & strategies in use, which ultimately allow you to book excellent profits. (5/n)

Sarang Sood
@SarangSood

A THREAD

Topic: HOW TO TRADE IN RISING PREMIUMS SCENARIO

Option sellers specially Straddle sellers feel that rising premiums give them excellent opportunity to make easy money. So what they are seeing is the theta aspect of options & ignoring the delta/gamma/vega forces.

1/

With rising premiums come high delta moves. There is a reason why premiums are all increasing up in the first place. High uncertainty & fear is what's controlling the markets during such times. So a volatile 200 point move in nifty is always on the cards.

2/

Adjusting during such delta moves involves high slippages. Such costs go in our system & are irrecoverable. So if the ATM straddle is around 400 & after 200 point downmove, the next straddle is at 450 & the loss is not just 50points but compounded much more.

3/

Also there are chances that there is no decay throughout the day. So a straddle seller has to take that heavy risk of carrying it forward & chances of gap openings are high during such times. If converted into Ironfly, then the cost of the wings is too expensive.

4/

Thus cutting down the initial credit significantly.

There will also be very few instances when premiums don't fall till expiry day. So with each delta move the cost of holding a straddle gets accumulated & pressure keeps mounting for the stubborn option sellers.

5/

Sarang Sood
@SarangSood

My previous b'day which fell on expiry day was in 2010. On that day Nifty straddle opened at 45. Day range of nifty was around 30pts :)

(High 5415, Low 5380)

At that time:

•Didn't know the word Straddle though i used to trade them regularly
•Greeks existence wasn't known

•Adjustments felt like a superpower
•Everyday theta decay was a birth right
•Any strategy thought off felt like a personal invention
•Listening to people warning about unlimited loss in option selling was normal
•Making unlimited gain in long straddle seemed a possibility

•Volumes & Oi were closely tracked
•Overnight positions without hedge was a normal routine

All the above points have been changed over the years. But the underlying market psychology & following the price action still remains the same.

Thank you all for the warm wishes 🙏

Sarang Sood
@SarangSood

THREAD ON IRONFLY

These days the most preferred strategy for option sellers due to improved margins is IRONFLY. It's essentially a short straddle with long strangle. Long strangle acting as 'WINGS', which help in capping the unlimited risk associated with a short straddle.(1/n)

You can also view the position as a combination of Cal & Put credit spreads, if that makes it more easy for you.

There are 3 important things to understand while trading this strategy:

1) Initial size of the Wings
2) Risk Management
3) Adjustments

(2/n)

Since we are selling an ATM straddle, the 1st question is how far our wings should be? Ideally i sell .50 delta straddle & buy .20 or .10 OTM strangle, depending on my view on volatility. So the distance of wings depends on the IV setup. Higher the IVs, greater the distance.(3/n)

If you don't understand greeks, then ideally with 30 days to expiry (dte), wings should be around 300pts either side. If your trading in weekly then it should be not more than 200pts. Higher the premiums, higher the distance as we have more cushion of theta. (4/n)

It is important to understand that we need to reduce the distance of wings with time so as to manage our RISK in gap openings or sudden volatile move. So for eg. if you started with 300pt wings with 30dte, the wings wouldn't give the same protection when there is 7dte. (5/n)

More from Optionslearnings

Maahi_hooda
@Mahipal30361452

Thanks @ITRADE191 bro. I'm following your setup from last few months.
PDL
PDH
VWAP
PDVWAP
PIVOTS
Its help me a lot .
I compiled your last tweets as pdf, hope it's help others also. I learn a lot of from this.

If you find it useful please retweet and follow

Sarang Sood
@SarangSood

Q: Sir why call option premiums are higher the put?

A: It usually happens when there is big difference between spot & future.

Example

BN Spot: 35110
BN Future: 35300
BN Synthetic Future: 35150

It depends on our perception of what is ATM & accordingly match the calls & puts.

itrade(DJ)
@ITRADE191

We don't have to be smarter than
the rest. We have to be more disciplined than the rest. - Warren Buffett.

itrade(DJ)
@ITRADE191

Why I trade in Nifty or Reliance most ...If you are confused what to trade watch this

JayneshKasliwal
@JayneshKasliwal

In this session we talked about
1. Basics of Option Selling
2. Directional Vs Non Directional
3. Straddle and Strangle Backtest
4. Benefits of Automated

The UN just voted to condemn Israel 9 times, and the rest of the world 0.

View the resolutions and voting results here:

The resolution titled "The occupied Syrian Golan," which condemns Israel for "repressive measures" against Syrian citizens in the Golan Heights, was adopted by a vote of 151 - 2 - 14.

Israel and the U.S. voted 'No' https://t.co/HoO7oz0dwr

The resolution titled "Israeli practices affecting the human rights of the Palestinian people..." was adopted by a vote of 153 - 6 - 9.

Australia, Canada, Israel, Marshall Islands, Micronesia, and the U.S. voted 'No' https://t.co/1Ntpi7Vqab

The resolution titled "Israeli settlements in the Occupied Palestinian Territory, including East Jerusalem, and the occupied Syrian Golan" was adopted by a vote of 153 – 5 – 10.

Canada, Israel, Marshall Islands, Micronesia, and the U.S. voted 'No'
https://t.co/REumYgyRuF

The resolution titled "Applicability of the Geneva Convention... to the
Occupied Palestinian Territory..." was adopted by a vote of 154 - 5 - 8.

Canada, Israel, Marshall Islands, Micronesia, and the U.S. voted 'No'
https://t.co/xDAeS9K1kW

STEALTH JEFF
@drawandstrike

THIS.

Russia hasn't been a willing partner in this treaty for almost 3 decades. We should have ended the pretense long ago.

Naturally, Rand Paul is telling anyone who will listen to him that Trump is making a HUGE MISTAKE here.

Arms control agreements are good when you have willing partners. Lightens the load on our military.

Russia hasnt been a willing partner in years. There will be gnashing of teeth from people who do arms control advocacy full time, but this is right move https://t.co/WmQE43ERCB
— John Noonan (@noonanjo) October 20, 2018

Rand is just like his dad, Ron. 100% isolationist.

They've never grasped that 100% isolationist is not 'America First' when you examine it. It really means 'America Alone'.

The consistent grousing of pursuing military alliances with allies - like Trump is doing now with Saudi Arabia.

So of course Rand has also spent the last 2 days loudly calling for Trump to kill the arms deal with Saudi Arabia and end our alliance with them.

What Obama was engineering with his foreign policy was de facto isolationism: pull all the troops out of the ME, abandon the region to Iranian control as a client state of Russia.

Obama wasn't building an alliance with Iran; he was facilitating abandoning the ME to Iran.

Obama wouldn't even leave behind a token security force, so of course what happened was the rise of ISIS. He also pumped billions of dollars into the Iranian coffers, which the Mullah's used to fund destabilizing activity [wars/terrorism] & criminal enterprises all over the globe

Devdutta
@Devdutta96

Please please please take your cyber security seriously even if you don’t consider yourself a high risk person. Here are a few easy things to start with. 1/n

Switch from WhatsApp to Signal and enable disappearing messages. Most of us cannot stop using WhatsApp entirely but at least turn off back ups to Google Drive or iCloud. 2/n

Do not have private conversations using the messaging service on any social media platform like Facebook, Instagram or Twitter. 3/n

Switch from Gmail to ProtonMail or any other secure email service provider. 4/n

Switch from Google Docs to CryptPad or RiseUp Pad.

Noah Smith
@Noahpinion

1/Politics thread time.

To me, the most important aspect of the 2018 midterms wasn't even about partisan control, but about democracy and voting rights. That's the real battle.

2/The good news: It's now an issue that everyone's talking about, and that everyone cares about.

3/More good news: Florida's proposition to give felons voting rights won. But it didn't just win - it won with substantial support from Republican voters.

That suggests there is still SOME grassroots support for democracy that transcends

4/Yet more good news: Michigan made it easier to vote. Again, by plebiscite, showing broad support for voting rights as an

5/OK, now the bad news.

We seem to have accepted electoral dysfunction in Florida as a permanent thing. The 2000 election has never really

Bad ballot design led to a lot of undervotes for Bill Nelson in Broward Co., possibly even enough to cost him his Senate seat. They do appear to be real undervotes, though, instead of tabulation errors. He doesn't really seem to have a path to victory. https://t.co/utUhY2KTaR
— Nate Silver (@NateSilver538) November 16, 2018

$\u0100\u1e0di \u015aloka$

Āḍi Śloka...
@AdiShloka

Knowledge & Bharat : Part V

The Curriculum of Vedic Education :
According to the Ancient Indian theory of education, the training of the mind & the process of thinking, are essential for the acquisition of knowledge.

#Thread

Vedic Education System delivered outstanding results. These were an outcome of the context in which it functioned. Understanding them is critical in the revival of such a system in modern times.
The Shanthi Mantra spells out the context of the Vedic Education System.

It says:

ॐ सह नाववतु ।
सह नौ भुनक्तु ।
सह वीर्यं करवावहै ।
तेजस्वि नावधीतमस्तु मा विद्विषावहै ।
ॐ शान्तिः शान्तिः शान्तिः ॥

“Aum. May we both (the guru and disciples) together be protected. May we both be nourished and enriched. May we both bring our hands together and work

with great energy, strength and enthusiasm from the space of powerfulness. May our study and learning together illuminate both with a sharp, absolute light of higher intelligence. So be it.”

The students started the recitation of the Vedic hymns in early hours of morning.

The chanting of Mantras had been evolved into the form of a fine art. Special attention was paid to the correct pronunciation of words, Pada or even letters. The Vedic knowledge was imparted by the Guru or the teacher to the pupil through regulated and prescribed pronunciation,

Low VIX doesn't necessarily mean ideal time for option buyers. If premiums aren't falling consistently during the day in low VIX, it usually gives those small delta & IV spikes, just enough to irritate both option buyers & sellers. Same happens when VIX is ultra high.

More from Sarang Sood

More from Optionslearnings

You May Also Like