Most people have no clarity regarding synthetics & are just too confused.
Let's begin understanding synthetics & how they can help us trade with a clear understanding!
In NSE, 99.6% of the trading is done in derivatives.
But most of those traders don't know how to lower costs and increase returns.
Here's a breakdown on Options Synthetics: 🧵
Collaborated with @niki_poojary
Most people have no clarity regarding synthetics & are just too confused.
Let's begin understanding synthetics & how they can help us trade with a clear understanding!
1. Calls
2. Puts
3. Futures/Stocks
You don't even need to touch futures/stocks. Whatever kind of payoff graph you want, you can get via options only.
Ft buy + Call sell = Put sell
Ft sell + Call buy = Put Buy
Ft sell + Put sell = Call sell
Ft buy = Call Buy + Put Sell
Fut sell = Put Buy + Call Sell
Know this very well as this is a must to know.
Also, we'll look at 3 problems and 4 myths about strategies.
Let's begin, by looking at the advantages:
Synthetics increases your leverage due to lower margins.
For eg, you want to buy a stock you have to pay a huge margin.
Instead of that you can buy an ATM call and sell an ATM put.
Vice versa for selling.
Margins are drastically lower via options.
There is a cost to trade in futures in the form of huge STT charges, brokerage etc.
Options charges are way lower, so from a charged viewpoint synthetics make more sense.
If you want to go long in July series now, can you go long in futures? No.
But you can sell puts and go long in July series now in options.
We cannot short stocks in India, we need to trade via futures. Some traders don't like to trade in futures as they trade via collateral and mtm loss needs to be paid daily.
Synthetics takes care of that as u only have to pay when booked.
1. Liquidity Issue - In stocks, there are liquidity issues when you try to use synthetics in ITM options.
2. Indian markets have low liquidity in contracts beyond the current month.
Covered call = Fut buy + 2600 call sell
Put sell via synthetics = 2600 Put Sell
Low liquidity here in the Put sold.
Options mtm losses can be adjusted against collateral till you don't "book" the loss.
Futures irrespective of if you book or don't book the loss, you still need to pay by cash daily.
1. Tripple Straddle has a huge advantage.
2. Inverted strangle has an advantage over strangles.
I couldn't have explained better than @SarangSood Sir this concept in his thread.
Read how he shows you how there is no advantage to both.
https://t.co/Gn6hjqIEzm
A THREAD
— Sarang Sood (@SarangSood) May 14, 2021
Topic: Why triple straddle has no real benefit.
A triple straddle is essentially an ATM Straddle & one or two step away straddle on either side. The position is almost neutral strategy just like any other neutral straddle or strangle.
1/
If you buy a call profit is unlimited, but if no movement occurs then the option will deteriorate in value.
If you buy fut and buy put, and if the stock doesn't move, the put goes to zero and fut doesn't give profit.
Both are the same.
1. Low probability of success
2. Constant theta decay.
These same traders when they trade futures are buying puts as "hedges" too which is the same as buying options.
This is totally illogical.
Can achieve the same via only selling puts.
When we buy fut and sell call to "hedge" we pay two margin requirements.
Selling a put requires only one margin.
Vice-versa for covered puts.
If you found this useful, please do RT first tweet.
Follow to never miss them.
See past threads here:
@AdityaTodmal & @niki_poojary
More from Aditya Todmal
Here are my top 10 best tweets of the week: 24th September.
• Stocks to buy & hold forever
• Companies which will always be in business
• How to 10x money in 10 years?
• Feedback of company employees
• MWPL & F&O ban list explained
• Tradingview free version tricks
Stocks one can buy and hold
These companies will always keep running, no matter if recessions come or not.
26% CAGR makes your money 10x in 10
Some life
• Stocks to buy & hold forever
• Companies which will always be in business
• How to 10x money in 10 years?
• Feedback of company employees
• MWPL & F&O ban list explained
• Tradingview free version tricks
Stocks one can buy and hold
8 - Stocks For Buy And Hold Forever:
— Pankaj Parekh (@DhanValue) September 22, 2021
1. Asian Paints
2. Pidilite
3. HUL
4. Colgate
5. Nestle
6. Abbott
7. Honeywell
8. PGHH
NB: ITC is not included here due to its tobacco business.
Discl: Have a check and satisfy yourself before investing.
These companies will always keep running, no matter if recessions come or not.
26% CAGR makes your money 10x in 10
\u26a1\ufe0fIf you are making 26% CAGR then Rs 10,000 invested at 23 has the same value as:
— Soumya Malani (@insharebazaar) September 19, 2021
Investing Rs 1 Lakh at 33
Investing Rs 10 Lakh at 43
At 26% CAGR, your money grows 10 times in 10 years.
Young earners should realize this power and start early.
No amount is too small to start.
Some life
Old Life Lessons:
— R.K. (@ipo_mantra) September 19, 2021
-Mind your Thoughts: If u are Alone
-Mind your Tongue: If u are with Friends
-Mind your Temper: If u are Angry
-Mind your Behavior: if u are in a Group
-Mind your Emotions: If u are in Trouble
-Mind your Ego: If God showers His Blessing
Do u want to add more ?
Curated tweets of @sourabhsiso19
Found awesome content: ⏬
1. Moneycontrol
2. Bank nifty Strangles/Straddles
3. Learnings
4. Expiry Trading
5. Directional trading
6. Long Term Investing
7. Pivot system
8. DHS pattern
9. Multiple trade management threads/ways.
Moneycontrol article on @sourabhsiso19
What Sourabh does and how to trade like him?
Why trade multiple systems? ⏬
1. Keeps drawdown at minimum.
2. Strong money management can be applied.
3. Better psychology.
Thread on how options allow you to change your positions in a dynamic manner.
Found awesome content: ⏬
1. Moneycontrol
2. Bank nifty Strangles/Straddles
3. Learnings
4. Expiry Trading
5. Directional trading
6. Long Term Investing
7. Pivot system
8. DHS pattern
9. Multiple trade management threads/ways.
Moneycontrol article on @sourabhsiso19
@moneycontrolcom did a detailed story on my trading journey.
— Sourabh Sisodiya, CFA (@sourabhsiso19) May 26, 2020
But many couldn\u2019t read it as it needed a pro-subscription.
So here\u2019s a blog on the same :https://t.co/dwN2xieUKd#trading #journey #quant #options #algotrading #markets #OptionsTrading
What Sourabh does and how to trade like him?
Getting many DM\u2019s on how I can learn and trade like you.
— Sourabh Sisodiya, CFA (@sourabhsiso19) January 10, 2020
To be a succesful trader one needs an edge
My edge:
1)focus on selected instruments (Banknifty majorly and few stocks)
2) backtested my strategies historically (for past 10years)
(1)
Why trade multiple systems? ⏬
1. Keeps drawdown at minimum.
2. Strong money management can be applied.
3. Better psychology.
Do I trade only BNF ?
— Sourabh Sisodiya, CFA (@sourabhsiso19) March 4, 2020
Other than BNF intraday , I run few other systems too.
1) Intraday Momentum
2) Positional systems
3) Vol Crush Trade etc
Goal of system trading is to run few non-correlated strategies together so that system drawdown is at the minimum.#trading #systems pic.twitter.com/mS8jFEaLUW
Thread on how options allow you to change your positions in a dynamic manner.
Options Thread
— Sourabh Sisodiya, CFA (@sourabhsiso19) December 7, 2019
How options allows to change and adjust view dynamically.
Let\u2019s understand with a live example.
Example : Nifty is at 11921 and you are bullish on Nifty.
1) Buy Naked 11900 CE(call) at 167
Breakeven : 12068
Max Loss : Rs 12555
Max Profit : Unlimited pic.twitter.com/TXMhh5HWsd
More from Optionslearnings
As committed here goes the 2nd "Inside Candle" strategy:-
Queries can be posted on comments, video will take some time to come.
Want market influence to circulate it to reach max audiences.
@DillikiBiili @AnilSinghvi_ @anilbalaji11 @bankniftydoctor @brahmesh https://t.co/SmCZMMkBzV
Inside Candle Trading statergy
*15mints min time frame & more
*whenever you see 2nd(baby)candle
is forming inside of 1st(mother)candle
draw high and low of 1st(mother)candle and
take entry which side 3rd candle breaks
*stop loss - 1.someone can put sl at baby candle low
2.someone can put sl at mother candle low(both works)
*entry - 3rd candle breaking mother candle
*target - 1x2x3x of your risk
#candles could be any colour
Queries can be posted on comments, video will take some time to come.
Want market influence to circulate it to reach max audiences.
@DillikiBiili @AnilSinghvi_ @anilbalaji11 @bankniftydoctor @brahmesh https://t.co/SmCZMMkBzV
I will give free 40 point #banknifty and 20 point # nifty strategy .
— SG (@GhoshSubhag) October 30, 2021
Don't pay me anything, just 1 like or retweet is sufficient \U0001f64f https://t.co/3R1PZZSK84
Inside Candle Trading statergy
*15mints min time frame & more
*whenever you see 2nd(baby)candle
is forming inside of 1st(mother)candle
draw high and low of 1st(mother)candle and
take entry which side 3rd candle breaks
*stop loss - 1.someone can put sl at baby candle low
2.someone can put sl at mother candle low(both works)
*entry - 3rd candle breaking mother candle
*target - 1x2x3x of your risk
#candles could be any colour
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The YouTube algorithm that I helped build in 2011 still recommends the flat earth theory by the *hundreds of millions*. This investigation by @RawStory shows some of the real-life consequences of this badly designed AI.
This spring at SxSW, @SusanWojcicki promised "Wikipedia snippets" on debated videos. But they didn't put them on flat earth videos, and instead @YouTube is promoting merchandising such as "NASA lies - Never Trust a Snake". 2/
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This spring at SxSW, @SusanWojcicki promised "Wikipedia snippets" on debated videos. But they didn't put them on flat earth videos, and instead @YouTube is promoting merchandising such as "NASA lies - Never Trust a Snake". 2/
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https://t.co/uAORIJ5BYX 4/
https://t.co/yOGZ0pLfHG 5/
"I lied about my basic beliefs in order to keep a prestigious job. Now that it will be zero-cost to me, I have a few things to say."
We know that elite institutions like the one Flier was in (partial) charge of rely on irrelevant status markers like private school education, whiteness, legacy, and ability to charm an old white guy at an interview.
Harvard's discriminatory policies are becoming increasingly well known, across the political spectrum (see, e.g., the recent lawsuit on discrimination against East Asian applications.)
It's refreshing to hear a senior administrator admits to personally opposing policies that attempt to remedy these basic flaws. These are flaws that harm his institution's ability to do cutting-edge research and to serve the public.
Harvard is being eclipsed by institutions that have different ideas about how to run a 21st Century institution. Stanford, for one; the UC system; the "public Ivys".
As a dean of a major academic institution, I could not have said this. But I will now. Requiring such statements in applications for appointments and promotions is an affront to academic freedom, and diminishes the true value of diversity, equity of inclusion by trivializing it. https://t.co/NfcI5VLODi
— Jeffrey Flier (@jflier) November 10, 2018
We know that elite institutions like the one Flier was in (partial) charge of rely on irrelevant status markers like private school education, whiteness, legacy, and ability to charm an old white guy at an interview.
Harvard's discriminatory policies are becoming increasingly well known, across the political spectrum (see, e.g., the recent lawsuit on discrimination against East Asian applications.)
It's refreshing to hear a senior administrator admits to personally opposing policies that attempt to remedy these basic flaws. These are flaws that harm his institution's ability to do cutting-edge research and to serve the public.
Harvard is being eclipsed by institutions that have different ideas about how to run a 21st Century institution. Stanford, for one; the UC system; the "public Ivys".
