BC OPTIONSLEARNINGS
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BENEFITS OF OPTION SELLING

Most of the successful traders here are option sellers.

Ever wondered why?

Why we have chosen option selling?

How to decide what strategies to use?

THIS IS THE ONLY THREAD YOU'LL EVER NEED!

Find out below

 1: Theta decay

The biggest reason and one of the prime reasons is the theta decay.

Option sellers always have an advantage because the as time passes, the option premium falls even if the underlying instrument doesn't move.
2: Being wrong and still making money.

We as option sellers can be wrong with our market view and still end up making money because of the power of theta decay and adjustments to some extent,
3:Playing directional view

Option selling also enables us to take a directional view. Infact, directional view along with theta decay makes it a solid combination.

Debit spreads and credit spreads works great for a directional view.
4: Playing Neutral view

We can make money in option selling even if the market doesn't move as the otm options will go to 0 with the help of theta decay. It's the most fascinating thing.
This is what attracted many into option selling. Strangles, straddles, ironfly, iron condor works extremely well for playing out neutral view,
5: Lower transaction costs

Option selling has extremely low transaction costs as compared to futures and other instruments.

The STT which has to be paid in option selling is drastically low making it an excellent option for many.
6: Hedging

Hedging is an excellent tool in option selling. It protects you from losses and also makes you more money than the original trade itself in some cases.

Hedging also makes sure you stay in the trade and prevents you from being thrown out in small spikes.
7: Limited risk

Usually naked option carries unlimited risk.

But hedging your risk ensures limited risk on your positions.

You can also deploy limited risk strategies which protects you from any big spike and also big gaps.
8: Trading volatility.

Option trading is all about trading volatility. Option selling can be used to take advantage of rising and falling volatility.
Best strategy for rising volatility : Calendar spreads

Best strategy for falling volatility : Strangles, straddles, iron condor, ironfly, butterfly.
9: Adjustments

Adjustments is the heart of option selling.

The ability to adjust your trades and coming out in profit even when your view goes wrong is one of the prime reason why option selling is amazing.

Adjustments can be done in "n" number of ways as per one's style.
10: Lower margin compared to futures

Option selling requires very low margin as compared to futures because of hedging. You can also make your option selling position behave like futures by going with itm options, although I personally don't recommend it to newbies.
11: Playing long/short/neutral view

In option selling,you can play ALL directions

If you're bullish you can play long, If you're bearish you can play short and if you think the market will be rangebound, you can deploy neutral strategies

The flexibility it offers is unmatched!
12: Probability of profit

Close to 80% of the options expire worthless. So the probability is always on your side.

You don't have to be intelligent to make money. Only trade the most high probable setups and you're good to go.
13: Good for consistent returns.

Option selling is an amazing tool for making consistent returns and compounding your money at a decent pace with least drawdown.

You just have to make 2% a month.
2% a month can turn 20 lakhs into 244crs in 10 years!
14: Scalability

Often buying options, futures, etc has a problem of scalability.

But selling options can be done at a scale! It can be done with huge capital and there's seriously no limit as to how much capital one can scale!
15: Portfolio hedging

Option selling is not only used for trading but also for hedging your long term investment portfolio.

Covered calls is an excellent way to collect premiums from option selling as long as your stock is flat/going down and bring down the average price.
16: Cash secured puts

Cash secured puts is an amazing way to buy stocks at your desired price provided you have enough cash to take the delivery of the stock.
17: Psychology

Option selling requires patience by default since it doesn't give you money instantly like other instruments.

It cultivates the habit of patience and also makes you less prone to take unnecessary risks.
That's it for this thread and thanks for reading! I hope you learnt something and make my efforts count!

For more learnings/analysis during live markets join our telegram channel : https://t.co/uNIrqq5aDP

More from Aditya Trivedi

Aditya Trivedi
Aditya Trivedi
@itsAdityaT
Most of the successful traders here are option sellers.

Ever wondered why?

Why we have chosen option selling?

Find our below

1: Being wrong and still making money.

We as option sellers can be wrong with our market view and still end up making money because of the power of theta decay and adjustments to some extent.

Adjustments work better as get closer to expiry since decay is the highest.

2: Theta decay

The biggest reason and one of the prime reasons is the theta decay.

Option sellers always have an advantage because the as time passes, the option premium falls even if the underlying instrument doesn't move.

3:Playing directional view

Option selling also enables us to take a directional view. In fact, directional view along with theta decay makes it a solid combination.

Debit spreads and credit spreads works great for a directional view.

4: Playing Neutral view

We can make money in option selling even if the market doesn't move as the otm options will go to 0 with the help of theta decay. It's the most fascinating thing.

This is what attracted many into option selling.
TRADING
Aditya Trivedi
Aditya Trivedi
@itsAdityaT
MY TOP 10 POINTS TO BECOME A BETTER TRADER

A Thread🧵

Listing down some of my top learnings which has helped me improve my trading to a great extent and will help you too.

1: Always stay on the right side on trend.

The biggest money is made by being with the trend, not against it.

Traders who made it big were always trend followers.

2: Don't ever underestimate risk.

Big losses usually happens when a trader ignores risk management when he's on a winning streak.

Overconfidence usually leads to poor risk management which ultimately causes destruction.

3: Taking Risk on Profits made:

A trader should always take high risk trades on the profit which he has already made and not on his principal.

It's much easier to take risks on the profits than taking risk on principal capital and losing it.

4: Patience

Success in trading comes with patience. One should be willing to wait atleast 2 years before giving up trading.

You drastically improve your odds of success even if you just survive for a couple of years without losing much money.
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Aditya Trivedi
Aditya Trivedi
@itsAdityaT
JESSE LIVERMORE is considered the greatest trader of all time.

He was the richest person in the world during his time.

I've read majority of his books and picked out learnings which are relevant even today with examples of the current scenario.


1: Remember that stocks are never too high for you to begin buying or too low to begin selling.

This principle still holds true today in trading, especially trend following.

Most people think if a stock has run up too much, then it's price is high and it will reverse.

But a trader should always be on the right side of a trend.

For eg: Asianpaints has been making new highs constantly, the major money would've been by the people who were on the right side of the trend i.e long.


Never buy it just because it has fallen too much. Instead short it and make money.

2: “Being a little late in a trade is insurance that your opinion is correct.”

It's okay to enter in a trade after you have received confirmation from the market.

Trading after confirmation will make your sacrifice your profits but it will also protect you against the loss
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Aditya Trivedi
Aditya Trivedi
@itsAdityaT
Workshop worth 5 LAKHS absolutely for FREE.

I've posted some amazing stuff about trading which in itself is a workshop.

Posting some of my best threads here.

1: Benefits of Option selling.

Why are most of the successful traders option sellers?

Writing down my reasons for choosing


2: How to use Technical Analysis to form a weekly view as an option


3: How to adjust a short


4: Top Trading books that make you a better
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Aditya Trivedi
Aditya Trivedi
@itsAdityaT
WHAT IS OPEN INTEREST, HOW TO ANALYZE IT AND DOES IT WORK?

In the thread I'll explain everything about Open interest and also all the tools used to analyze it and my personal opinion.

THIS IS THE ONLY THREAD YOU'LL EVER NEED ON OPEN INTEREST.

1: What is Oi?

Support if Mr A buys 10 lots of 17000ce in Nifty and Mr B sells 10 lots of call in Nifty then the total Oi on 17000 strike price will be 10.

So Oi is basically the number of outstanding contracts which are not squared off.

2: What is Oi used for?

Oi is only used to determine support and resistance on a particular strike price.

For eg: Nifty 16000pe has the highest Oi and 16200pe has to highest Oi.

So 16000 and 16200 level can be considered as good supports.

In the same way, 16500 ce has highest Oi and it can be considered as a resistance.


3: But why?

Highest Oi at 16500ce indicates that highest number of people have sold it BUT it also means that highest number of people have Bought it!

If 16500 acts as resistance, the option will go to 0 and all the buyers will lose money.
OPTIONSLEARNINGS , TRADING INDICATORS

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#Learning Those who are interested in options... Here is an old tweet on gamma scalping ...
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https://t.co/15abL7Q0yj
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Aditya Todmal
Aditya Todmal
@AdityaTodmal
MASTER THREAD on Short Strangles.

Curated the best tweets from the best traders who are exceptional at managing strangles.

• Positional Strangles
• Intraday Strangles
• Position Sizing
• How to do Adjustments
• Plenty of Examples
• When to avoid
• Exit Criteria

How to sell Strangles in weekly expiry as explained by boss himself. @Mitesh_Engr

• When to sell
• How to do Adjustments
• Exit


Beautiful explanation on positional option selling by @Mitesh_Engr
Sir on how to sell low premium strangles yourself without paying anyone. This is a free mini course in


1st Live example of managing a strangle by Mitesh Sir. @Mitesh_Engr

• Sold Strangles 20% cap used
• Added 20% cap more when in profit
• Booked profitable leg and rolled up
• Kept rolling up profitable leg
• Booked loss in calls
• Sold only


2nd example by @Mitesh_Engr Sir on converting a directional trade into strangles. Option Sellers can use this for consistent profit.

• Identified a reversal and sold puts

• Puts decayed a lot

• When achieved 2% profit through puts then sold
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Subhadip Nandy
Subhadip Nandy
@SubhadipNandy16
Options and their price action analysis.
Read 👇👇
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Aditya Todmal
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Here are my TOP 10 BEST TWEETS of the week: 10th September.🧵

• Psychological mistakes to avoid
• Iron fly strategy
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• 3 great books on trading stocks.
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Compounding is
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