•This requires a high level of skill, and discipline in terms of which strike to choose, which time to trade, and which days to trade.
•It also comes with higher drawdown.
An option buyer made Rs. 58 lacs from Rs. 2 lac capital in a span of just one month (March 2020 COVID crash).
He is none other than Mr. Subasish Pani.
THREAD: 11 things you must know to become an option buyer.
Collaborated with @AdityaTodmal
•This requires a high level of skill, and discipline in terms of which strike to choose, which time to trade, and which days to trade.
•It also comes with higher drawdown.
• Indian markets function from 9:15-15:30.
• Dividing this time zone into 3 sub parts:
- 9:15 to 10:30: trending market
- 10:30 to 13:30: for retracement
- 13:30 to 3:30: trending market
https://t.co/cO7FtokXTQ
• Option buyers make money when the momentum is quick.
• However if the market remain sideways for few days then the option starts to lose its value.
• This is because theta decay works against option buyers.
• Hence focus on the 1st & 2nd time zone where the markets are trending.
• Avoid taking trades between 10:30am till 13:30.
• Special focus on Wednesday & Thursday as premiums are low and if you can catch momentum then good R/R.
• Let's say the market view is -ve and market stays sideways or goes down, option sellers will still make money due to theta decay.
• Hence, the probability of winning for option sellers is 66.6% whereas for buyers its 33.3%.
• Since the winning probability of an option buyer is 33.3%, the edge is maintained by keeping losses at a fraction of gains.
Hence, R/R has to be 1:4.
• Most of the option buyers select deep OTMs , but they have a higher probability of losing value as time passes away.
• Hence, deep OTMs are usually favorite of option sellers.
•Option buyers should select strikes near to Rs. 100.
• ATM strikes, having prems near to 200-300 is highly volatile. Hence the SL for ATM would be minimum Rs. 40-50.
• R/R is 1:4, then the reward should be atleast Rs. 160-200 which looks slightly challenging.
• So stay away from ATMs.
• ATMs are too volatile and far OTMs lose value quickly, therefore the golden mean is to select option in the range of Rs. 100
• Rs. 100 option doesn't have that kind of volatility that ATM has and Rs. 20-25 SL works, without getting stopped out.
• During expiry's one can work with Rs. 40 - 50 especially post 12:30 noon.
• At times the 2pm moves are ferocious and one can even work with Rs. 20-25 premium.
https://t.co/GwqZ5cc2so
• We don't know the target, we can only book as per our R/R.
• One can never capture the entire move in option buying.
• Be satisfied with what you book rather than having regrets of exiting the trade early.
• Choose option buying because it interests you rather than opting for it due to lack of capital.
•Psychological issues would be higher while scaling up due to the MTM swings in option buying.
https://t.co/wviTTCzNz5
https://t.co/1Au8unvmum
Subasish Pani revealed the most simple, yet successful strategy: 5EMA set up!
— Nikita Poojary (@niki_poojary) July 3, 2022
Here is a thread of 23 video clips on the 5EMA set-up that will save you hundreds of hours and available to you for no cost!
5EMA set-up: \U0001f9f5!
Collaborated with @AdityaTodmal
If you did, share it with a friend
Hop back up to retweet the first tweet
See past threads here:
@AdityaTodmal
&
@niki_poojary
More from Nikita Poojary
More from Trading
Fake chats claiming to be from the Irish African community are being disseminated by the far right in order to suggest that violence is imminent from #BLM supporters. This is straight out of the QAnon and Proud Boys playbook. Spread the word. Protest safely. #georgenkencho
There is co-ordination across the far right in Ireland now to stir both left and right in the hopes of creating a race war. Think critically! Fascists see the tragic killing of #georgenkencho, the grief of his community and pending investigation as a flashpoint for action.
Across Telegram, Twitter and Facebook disinformation is being peddled on the back of these tragic events. From false photographs to the tactics ofwhite supremacy, the far right is clumsily trying to drive hate against minority groups and figureheads.
Declan Ganley’s Burkean group and the incel wing of National Party (Gearóid Murphy, Mick O’Keeffe & Co.) as well as all the usuals are concerted in their efforts to demonstrate their white supremacist cred. The quiet parts are today being said out loud.
The best thing you can do is challenge disinformation and report posts where engagement isn’t appropriate. Many of these are blatantly racist posts designed to drive recruitment to NP and other Nationalist groups. By all means protest but stay safe.
There is co-ordination across the far right in Ireland now to stir both left and right in the hopes of creating a race war. Think critically! Fascists see the tragic killing of #georgenkencho, the grief of his community and pending investigation as a flashpoint for action.
Across Telegram, Twitter and Facebook disinformation is being peddled on the back of these tragic events. From false photographs to the tactics ofwhite supremacy, the far right is clumsily trying to drive hate against minority groups and figureheads.
Be aware, the images the #farright are sharing in the hopes of starting a race war, are not of the SPAR employee that was punched. They\u2019re older photos of a Everton fan. Be aware of the information you\u2019re sharing and that it may be false. Always #factcheck #GeorgeNkencho pic.twitter.com/4c9w4CMk5h
— antifa.drone (@antifa_drone) December 31, 2020
Declan Ganley’s Burkean group and the incel wing of National Party (Gearóid Murphy, Mick O’Keeffe & Co.) as well as all the usuals are concerted in their efforts to demonstrate their white supremacist cred. The quiet parts are today being said out loud.
There is a concerted effort in far-right Telegram groups to try and incite violence on street by targetting people for racist online abuse following the killing of George Nkencho
— Mark Malone (@soundmigration) January 1, 2021
This follows on and is part of a misinformation campaign to polarise communities at this time.
The best thing you can do is challenge disinformation and report posts where engagement isn’t appropriate. Many of these are blatantly racist posts designed to drive recruitment to NP and other Nationalist groups. By all means protest but stay safe.
