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
•Don't get carried away with the kind of return that Mr. Pani made in such a short period of time.
•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.
1/ Screen Time:
• 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
2/ Focus on momentum:
• 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.
3/ Option buyers need momentum to make money:
• 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.