One can benefit from the sudden drop in volatility by going short on the same before the event
Denied an opportunity to trade in the regular market, these retail traders will shift to the dabba market or be part of a collective trading scheme where an ‘eligible’ trader will punch orders on behalf of smaller traders for a fee
A four-step confirmation process implemented for futures is proposed to be introduced in the options segment
Market speculation has reached a frenzied level not seen since the tail end of the dot-com boom two decades ago
The biggest advantage has been the hedging option provided by the derivative market
Options are the ideal instrument to resort to in situations like today after the Nifty reversed 70% of the drop caused by COVID-19 and is still standing strong.
New investors are putting their money into options, which offer high returns but are riskier. Analysts attribute their affinity to low margin requirements and ease of executing the trade
Bear Put spread is a moderately bearish strategy. The strategy is built by Buying a Put close to the current market price of the underlying and Selling the same expiry Put but of a strike lower than the Put bought.
As COVID-19 pandemic turns the entire market more headline-driven than driven by solid economic data. The moves upward or downward become vulnerable to reversals and respite.
Modified Call Butterfly is a 4-legged strategy where 1 lot of Call close to current underlying level is bought against that 2 lots of higher strike calls.
In the last few days, trading volumes have fallen across segments, causing havoc among traders. In this article, we will examine the effects of this, and what precautions we can take to decrease our risks.
Considering the unpredictability of the pandemic, it makes sense to keep the trades limited and protected. Hence, Modified Butterfly on monthly series options is advised.
The Back ratios are typically known for their pro-volatility characteristics. Here, we have a forecast that we could have a big move in a day or two.
Empirically such periods have ended in prolonged calmer times. Till such signs come into trade analytics with a drop in Implied Volatility, it would be wise to await an opportunity instead of venturing into a trade.
Writing Options and covering the Option Buyer is equally difficult as the possibility of any unforeseen, unexpected rises a lot. This makes the Option Writing a lot riskier.
Trapped Option Writers may extrapolate weakness if any in the coming days. Hence, an index hedge is advised with bear Put spread on Nifty profiting from the extension of the ongoing meltdown.
Bear Put Strategy is built by Buying a Put close to the current market price of the underlying and selling the same expiry Put but of a strike lower than the Put bought.
Historically, we have seen that equities as an asset class have outperformed in a trending market. But, it is equally important to learn an art of option writing, especially in the ‘non-directional’ one
Options trading is more and more becoming an integral part of trading especially after benchmark indices topped global charts for highest Options Volumes.
It would encourage hedged trades, making the derivative markets safer
Moving average based trading is one of the simplest form of trend trading but has been lost in the maze of new indicators. Nooruddin Fidai, one of the respected names in moving average based trading demystifies his art.
The annual Traders Carnival is being held in Coimbatore and will capture the changing market dynamics. Live trading, expiry day trading, currency and commodity traders will be showcasing their skills.
Mental discipline, rather than technical analysis and strategies is the main challenge in becoming a successful trader. Vishal Mehta crossed that hurdle when he moved from discretionary to system trading.
Situations like these where there is strong consensus seem to have been built against the range breakouts, trading against the tide for that minor possibility of a very big move becomes very difficult
Abhinand Basavaraj shows how trading success can be achieved by working in isolation, progressively combining technical analysis with strong risk management and optimum sizing learnt after each trading mistake