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SwingTrader
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Joined: 11 Aug 2006
Posts: 2884
Location: Hyderabad, India

Post: #16   PostPosted: Tue Jan 28, 2014 9:29 am    Post subject: Reply with quote

drsuhask wrote:
Thank you ST Sir for prompt reply.
Dr.Suhas Kothavale


One more key point about selling verticals vs buying diagonals. Selling verticals means you are opting for lower fixed return. Your max return is going to be the credit you receive for the spread sold. This is usually around 8-12% of margin for the trade. If you try to get more credit than this, you would be too close to current price and this would increase your risk drastically. In case of diagonals I accept a bit more initial risk for variable reward which could be significantly higher than that of an equivalent sold vertical.

So it all boils down to how much risk you want to take. and the kind of reward you are looking for.

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Srikanth Kurdukar
@SwingTrader
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drsuhask
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Joined: 09 Dec 2009
Posts: 9

Post: #17   PostPosted: Tue Jan 28, 2014 10:27 pm    Post subject: Selling option(contd.) Reply with quote

Dear ST Sir,
Actually I am not used to trade in only-options. I am used to analyse the charts & trade in NiftyF, sometimes BNF. I usally sell the nifty option as covered option if my positions in nifty futures are in profit or if market becomes sideways after I take position in NF .
It is very difficult to understand option greeks & other details which is the reason refraining me from trading only-options . But ST Sir simplified trading in options by introducing this diagonal or vertical spread. This requires less monitoring as that required in future trading. Loss is more with future trading.
Even if I lost the first trade in diagonal, I will now do paper trade in live market for at least 2-3 months & then take live trade.
This spread seems very useful to the traders like me who remain busy in their schedule .
Thanking you.
Dr.Suhas Kothavale
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chiragbvyas
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Joined: 18 Feb 2010
Posts: 469

Post: #18   PostPosted: Sat May 23, 2015 10:33 pm    Post subject: Re: Selling option Reply with quote

drsuhask wrote:
Dear ST Sir,
If we go for selling the spread (Vertical or diagonal), what will be its results? As there is always time decay in options, rather than buying call spread ( when we are bullish) selling put spread will lead to lesser loss if market goes against us.
On 23/01/2014, I took diagonal call spread i.e. baught CE 6200 Mar @ 302 & sold CE 6400 Feb @ 105. Now this position is in loss almost Rs.52*50 per lot.
Again today market closed below the pivot support after bearish cross-over of EMA13/233.
Thanking you.
Dr.Suhas Kothavale


EMA 13/233 on which Tf ?
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