If you're a directional trader, trading options instead of stock/futures can be a great way to play the markets. By trading options, you can specify your maximum loss upfront and even define specifically where you think the underlying will be trading at by the expiration date.
These tutorials will demonstrate, with real examples, how to use options to trade the markets when taking a bet on underlying price movements. Nothing fancy...just short examples that demonstrate the advantages of trading options.
| Position | Type | Strike | Price | Current | P&L |
|---|---|---|---|---|---|
| -1 | Call | 5300 | 27.50 | 92.00 | -3,225 |
| +1 | Call | 5400 | 14.50 | 50.00 | 1,775 |
| -1 | Put | 4700 | 45.00 | 8.50 | 1,825 |
| +1 | Put | 4600 | 29.00 | 5.55 | -1,172.50 |
| Total P&L | -797.50 INR | ||||
| # | Asset | Strategy | Profit/Loss |
| 8 | BUD | Put Backspread | + 31.58% |
| 7 | HD | Call Spread | - 78.26% |
| 6 | XOM | Call Backspread | - 0.85% |
| 5 | PFE | Put Backspread | + 22.22% |
| 4 | USU05 | Time Spread | + 25.27% |
| 3 | APCC | Call Backspread | - 62% |
| 2 | DXJ05 | Time Spread | |
| 1 | MSFT | Straddle | + 80% |
Comments (11)
Peter
August 28th, 2011 at 5:33pm
You mean you want to start trading the VIX?
Manish kumar
August 28th, 2011 at 10:10am
Hi, I'm an option trader nifty index only I want to say thanks lot because I learn lot of thing from your option trading workbook, and now I want to improve my trading style at high and low VIX. How i improve myself advice me?
Peter
July 16th, 2011 at 7:46am
Mmm...not sure about how exactly to calculate VAR, but here's a heavy PDF that explains it if you're interested - Value at Risk.
Is this what you were after or are you looking for a calculator?
daniel
July 15th, 2011 at 12:58pm
hi peter,
can you also tell us how to calculate the value at risk and the expected shortfall of options? Would really apreciate it. Thanks.
Daniel
Eric
June 14th, 2011 at 7:52pm
Hi Peter,
This blog is amazing. Thank you so much. I just sent you a PM, so looking forward to talking with you soon.
Thanks!
Peter
March 19th, 2011 at 6:57pm
Hi Jitendra, no, options will never be offered below their intrinsic value.
jitendra
March 18th, 2011 at 8:33am
halo Peter,
I wanted to clear some doubts,,,,as a starter with options....
I have few questions
suppose current market price of X company is 5 euros and I purchase a call of 7 euros (2 euros is the premium) I have heard this ...but are the call ever available at discount).
Peter
January 23rd, 2011 at 3:19am
Hi there, I'm happy to hear some suggestions on what you'd like to see on the site. Maybe some tutorials on option trading software etc?
Anonymous
January 23rd, 2011 at 12:01am
I don't know what you call this but this is not option tutorials for me, more like an excerpt from some paper.
yogita
October 5th, 2010 at 1:21am
i want to know that how to analyse put call ratio. plz give me the writeup on theis topic.
Mahesh D
December 11th, 2009 at 12:34am
Excellent analysis and the information provided is very helpful..
Thanks
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