Options #Strategies कैसे बनाते है? | #Options #Trading - 5 | #Learn2Trade - 37
Welcoming you all to Learn2Trade session #37 and Options Trading #5 My name is Vivek Bajaj and I’m in market since a long time. And I’m teaching Trading free of cost to you and Annapurna Ji. Hello. -Hello sir. -All well? -Yes sir. -Same shirt friends, the previous video was just recorded. And this video. Some people were saying Annapurna that when you record 2 videos together Then upload it together too. So, answer to that is after every video there is a post-production.
Transcript is written. A task. You feel that we are doing easily but the efforts after that Takes time. So, if you would give time, we will get time to record it nicely. So, Annapurna Ji, you might have got comfort in Options Greek. -A little bit sir. If you haven’t understood, then please go to eLearn options, go to Greeks. And on every Greek, there is a video in English, watch that too. I think you will be comfortable, and there is something which you will understand after it’s done.
Like swimming. I have taught you swimming. But if you haven’t done it, then how will you do it. So, if you want to do trading, then go and start doing swimming. Invest small. But start it. In last class, I had told we will discuss about Option Strategies. Let me tell you one thing, When you go to eLearn options then there are video based tutorials.
But when you will go to ELM school, then go to modules, there will be derivatives module. Where you will find a lot about Options. This is even free of cost. The things that I have taught you, not told any rocket-science just explained very nicely, These talks are present there in English in text based if you want to understand about it in detail. You are a millennial, so believe in reading, then after watching my video if you will watch this.
See, delta hedging? Did you remember? -Yes sir. I asked you something like this then it’s written here. What is Gama? About Gama, is even written about it. What is the relationship with Gama and Strike price? Then revise the basics through it once again. So, let’s discuss about strategies! In fact, there is option strategies too, I just saw there is strategies too. Different type of strategies is here and even taught. Very nice thing. What is Strategy? Nothing is permanent in life that it would work or not. Except mother’s love.
Rest all is fluctuating. Variable. And the strategy is permutation-combination of all variability. Like to deal with this person, a strategy is required. You are doing permutation and combination with it. the probable output that will come. Ultimately, it’s a game of probability. Right? -Yes.
No game of probability is better than Options. Because same strike price would give you a different orientation today than tomorrow. Because of Theta. Just one strike price will have a different character because of the distance between two strike prices. Any event that can probable happen can have an impact on strike price premium.
So, at last, I had given you an example that I felt this is going to happen then my heartbeat inc. So, I told you premium cannot be 55. Give me 65. There is so much of variability. And creating right permutation-combination with this probability then you can make money in Options. But the question is. Right. What is right? What is right for you? May not be right for me! That’s why its market. That why you probably would do the same thing.
And I would lose money and you might make money. Because your temperament might tell you to square-up early and mine will tell to stay till end. Because staying till the end has a natural advantage of making money. How? If I have sold at Option Net, which is by the way Gama. Meaning if you have sold at net in options, then it means your Gama is negative.
Which means if you stay till end, then you would make money. Let’s discuss a concept Annapurna Ji. Who has a natural advantage in options? Buyer or seller? -Seller. -A natural advantage. Because he would get everyday money. So, you want to become a buyer or seller? When profitability of a seller is more, then obviously a seller. -But risk is more too for seller.
Yes Sir. -Do you believe “Risk hai toh Ishq hai’’? These dialogues are nice only in listening. But when you go to trade, and then you would understand that this trade is difficult. But probability of making money is more when you are an option seller riding the tide. Have you been to Goa? -Yes sir. The sea beaches are so nice in Goa. The waves. You feel like talking to the wave. But when you go inside the wave and fight with it,
And come back, it really takes out from you because you are fighting against the nature. Nature is pushing you. But you are fighting against it. So, option selling like that wave. If you flow with the wave, knowing that risk, because market is all about risk and knowing it. Then if you are participating in market as a seller knowing your risk then probability is higher.
Because naturally money will come to you. But if you are a buyer and working against the wave. When we go to beach, we go to wave. Make a timing and go that it will go back, and I will come front. Not like its coming and I’m coming from here too. Then you may suffer.
And you know there are different beaches with different intensity of wave. What you can do at Goa Beach cannot be done at Puri Beach. Puri Beach is so rough. So Puri beach is a stock. And what you can do at nifty in Options, cannot be done in Bank-Nifty Options. Because intensity of both the waves will be different. So, you will have to deicde where do you have to go? Goa or Puri.
And make strategy accordingly. Meaning you want to work in stocks/nifty/bank-nifty. You recently went to Pondicherry and came. Right? -Yes sir. How’s the beaches of there? -It is nice sir. -It’s like which stock? Honestly, beaches over there fall too fast meaning you cannot stand at a place. It will pull. -Sand keeps on falling. -Which means it is quite volatile. A highly volatile stock. So, strategy for that would be different. It’s not so the strategy would be same for goa and Pondicherry.
So, imagine it the same way. So, when we are making strategy. Then our objective is one only That we must make money. We all are here for one thing. You are here for anything else? -No sir. Some people might be here to lose money, so you might not like this conversation.
But largely we all are here for earning money. So, if you want to earn, then saving must be there. So, if you are an option seller, then probability is more. Option buyer makes money too. How can I say it doesn’t mint money! But less probability. When we are doing strategy.
Then it depends on what you want to become! How much money you have? I have only 10,000 and talking big. Then how will it work? If you to become Option Seller, Meaning you must become Option Seller, wanting to take risk. You must have money for it. Without money in pocket, how can you take risk? And if you take loan and enter market, And take risk, then you deserve a param veer chakra, you itself set an example of Veerta.
That I entered with loan and trading in market in options being a seller. you must get Veerta Parva. If you get, then very nice and give me too if you stay. Sorry for non-contextual discussion But friends, life should be done this way only. If you think options is tough, the more it will pull you. Play with it. In this website we have written too, “Learn Options the FUN way”. Let it be fun. But you should know every fun should have a limit. Every fun has a limit.
And must go till there only. So, you must know in options too, what is the limit. So, lets talk about strategy. Let’s go to learn strategy. There are different types of strategies. Have put basic framework here. Basic Strategies. Synthetic Strategies. Intimidate Strategies. Arbitrage Strategies. Combination Strategies. Advanced Strategies. This is not an exhaustive list, but this is what people follow. You can create your own. So, in basics. Long. Short. Bull Spread. Bear Spread. Let’s talk about this.
Long meaning? Buying. Either call or put. In that you know my loss is limited and if price increases then great. Similarly in put my loss is limited. But if price falls, then great because I’m a buyer. How did you find our tool to be? -Easy to comprehend. -Very Simple. If you play with it, with friends the more they will be friends with you. So, play with the tool. And tell your friends because its free to its fun to play. If you to put of short, then I will sell
And the one selling has limited earnings. Loss can be anything. So, if I sell call, then earning is this much. And if price increased then I’m gone. And in case of put, earning’s is this much only. And if price falls then I’m gone. So, this would be a basic. Now let’s go bull spread.
What is bull spread saying? That price will increase. But it will not rise more than it. Do you remember when we were studying Option Chain of Reliance. Let’s look what happened at Reliance. Let’s use Opstra. Very nice people. Raghu, Prashant. So, what had we seen? We want option chain. Then if we see open interest, then where it’s the most? Call of 2100. In today’s date. This is OI change. This is volume. A little diff from NSE. The most OI is in call 11,500. And strike price of 2100. Let’s zoom.
And OI in put is 5090. Which means call has more OI which means 2100 should be a max. Because there are sellers in it, then chances of it going more than 2100 is less. Suppose I make a strategy, that I sell call at 2100. Let’s talk about buyer because seller is a next level complication. Suppose I’m an option buyer, then I bought put of 2100. But I feel that it won’t go below 20,060.
I am feeling it. Suppose there’s a range in which the stock will be there. So, if it goes below 2100, it won’t go below 2060. What will I do? I will take put of 2100 And sell put of 2060. Let’s make a strategy. Option Strategy. Strategy Builder is here.
We can do it here too in eLearn Options. Will be theoretical in eLearn Options. Over here they have made practical. So, lets select reliance. Options. Put of 2100 for reliance of 26th August. I bought 1 lot. So, add position. Okay?
And put of 2060. 1 lot only. Selling 2060 put in 1 lot. Then let me add this. So, my trade is, I have bought put of expiry of 28th August in Rs. 27. And sold one lot of 28th August and received Rs. 14.50 I have sold so I would get. And in this I must give. So, this strategy made your pay-off that maximum that must come
Is this much only because you have sold of up. So, if it goes below, then you won’t get money. And maximum to be used is even this much because you have taken it. So, the normal strategy in call-put that became open ended, if you spread it.
Buy one and sell other. Then somewhere you have capped your profit and loss. Look. Profit and loss became capped. Now let’s look at Greeks in this. When we have bought then its IV is 19.5 and the one, we have sold is 19.61
Now your question should be why the iv is different of different strike price? Because it represents the seller’s fear. - Correct. In every strike price, the seller has different fear? -Yes sir. Because change in price will matter. Every seller thinks very uniquely for every strike price. Will have diff fear in higher and lower strike price. So, volatility cannot be a linear line. Because probability is not linear. Now, life, every moment of it is not linear. We were thinking something else in the previous moment and now something else. There is no linearity in our thought process. So, probability would be different.
Volatility curve, every iv curve if we join, then it becomes a smile curve. Smile. Because “at the money”, IV is lowest and the more “out of the money” you will go. And “in the money” you will go, the volatility increases. Why?
Because the seller has estimation that price might come there so he charges higher premium in far-away strikes. Because it has uncertainty in the far one’s. Certainty in the near one’s that ‘at the money’ has happened So, certainty is there, so he can plan better. More far you will go, the more he is uncertain So, he keeps the volatility high reason that he charges high premium. You understood this concept!
Now my position is made in which I have worked in both strike prices. So, what is the position in Greek? Strike price of this Greek is different and for this is different. So finally, what is Greek? 14.22 It is -14.22. So, if price increases by 100 then my premium would decrease by 14.22
Meaning this would be my loss. This is my delta loss. If it increases. Theta is 16.46 Meaning according to this position, in daily basis I will have a loss of 16.46. -Okay. Because in net I have made the premium plus. Meaning my Gama is plus in net. So, remember this, if Gama is positive in net, then due to Theta your money will be used. Because you have plus the premium in net. Understand this much only for Gama.
If Gama is plus, then it means your theta is negative because you have made the premium plus. You have made the premium plus because see you have taken at 27 and sold at 14. In net the premium is plus only. So, Gama would be positive only. And Vega is 36.
which means volatility which is 19.54 & 19.61 - Sir premium would be minus. Because I have bought at 27, so I must pay. Premium plus meaning you have taken the premium. I can understand. You might take time in connecting with my language. Please do ask question wherever you are stuck. I have told premium plus meaning I have taken. So, if you have invested in NET then Gama is Plus.
And if in net, Premium is at home, then Gama is minus. Due to which theta has a reverse impact. If Gama is plus, then Theta would be used. And if Gama, is in minus then Theta money would come. So, friend do you think it’s complicated? Not at all complicated. No one can explain Option Greek more simply giving you in stamp paper written. Watch this video multiple times, practice through these tools. You would understand so much That your next level option journey would become so smooth that you will enjoy as a trader.
Vega 36.16 meaning, if options increase by 1%, IV. Gama is positive, as I have taken in NET. So, Theta’s impact would always be negative, and Volatility’s impact would always be positive. So, Gama & Vega has a direct relation whereas Theta & Gama has indirect one. -Kind off. Let’s look below too what is there. This is taking out probability of profit.
It is saying you will make 36% profit in this trade. It’s a technique of taking out probability. Let’s not go into it. Let this data be circumstanced. Assuming it that there are 36% chances of making profit. Then would you do this? No sir. -Breakeven point in this is from 0 to 2087. Very interesting, isn’t it?
Total profit is coming of 87. 0 to 2087. If you see it’s pay-off chart. breakeven point for this would be from here till here. This and this. This 2062, 2087 and 2103. If it closes in between the two. Wait a minute, when will you make profit? When break-even point range is this – 2087. This is the breakeven point. So, when it will come over here, then your profit would be Oh, if it is below it, then you will have profit that’s why it’s saying 0 to 2087. Till here.
If it comes in this range, then it’s your profit. -Got it Estimated Margin Requirement. We will talk about it later that how it became 18,554. Because every strategy has different risk profile. Taking 1 & selling 1. Taking 1 & selling 2.
Taking 1 & Selling 4. Then automatically you are adjusting the risk Because Delta, Gama, Vega are different. Then by accessing that risk margin is calculated. And if any position you see risk, then he will take margin from you. More risk, more margin. Less risk, less margin. Then this strategy chart, basics understood.
That how you can strategize your trade. This was Bull's Spread. If you go in this, then there is Bear Spread Meaning if you feel recession in market then what spread you will make. Like we told in reliance, if it will go below 2100 then take of 2100 and sell put of 2060.
So, that’s bear spread. Bear Spread can be done by Call as well as Put. If you go through all this, you will get an understanding. One question like we are buying put and selling put similarly can we do with call? -That’s called Call Spread. -What is the difference between the two? How do I Strategize? If you want to play in recession, then put is always preferable. Taking Put and selling Put. Because if you are taking put and selling then you are investing premium. If you see in example, then we invested in NET. But if you say you don’t want to invest in premium.
Want to eat premium. Meaning want to plus Theta. Then in put if you want to play in recession. You can’t do it in put and play recession. And reverse in call. What to do? Let’s change it once. If same I want to play recession in Reliance and use call. What will I do? I will take upper call.
Because if I seem to see price is going down, then I can fix the upper call. So, the upper call, I don’t think it will go above 2160, then I will sell that call. So, I won’t keep my risk open as it can go anywhere then I will take the upper call. Suppose I buy call of 2200. Then it means credit spread. If I want to play recession with put, Then I take put and sell below put. And I want to play recession with call, then I do credit spread.
Sell call and take upper call. Just done the reverse. Then let’s look in Greeks, what happened! In this Theta, became positive which means Money would come in my home. Gama became negative. Which means if you have sold net Options, that’s why Theta is positive. And Vega too became negative which means Volatility will increase then money would be used. So, look game is completely changed now because you have become an option seller in net. Then what you want to do? Option buyer or Option seller? accordingly strategize.
If you go through this strategy document and this strategy has been explained separately And it has been shown what is the meaning and if you practice then you would understand about each strategy what it wants to say. -Okay sir. Basic Strategies, Synthetic Strategies like covered-call, covered-put. We will discuss about it later but from this video perspective, I hope you understood How you make strategies. You can do anything. Every type of combination is possible. These are standard combinations that we can use but if you want to make your own, Your own unique propriety model, you can do that also. But for that money is required. The more the creativity, the more is money required. -Sir how much minimum capital? If you want to work in Option Strategies, then I would recommend 5,00,000.
Because if not 5,00,000 then nothing would come home, and you won’t be excited. In fact, if you are coming to market for trading and expecting significant revenue Then 5,00,000 is minimum. You can start from 50,000. Can explore. Can buy little bit. But very much money won’t be made in it. But if you commit 5,00,000 minimum base capital Then only market will give you. Otherwise, market will feel that you are here for time pass. You assume market to be a personality. The more you become friendly, suppose you have a friend whom you said you have net worth of 50,000. How will be the reaction?
Will say doesn’t have anything, only pennies. And if they get to know you have 5,00,000 Will become more friendly. 50,00,000 then more friendship. This is the world, like this only. Market is similar, the more the money you have more they will invest in you. So sad!
Make a target of 5,00,00. Suppose you don’t have it today then how do you do this? Start building the capital. Then probably options may not be the right thing to do. Or you must rely on Option Buying which is a low probability success event. Time your, trading in such a way that you make money when there is probability on Option Buying.
Which is not an easy thing to do, then you focus on cash market. Then do some intraday, morning trade that I had taught you. If you don’t remember, then I would give link below such that you understand morning trade.
Start building your capital, that from 50,000 you started doing you did 70,000 – 80,000 – 1,00,000 – 2,00,000 When you reach the zone of 5,00,000 then we would go all in Options. Can start from 2,00,000 taking 1-1lot. But 5,00,000 is a comfort number for anyone to become a serious trader in market. When you will learn these basics and cover in the next video, cover these advanced strategies After this, then there are many options oriented, webinar in eLearn markets. Options specialists like Chetan Sir, our friend – His webinars are there. When you will complete these basics then when you will go to subject and derivatives And under name if you select Chetan and you would see Chetan Sir has made many webinars on Options.
We won’t watch it now, when our basics would be clear, then specialized learning that for this strategy this would be profitable or loss. Strategy specific specialized learning you would do later by subscribing to these webinars. Teaching you the basics for free now. But to go into advanced -Efforts must be made. Efforts and if you must do advanced worship in temple then extra money is required. Because those are specialized learning that to has potential to make lot of money.
So, you pay a little to get it. There is advantage to pay fees. - Support. -Second? Hurts to pay so human being grows. Nothing pains if it’s free because no expenses and doesn’t take it seriously. So, basic knowledge which is free is fine but little more should be paid in advanced. That’s why eLearn Markets have made it cost effective. Paying some money would have a zeal in you, that I utilize that money. And make earning form that money by recovering it. That’s why.
So, this was a basic video on strategy where I talked about Basic Concepts. eLearn Options and Opstra is a deadly combo for freshers who are just into market you use it, and learn and don’t rush, let this process go slow and in next video I would discuss about advanced strategy and make attempts slowly if you have capital support and proceed our journey in options. Will try to make you an Option Trader. This journey from cash market to Options, can give you. And will record more videos And make you a good trader. Till then stay tuned to my channel, like the video if you liked it. And sharing with friends is necessary. Thankyou friends. See you in the next video. Bye-Bye.