- support 10000 resistance 10800 based on highest OTM options
- note earlier support was 11000, then 10700, then 10500 all of which broke
- but open interest remained roughly the same in the puts... see chart
- so what do you do when you have sold 10500 put and your trade goes in a loss?
- simple... you short in futures and hedge it.
- that is why when a support breaks, markets have a free fall.
- also note the IVs... it is at 20%. A 10300 put is now available at 200 so if you sell a put and short nifty, you can get almost the entire premium as profit on expiry. And at panic bottoms, the IVs will be the highest!
- And if you sell a straddle (say 10300), you have a leeway of 400 points (cost of 10300 call and 10300 put).
- of course, in real life it is not so easy. You must have good knowledge of option greeks, a calm mind and nerves of steel.
- note earlier support was 11000, then 10700, then 10500 all of which broke
- but open interest remained roughly the same in the puts... see chart
- so what do you do when you have sold 10500 put and your trade goes in a loss?
- simple... you short in futures and hedge it.
- that is why when a support breaks, markets have a free fall.
- also note the IVs... it is at 20%. A 10300 put is now available at 200 so if you sell a put and short nifty, you can get almost the entire premium as profit on expiry. And at panic bottoms, the IVs will be the highest!
- And if you sell a straddle (say 10300), you have a leeway of 400 points (cost of 10300 call and 10300 put).
- of course, in real life it is not so easy. You must have good knowledge of option greeks, a calm mind and nerves of steel.
No comments:
Post a Comment