Option buyers and option sellers are poles away from each other. Some people are looking for 40-50% returns with 10,000-20,000 capital, while others are looking for 2-3% returns with very little capital.
What do you think options sellers fear in the market?
Iv only fear option sellers.
Move in one direction in a short time.
Only one concern is that the premium we got was worth it?
i do both. do not be afraid. Due to its small size and high frequency of occurrence, it is the only way to trade without fear.
I mean, can the return not be so good???
Option buyers don’t see the premium before buying. They see momentum and direction. They are ready to pay Rs100 even though the ATM CE has an intrinsic value of 80. I also don’t worry about losing the entire premium because I know that’s the biggest risk.
Option sellers are primarily looking for high premiums and trying to absorb risk. Remember that transactions only occur when the seller is ready to sell. So someone is pushing the price up to cover the risk.
If option buyers look for premium valuations before jumping in, they won’t lose much.
you do both! Therefore, you will always make a profit regardless of what the market is doing. Sell options when standing, buy options when trending, and even if you sell options in a trending market, buying options in that direction can cover your losses significantly. It seems like the sweet spot!
But how do you, the options seller, decide that the market will move in that range or not break that level? Is it based entirely on support resistance and option chain data?? ?
I don’t think I have any doubts about my understanding of this line. Does it mean that option sellers try to push prices higher when trying to break sell levels? Please clear…
Prices will go up before then. Sellers demand higher premiums, and buyers are prepared to pay absurdly higher prices – that’s how price discovery works.
After a while the madness will subside and the price will revert
Open 15 adjacent strike price premiums on the day the bank’s nifty move exceeds its ATR.
Also, the dynamics change when an option goes in-the-money.Option sellers cannot easily seek it as it reduces liquidity
Your basic question is when should you start and end selling options trades. Market analysis: ta, s&r, oi, volume, and a myriad of others are all highly subjective and do not give an objective idea of how to define entry and exit criteria.
So what actually works is: How are options priced? What does the option premium represent mathematically? What is the Greek?
Once you have read and understood these concepts in depth, you can start shaping your rules for trading, buying and selling options.