Time to buy an option is very critical. Option is also like equity. But the difference if you make a mistake a in equity buy you can stay for more time to exit. In case of Options your inaction will eat your capital 100%.
I give a below the tips for entry into options at right price. What is right price and right time will be decided technically. The following example is based on 10100 CE of Aug 17 Expiry.
Monthly High 150.00 Monthly Low 16.20
On 18th July it touched a low of 48.05 and never visited this place again. You have to immediately note down the date on which this number was crossed. It was on 13th July. Note down High and low of this date. The low was 53.55. You can see that this low has never been closed on daily basis till date.
Again on 3rd August it touched a low of 74.20 and closed at 82.70. Note down the date on which this 74.20 was crossed. It was on 24th July. The low on this date was 64. The interesting thing is 82.70 was the high achieved on 24th July.
Now next thing you must note down is number of days remaining to expiry. This month Expiry is on 31st. So 17 trading days are remaining.
So far 150 has been touched from a low of 16.20 and closed at 82.70. Almost 40% of gain is lost. The best price to buy is above 64.00. How this rate is arrived? Since the latest low of 74.20 was crossed on 24th July with a bottom of 64.00 this 64 acts as a strong bounce back point in case of next drop in Nifty and recovery.
You must do this analysis for Put also in the same manner and note down the buy point.
What is the stop loss for this 64. Obviously 48.05. That is the most strongest base which will not be touched if the bull run continues.
What is the target for Exit for this Option?
If this Option start trading above 150 before 17th of this month, the exit price will be minimum 300. Now you can calculate the number of times your buy price of 64 over 300.
Start doing home work. Analyse the data. Options never jump just like that. Technical works on every data. Be it Equity or Option!
Those who have doubt still can reach me on email.
Be a positional investor in Options rather than day trading! You will be succcessful!
Happy Learning!!
Thanks for your opinion ideas.I mainly depend on VWAP and ATR values and closing points with simple Pivot points.It works almost 90% correct.Depending on this strategy I took a call on LT on Friday last and stock was southward but it regained significantly and been able to sq.off with little profit.Now I obviously try this opportunity.All the best to be very kind to small traders like me.Thanks once again Sir.😄
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