Nikita Poojary

Nikita Poojary

15-01-2022

10:46

𝐁𝐚𝐬𝐒𝐜𝐬 𝐨𝐟 πƒπžπ«π’π―πšπ­π’π―πžπ¬ - 𝐏𝐚𝐫𝐭 𝐈𝐈 β€’ How options can be used β€’ How to trade in options & exit strategy- buyers β€’ Imp of theta decay β€’ How to trade in options & exit strategy -sellers Time for a Thread🧡 Curated in collaboration with @AdityaTodmal

β€’ The lame textbook def of right but not the obligation etc is simply confusing β€’ This is how you can remember, by understanding the logic of the instruments with your view on the market

β€’ In a nutshell: Options are instruments used to express your view on the market β€’ The view could be same but the instruments played by the buyers and sellers could be different

β€’ For Option buyers: β€’ Its imp to set a price target β€’ and to set a time target as well

β€’ Time is an important factor to be considered β€’ Movement should outweigh the time decay

β€’ Remember option is a wasting asset β€’ Time decay always works against option buyers β€’ Time decay is the highest when the option nears its expiry

β€’ Stock moved up but my CE dint move up 😭😭😭 β€’ Buying too early in the series means paying higher prem for an OTM option β€’ Remember, OTM option only has time value

β€’ Exit conditions are very crucial β€’ Evaluate your position everyday whether the theta decay is eroding your option premium faster than the movement you are waiting for β€’ If yes have a SL

β€’ Option selling :betting where the market wont go β€’ Need a broader view over a precise view

β€’ Draw a mental probability distribution chart β€’ Theta decay is a friend of option sellersπŸ€πŸ‘¬

β€’ Exit conditions for option sellers β€’ Time to expiry is less: theta decay will bail you out, ceteris paribus β€’ If its breaking a major support or resistance: exit β€’ Meanwhile: adjustment is the name of the game, to protect from huge MTM swings

β€’ This was a part II Thread on derivatives β€’ You can check out the 1st part hereπŸ‘‡ β€’ If you ❀️ this, why not share? β€’ Retweet the first tweet and help others find this 🧡 β€’ Happy learning πŸ€“ to everyone!

β€’ I curate threads on trading & financeπŸ“‰πŸ“ŠπŸ“ˆ β€’ You can check out other threads πŸ“Œ on my profile πŸ˜ƒβœŒοΈ Follow us: @AdityaTodmal & @niki_poojary for more such interesting Threads! Have & happy πŸͺπŸ§΅ & a safe 😷 weekend!



Follow us on Twitter

to be informed of the latest developments and updates!


You can easily use to @tivitikothread bot for create more readable thread!
Donate πŸ’²

You can keep this app free of charge by supporting 😊

for server charges...