
πππ¬π’ππ¬ π¨π πππ«π’π―πππ’π―ππ¬ - πππ«π ππ 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 Threadπ§΅ 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’ 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 πππ 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’ Draw a mental probability distribution chart β’ Theta decay is a friend of option sellersπ€π¬
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 hereπ β’ If you β€οΈ this, why not share? β’ Retweet the first tweet and help others find this π§΅ β’ Happy learning π€ to everyone!
πππ¬π’ππ¬ π¨π πππ«π’π―πππ’π―ππ¬
— Nikita Poojary (@niki_poojary) January 8, 2022
β’ What is a derivative
β’ Various derivative products
β’ Participants in derivatives market
β’ Uses of derivative instruments
β’ Beta & hedge ratio
β’ Option Greeks
Time for a Thread π§΅
Curated in collaboration with @AdityaTodmal pic.twitter.com/x6IHoQubOT
β’ I curate threads on trading & financeπππ β’ You can check out other threads π on my profile πβοΈ Follow us: @AdityaTodmal & @niki_poojary for more such interesting Threads! Have & happy πͺπ§΅ & a safe π· weekend!
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