[itsmb]

Originally Posted by SmartCat

You don't need to use futures here at all. You get the same payoff chart when you buy a call option or buy a put option. By bringing futures into the picture, you are unnecessarily adding one more trade.

OP inquired about hedging by buying options, intention was to inform regarding hedging in speculative trading (also mentioned in post). I have seen many people venturing in to Futures trading without knowledge and burning their hard earned cash in a matter of days.
Long options are not everyone's cup of tea and then the fight against Theta and Vega is never ending.
Happy Trading

[100BHP]

Please start from the Chapter 1 , for people like us who dabbles in spot equity only .

[SmartCat]

Originally Posted by 100BHP

Please start from the Chapter 1 , for people like us who dabbles in spot equity only .

Open link in Youtube and watch videos in this playlist:

https://www.youtube.com/watch?v=HCcF...mL8bK2R-OyXzCu

[yogesh.8984]

Originally Posted by SmartCat

That's how I got started with options - cash secured put and covered calls. These are the safest options strategies and can be incorporated into a long term stock investment strategy, and is not considered to be speculation. Warren Buffett rakes in billions by selling cash secured puts.

Exactly how I started options trading (and option selling in particular).

During the crash of Covid (in March of last year), I decided to get into stock market for long term wealth generation. This was to compliment other retirement corpus building avenues like PPF, NPS etc. Since then, buying stocks on each dip (have a watchlist of only selected blue-chip stocks and never go outside of the watchlist). This helps in two ways –

• Easy to follow and keep track of what is happening in the selected companies
• Since its a collection of only blue-chip sector leaders, relatively less riskier compared to general stock market investing

Along the way, started reading and learning about options as parallel activity in stock market and adopted above mentioned cash secured put and covered call strategies to make some regular side income. Felt this side income as a great benefit considering below two points in the journey of long term investing.

• Apart from dividends, you get some real gains month after month and
• Though your long term portfolio shows good returns, you don't really sell shares to encash it. It is all virtual till you actually sell it.

On a closing note, subscribing to this thread to get to hear the stalwarts in the game.

Thank you for starting this thread.

[srishiva]

Originally Posted by airbus

Today I took a trade by buying both call and put. Here is the result:

Attachment 2122454

I was a pure investor until Covid hit us. I realized that if I want to do trading full time at some point of time, I need to learn to make some money even if market goes down. I tried scalping for few months and result was encouraging. Then started learning options and it was buying only call or put. The idea of buying both call and put was taken from a friend who does option selling of both call and put.

What does this mean ? could anyone explain ? Who creates the options ?

[SilentEngine]

Originally Posted by yogesh.8984

Along the way, started reading and learning about options as parallel activity in stock market and adopted above mentioned cash secured put and covered call strategies to make some regular side income. Felt this side income as a great benefit considering below two points in the journey of long term investing.

• Apart from dividends, you get some real gains month after month and
• Though your long term portfolio shows good returns, you don't really sell shares to encash it. It is all virtual till you actually sell it.

Nice to see more followers of this approach. I like the low maintenance aspect of this. Not everyone will have the kind of time required to follow the markets on a daily basis to keep track for various option positions, so these two really help to keep it simple without requiring too much time commitment on a daily basis.

In the past, i have tried long option strategies and used it to good effect during Covid crash (which helped to offset some of the losses from equity/mf long positions), but also lost out badly in eventual pull back when i ended up on the wrong side of the bets. My learning is that it's very important to get right both the direction as well as the magnitude of change to make consistent gains with just long option strategies.

My personal experience with secured puts and covered calls (limited to last 18 months):

• Premiums collected through these has been more than the dividend returns from the same set of stocks (may be i am stating the obvious here).
• Puts you in a contrarian position overall (you will be forced to buy the stocks when markets/stocks fall significantly, and forced to sell when markets/stocks rise significantly), which in theory, is good for long term investing.