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Saved by @Shubham51ngh

This friend had trouble making money in options though he was directionally right. Let us see how a basic understanding of greeks would have helped him, This thread will be about two attributes of option pricing, extrinsic value and theta

 An option has two parts, intrinsic and extrinsic value. Think of a pack of Lay's potato chips. When you buy and open the pack, what you find is some chips and a lot of air. Intrinsic value is the chips, extrinsic value is air
https://t.co/8ZPv4ZnCiL
https://t.co/icWmqSLENW
https://t.co/vHA6azEmbQ
Let us stop for a second here. When our friend was buying the 31700CE, he was buying pure extrinsic value, i.e, AIR
He has a second problem, theta.

What is theta ?
Watch this example for theta. These are actual calculations of greeks
https://t.co/kxHNu8eGYY
https://t.co/IgXzrssx5f
https://t.co/w1KFFZVZkh
DTE = Days to expiration. Watch that the theta decay curve is not linear, it speeds up as we approach expiration
https://t.co/wWYA331uQi
Theta decay starts to accelerate at 13 DTE. From 6DTE, it justs accelerates like crazy . This is true for all options
So our friend in this example was hit by a double whammy ( triple actually, due to vega, but vega on a later day. Explaining vega will confuse if you are a novice).
1. He was playing pure extrinsic value
2. He has a high theta burn rate so close to expiry, the highest
Hence, his 31700 call was not moving up fast. It was continuously losing theta. Being an OTM option with pure extrinsic value, the theta burn was very high
So what is the solution ? An options buyer has to negate theta burn to a certain degree. Best way ? Should have used a bull call spread. What you lose due to theta in your bought option can be somewhat covered by theta gain in the sold option
I can or anyone knowing greeks can make a position almost theta neutral thru spreads

THIS IS HOW GREEKS HELP YOU !
I understand that when one opens an options book, the maths seems daunting. It's supposed to be, Black and Scholes won the Nobel prize for making that formula 😃 To be very frank, if you ask me the total maths, I will also have trouble explaining
So, focus on the graphs. Using graphs is the easiest way to understand options. Whatever strategy you use, plot it graphically and play around with vols, DTE and direction
1. https://t.co/LpbzrgqvaH ( web based)
2. https://t.co/5AHY0EmfH9 ( software)

BOTH FREE, use them

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Subhadip Nandy
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Perhaps you have the idea that calling me " 1 lot Nandy" is somehow derogatory and a easy poke at me. Allow me to explain why I look at this moniker as a badge of honour


I have traded 1 lot continuously twice in my life. The first in 2003 after I blew up on my INFY trade. I traded 1 lot ACC fut consistently and made 50k in a month

The 2nd time in 2013. When I suffered continuous losses for 5-6 months due to a variety of psychological issues. Then I traded 1 lot Nifty options consistently for 3 months. After that 2 lots for next 1 month and slowly increased

I have shared these two incidents on my various interveiws and regularly share this in detail with my handholding students when I talk about trading psychology.

This logic of trading 1 lot to iron out trading issues I learnt from the interview of Anthony Saliba, who traded 1 lot in options for 6 months. BTW, Saliba was the only options trader to have been profiled on the original Market Wizards ( I read his interview and used his logic)
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Subhadip Nandy
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@Random37938918 @nuraniraj This is a paid course, extremely economically priced. This covers MFI in detail, check if you are
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Subhadip Nandy
Subhadip Nandy
@SubhadipNandy16
Regarding the MFI divergence indicator those who are asking :
1. Link not working on TV
2. Not showing on spot Nifty/BankNifty
3. Code showing errors
All your answers are there in the original thread. Kindly do not expect spoon feeding .
SOLVE YOUR PROBLEMS ON YOUR OWN
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Subhadip Nandy
Subhadip Nandy
@SubhadipNandy16
Time I retweeted this 😃
SUBHADIP DADA IV THREAD , IV THREAD SUBHADIP DADA
Subhadip Nandy
Subhadip Nandy
@SubhadipNandy16
Things are getting increasingly interesting. Now NIFTY fut in VolXplosion. As usual, I have marked the last few times this signal came, you can check how Nifty behaved after that


Let me show something else on Nifty fut. This is the " extreme top bottom" marker. A play on MFI, code is open for Quantifying Breakout students. This is suggesting a probable top in place . The pic shows signals over last one year. Right in green tick, wrong in red cross


In short, Nifty is extremely overheated. Does not mean it cannot go up, but one should be very very cautious here. Still no divergences on charts from momentum oscillators

I will risk making a forecast here. Trend is still strongly up, so keep dancing till the music is playing.. but stay close to the door. If Nifty fut closes below 15660, that would be the time to go short with the ATH as stoploss
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I'm sorry to tell you this, but you don't own GameStop.

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The reality is, the scale of the economic disparity and corruption is simply vast. Billionaires loosing a few millions means nothing. They buy one less yacht and you continue to live meal to meal.

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Hermann Peterscheck
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For fun I made a Robinhood account. It took me 5 minutes to sign up, get approved and transfer funds for trading...

Here's some details... Read on.

...it took me another 5 minutes to get qualified for options.

If I share a sign up I get "free shares" and I can share as much as I want up to 500$ worth.

The main UI has a prepopulated "list" of stocks/crypto to watch and links to news.


Clicking a stock opens a "trade" button that looks like this.

Notice options is first, buy second.

Options took me to an approval process (which took about a minute) and now away I go trading Baba options.


Buying stock looks like this. It emphasizes fractional shares.
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Having now taken a few days to digest the detail of the UK-EU agreement, here's a couple of observations from me on the deal, what it means, how we got here, & where it might take future UK-EU relations.

(A long thread)

First, let's be clear that negotiating a deal in 9 months, against the odds, and in the middle of a pandemic, is an achievement. It's too easy to underestimate the difficulty of negotiating over the screen for 4 months, from Mar-June, and under enormous pressure. /2

Both @DavidGHFrost & @MichelBarnier and their teams, deserve a lot of credit for sticking up with it in hard circumstances, often with lacking political clarity, & high stakes.

This shouldn't preclude us, or MPs and MEPs, from looking critically at the deal on the table. /3

That we have a deal is a result of the UK & EU having found a way to protect their core defensive interests.

From the EU's view, integrity of the single market is preserved with level-playing field obligations which go virtually beyond any other 3rd-country (even the Swiss). /4

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Trader knight
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@Traderknight007
How position sizing can affect your trading performance-

Assuming that you are trading a Trend-following system with Big RR and low win-rate.

For example, assume that you risk one percent per trade on a 100,000 account
and you have 20 straight losses.

That one percent is of your remaining equity and at the end of 20 losses, you would be down to 81,790.60.

Now if you got a 30R winner and you are risking one percent of your balance of 81,790.60, your new equity would be 106,327.9,


You’ve had 20 losses and one winner though you are still up 10Rplus your equity is up by 6.3R percent.

Now, let’s say you risk five percent per trade on your balance. At the end of 20 straight losses, you would be down to 35,772.89 or down 64 percent.


If you risk five percent on this amount and get a 30R winner, you would be up to 89,621.48. You are up 10R, but because of your position sizing, your equity is still down over 10 percent.

#positionsizing
#Trading
#nifty50

This is why position sizing is the most important factor in trading if you get it right and you have an edge, you will do good.

Thanks for reading till here.
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Trader knight
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Overthinking - The art of creating problems which weren't even there.

Thread on How Over-analysis leads to decision Paralysis-


What is Analysis paralysis?

In simple terms, analysis paralysis is a person's tendency to over-analyze or over-think upon a decision to such an extent that he/she fails to make a choice resulting in a paralyzed state of inaction.


How a retail trader trades-

A trader named Rahul, He know all the basics of markets, He also has made a system which gives signals on nifty, he has also encorporated good Risk management and Position sizing into his system.

One day he gets a signal to buy Nifty at 13500 with stop at 13450, he wanted to take the trade, but he wanted to get sure that the trade he has take should be a winner.

So he says just let me check the RSI if its above this level I will buy , he checks it and it was above his

level, then again he wants to check another indicator named MACD, he wanted to get sure man, Now he do the most intelligent thing to get sure he gets right.

He goes to twitter and ask his twitter Friend Trader knight he ask him that should I buy nifty at 13500,
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