Option Strategy

Profit has no place to hide!

Tips:
1. We assume that you have a Rs.500,000 account for the purpose of option trading. If you have a smaller or bigger account, adjust the numbers accordingly.

2. Money management plays a far greater role in successful trading than the ability to pick a good entry or exit point. It is very important not to invest more than Rs.60000 - Rs.70000 in any one position so that you have enough capital to spread over 7-8 trades. For bigger accounts we would reduce the share of funds invested in any one trade even further.

3. It is very important to allocate an approximately equal share of funds for each trade.

4. Never maintain more than 2 or 3 positions at any given time. It is very difficult to monitor more than 2 or 3 positions simultaneously, especially if you have a full time job.

5. In some rare cases the position will open in the morning with a profit of several hundred percent; take it immediately, don't wait for our alert.

6. Do not place any orders before the market opens.

7. Do not try to chase the market. If you need to get out of a long option position, place the limit sell order at the bid price. If you need to get in, place the limit buy order at the ask price.

8.Do not use a market order except in an extreme situation. Be prepared to possibly get a much worse fill in this case.

9. If for some reason you did not get into a trade, do not get into it after the fact if it trades at a much higher price. Wait for the next trade.

10. When we enter a trade, we sometimes will place a mental stop at the 50% level. You may use actual stops but keep in mind that an option can lose or gain 50% in a matter of minutes or even seconds at times.

11. Option trading is very risky. You may lose all money invested in long calls and puts plus commissions. Consider your actions carefully. Past performance is not a guarantee of future results.

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