But this will have higher premium theta decay, right? What I was thinking is if I pay a small amount for Deep OTM’s (example 5-10 Rs. and Qty 2-3 times of my original position), then in case of v high volatility it can act as hedge and protect the capital against big losses. I mostly prefer weekly option selling because I feel comfortable to take it overnight, due to theta decay but in high volatile movements it’s a curse. I lost my 80% capital in just 3-4 trading sessions due to big gap up-gap down. I buy ITM’s also but only when I am v sure of trend. I am still in learning stage in FNO. So learning and trying different trading strategies.
What I have observed is complete risk can’t be eliminated. If I buy far away ITM than I will have to face loss of premiums due to theta decay, if I buy deep OTM of near expiry than I will lose all premium 90-95% time unless there is v big movement which happens once in a while.
Subscribe To Our Free Newsletter |