Nikita Poojary

@niki_poojary

13 Tweets • 2022-01-15 10:46:19 UTC •  See on Twitter

rattibha.com 

• How options can be used

• How to trade in options & exit strategy-

buyers

• Imp of theta decay

• How to trade in options & exit strategy -

sellers

Time for a Thread

Curated in collaboration with

@AdityaTodmal
• The lame textbook def of right but not the
obligation etc is simply confusing

• This is how you can remember, by understanding

the logic of the instruments with your view on the
market
• In a nutshell: Options are instruments used to
express your view on the market

• The view could be same but the instruments

played by the buyers and sellers could be different
• For Option buyers:

• Its imp to set a price target

• and to set a time target as well

• Time is an important factor to be considered

• Movement should outweigh the time decay

• Remember option is a wasting asset

• Time decay always works against option buyers

• Time decay is the highest when the option nears

its expiry

• Stock moved up but my CE dint move up

• Buying too early in the series means paying higher

prem for an OTM option

• Remember, OTM option only has time value

• Exit conditions are very crucial

• Evaluate your position everyday whether the theta

decay is eroding your option premium faster than
the movement you are waiting for

• If yes have a SL
• Option selling :betting where the market wont go

• Need a broader view over a precise view

• Draw a mental probability distribution chart

• Theta decay is a friend of option sellers

• Exit conditions for option sellers

• Time to expiry is less: theta decay will bail you

out, ceteris paribus

• If its breaking a major support or resistance: exit

• Meanwhile: adjustment is the name of the game,

to protect from huge MTM swings
• This was a part II Thread on derivatives

• You can check out the 1st part here

• If you this, why not share?

• Retweet the first tweet and help others find this

• Happy learning to everyone!

• I curate threads on trading & finance

• You can check out other threads on my profile

Follow us:

@AdityaTodmal

&

@niki_poojary

for more such interesting Threads!

Have & happy & a safe weekend!

Please refer to this chart over the above

Sorry for the typo

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