Prashant Mullick⚡ Profile picture
Sep 16, 2018 20 tweets 5 min read Twitter logo Read on Twitter
Starting up #OptionsTrading #dosanddonts for #newbies

Don't get into #OptionsTrading with less than 25L if primary engine is #OptionSelling

Don't create focus on return in trades.

Do create focus on method and trading skill development

Do keep a trade journal to record trade entries, exits, adjustments and new potential trade ideas.

Don't rely on other trader's ideas, entries, exits, profit statements for your own trade confidence.

Do spend all the time you can reading, learning #OptionsPricing to develop a basic understanding of the risks that compose the edge in #OptionsTrading

Don't simply trade options like you would regular stock. Find out what else affects options pricing other than the movements of the underlying stock.

Don't get lured by massive margins and exposure offered by discount brokers

Do look for stable brokers even if it means you pay slightly more for trade execution

Do find mentors that you can access and have interests similar to yours.

Don't simply rely on attending workshops. They can be useful to lead you into a path of learning. Use them as stepping stones to a faster learning curve, but don't assume large risks coming straight off of them.

Do start #OptionsTrading with risk defined trades.

Don't get into #OptionsTrading close to expiry

Do initiate #OptionsTrading positions atleast 45 days to expiry

Do keep a tab and limits on the exposure you take on naked as well as risk defined short option positions.

Don't go over a notional exposure of 2, period.

Do practice #papertrading options for at least 3 months before deploying the initial 25L.
In this period, start off with 10 per day and get to putting on a minimum 50 trades per day. Enter, manage, exit each of them as per your pre-defined rules.

Aim is to develop skill.

Don't assume that #OptionsTrading can be done easily as a part-time effort.

Part-time #OptionsTrading is possible, but involves a specific subset of strategies that can be deployed.


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More from @VohiCapital

Aug 13, 2018
Traders need to check their ledger not daily MTM PNL statements.

Selling of deep ITM options to hide and carry forward losses is a common practice amongst unscrupulous "sub-brokers" illegally managing others money in #OptionsTrading.
There are no mandates from @SEBI_India on allowing "sub-brokers" or any party to trade and manage client funds in #OptionsTrading.

Certainly no mandate to take leverage of the sorts usually taken.
@SEBI_India Even AIF Category 3 norms don't allow leverage upwards of 2.

Beyond that, even an AIF cannot solicit funds from the public openly.

More on these norms here:…
Read 4 tweets
May 29, 2018
The God of #Options #Greeks is often disregarded and has no mercy, especially on #Options #expiration day.

A #Thread on #Gamma.

The primary feature of #Options is their non-linear payout.

Most traders understand that #OptionsPricing is dependent on the price of the underlying, but the response is non-linear. #Gamma is the variable that describes this non-linearity.

Loosely, if #Delta is the speed of the #Options position, #Gamma is the acceleration.

Read 15 tweets
May 27, 2018
A lot of chatter on my TL about the #edge in #OptionsTrading, specifically #OptionSelling.
A lot of good information but some mis-information being spread as well.

A #thread.
First off, #OptionSelling by itself is NOT an edge.

Simply by selling an instrument that decays in value over time, doesn't give one an edge towards profit. It is accompanied by short gamma and rising #volatility working "against" you.

The #volatility #edge or premium expresses itself when the underlying moves "less" than the move that is priced in the options.

Read 17 tweets
Mar 12, 2018
Some of my #takeaways & #notes from various #DECMA sessions this weekend. (1/n)
By @madan_kumar
- Build a rock solid trading plan
- Treat trading like a business
- Limit your time spent with the trading business
- Take the extra time that trading allows you to have and spend it with your family
By @Raminations
- Use all experiences positive and negative for building future plans
- Understand the products you are trading to the smallest details
- If a position or trade is giving you sleepless nights, get out of it immediately the next morning.
Read 19 tweets

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