Expiry Day Option Buying Strategy Based on Premium

[00:05] As I promised you in the last video, when should you plan for 1:1, 1:2, 1:3, 1:4, or bigger profits, You must be knowing that even though I am an option seller

[00:20] because I sell in-the-money options. That means that I plan for such a probability that the market is in my favor. As an option buyer, you should plan not to miss trending markets.

[00:35] We will discuss in detail how you can plan it. they will either lose Rs.30 or book profits of Rs.500 or Rs.200 or it will get doubled.

[00:47] because you must know, in November, October, and September, I used to tell you which options may react today on the Telegram channel for free.

[01:02] We were wrong once or twice but booked good profits the third time. I am telling you that the market can make a reversal from the last 2 days. Keep the quantity less for selling and you can get a good risk-to-reward ratio in buying.

[01:14] It gave a momentum of 100-150 points. But it gave a big momentum on Thursday. I told you that the setups will form themselves. I told you that whenever a green candle is crossing in the 5-minute timeframe,

[01:29] It gave a big momentum on Friday and formed an inside candle. How are these days identified? Setup is something that you can create from anywhere.

[01:45] If you see the 9:15 candle in the 15-minutes timeframe. or the 11:15 candle broke out, any candle breakout will work

[01:57] because the market doesn't move on the same line. But how much you are earning if it breaks out, that's important. It will benefit you in the long run.

[02:12] Because the market doesn't move in a line, it will go in a direction. Just your psychology should be right Then you will understand the setups in detail.

[02:25] But how will you plan? if the market will be trending, if it breaks the high or low after 12:30, you can buy the premium for Rs.20-40.

[02:40] If the market becomes trending, your money can triple or quadruple, But let's modify it more and bring some edge into it. You don't have to practice it every day.

[02:53] First thing, you need to see the premium of at-the-money at 9:16. As an option buyer, you give the premium. Let's keep the price aside.

[03:08] The first point is that the order execution will start after 12:30. and put the stoploss of Rs.5 or Rs.10.

[03:20] But there should be a condition in the premium. At 9:16, on the expiry day, look at the premium at which the market has opened. It may be 150, 200, or 220.

[03:34] 130 at the call side and 140 at the put side. Write it down in your notebook that if it has opened between 150-200,

[03:46] do not plan for more than 1:2 or 1:3. The chances are very less that you will get 1:4 that day. Or you can plan for 1:2 or 1:3

[04:01] I will tell you in detail, don't worry about it. If the premium is more than 200 at the money on expiry, Don't plan for big targets.

[04:16] Write another condition. it may be 130 or 110. If the market has opened with a premium of 110 or 120,

[04:28] that day you should plan for a minimum of 1:4 in option buying. And you should definitely plan for zero to hero on that day. Because you are giving 20-30 rupees.

[04:40] 2-3 weeks ago, the premium was the same and the market was also moving. Those who bought options, the market was trending, they must have earned money. Imagine, the market has opened with the premium of 220 at 9:16.

[04:58] A lot of option sellers, if they make a stadle, will have 480 points available after 9:16. they will not adjust their position.

[05:10] Afetr such a move, if you are buying options hoping for another 400 points, but it will become a little difficult.

[05:22] If the premium is hardly Rs.300 both the sides combined, if the market moves 100-150 points anytime, even 200 points in the first candle, When the option seller will be fearful

[05:38] they will either square it off and roll-over In this condition, you are likely to earn more profit. and sometimes it opens around 120, 110, or 130.

[05:55] Whether it's an expiry day or a normal day, When the market moves 250 points after opening, people with at-the-money will be the most fearful

[06:08] So the chances of the market being trending are very high. if the market has opened with the premium of 130-140, the premium will be even lesser till 12:30.

[06:22] A lot of people say that the premium is low That's the best day for option buyers. because it will move like futures.

[06:36] If you buy at the premium of 20-30, it will be hardly 100-150 points. It can easily make a momentum of 200-300 points after 12:30 But if it has started at 200-230 for at-the-money on expiry,

[06:52] The market has already moved. if you wait thinking that you will earn more profit in directional, I hope you are understanding how you can plan it.

[07:07] Watch the video again because I am telling all these points with experience and probability. You may fail twice, but you will make a big profit the third time.

[07:19] That means that if you are buying options, then make sure to exit with 1:2 or 1:3. What happens in the market in volatility is that when the premium is high,

[07:33] Even if the market makes a single spike, in the spot chart, the low and high will not be broken and the stoploss would not hit. Why? Because when the premium is high, option sellers don't hold their positions

[07:50] because they think that the market is trending. and people think that a big momentum is coming. At that time, either the market will open gap-down or gap-up.

[08:03] A lot of action takes place overnight when the premium is high. This was about the expiry day. You understood how to plan. when the options premium has opened around 130-120,

[08:18] If you focus on that, definitely, your trading career will become easier. because you have already planned You planned for Rs.20, Rs.30, Rs.50, or Rs.100 or whatever you are getting from 1:1 to 1:2

[08:37] Imagine that you want to practice, so how can you practice? Write the premium at the ATM on Monday in your notebook.

[08:50] then you can check it on Tuesday. You prepared the data for a week. The next week, you will see whether it's more or less than 400 on Monday.

[09:02] that means that the premium is less and option sellers have less premium. On that day, you can set a bigger target according to the probability. That is going to be the best day for sellers

[09:15] if I create a strangle or a straddle, even if the market falls 400 points, I will definitely earn some points I hope you understood this point.

[09:31] Option sellers fear when the premium is low. Premium is less when the market goes up or the IV is low. The premium itself is going to tell you what will be the IV.

[09:47] If the premium is more than 200 on the expiry day, You should keep it in mind. but the chances of it being trending are very low.

[09:59] In this case, if you think you will get a big profit, but in the end, the premium will decay rapidly. even if the market is volatile,

[10:14] your premium will not decay because you will be near to at-the-money or you will get the premium of Rs.20-30 within just 200 points. That means that you can't miss this day as an option buyer.

[10:30] And when you don't understand the market, you can keep the target small. But I remember, sometimes the premium opens at Rs.90-100.

[10:42] Imagine, the premium opens at around Rs.100 on the expiry day. That means that you will get a range of 200 points for both legs combined. It can break in a single candle easily.

[10:55] If it gets in just one candle, people will not bother adjusting the other leg If you are getting 250-250 points at at-the-money, a lot of people will create a straddle.

[11:08] When it will go 400 points, they will cut one leg and start rolling it over because when there is a high premium, option sellers prefer making adjustments. In this condition, option buyers get at least 10-12 chances to double or triple their account.

[11:28] I am not saying that it will definitely work Even if you hit the stoploss, well and good. It's okay. You are anyway going to waste that day.

[11:43] so that if we buy if we get near to ATM for Rs.20-30, then we will come to in-the-money.

[11:56] I hope you understood this simple theory. That's it for now. Thank you!