Options Spread Trading

In this instalment of the Face2Face series, we have with us Mr. Vivek Bajaj, co-founder, StockEdge, Elearnmarkets, in a conversation with Mr. Santosh Pasi, a trader who will highlight the essentials of options trading and, more importantly, options spread trading. Mr. Santosh Pasi has years of experience in options trading and options technology, and in this video, we will explore how the technology of trading options has evolved over the years, then we will touch upon the basics of options spreads and how Mr. Pasi trades on them.

Since this discussion was carried out during the live market, we will see the practical justification of Mr. Pasi’s teachings in the stock market. We will start the video with Mr. Pasi’s background and life, and the events that led him to explore the share market, followed by his finally choosing to work with call and put options extensively and finally trading on options spreads. We will start our conceptual discussion with the approach that Mr Pasi uses while approaching the options segment in different situations and how he chooses between being the buyer or seller of an option in any trade. We will explore the different factors that can affect this decision of choosing the buying or selling side.

We will discuss when we should buy put options or short-call options and how factors like volatility and open interest can affect this decision. Mr Santosh Pasi will show us how this works through the OI data on the NSE website and how we can practically apply his theory behind calls and puts in a volatile market to our own trading decisions. Next, we will discuss two important questions that might arise in a trader's mind after learning about this concept: when do we exit our trade, and how do we manage our risk to ensure that we can continue trading with as much safety and capital preservation as we need?

Mr. Santosh Pasi will discuss the various factors affecting his decision and the multiple data he checks to justify his decisions, like the Greeks, OI data and some technical indicators. Since we are holding this discussion in a live market, Mr Santosh Pasi will pick out an example from the market to show how he will enter, exit and execute a trade with his approach to the stock market.