Trading Options using Spreads
Vishvesh Chauhan, A renowned name in Quant and Derivatives trading in the country. He is highly regarded for his views and ideas on prime business channels (Zee Business, CNBC Awaaz, Bloomberg Quint, CNBC TV18). Vishvesh is a software engineer and MBA Finance with CMT Level II (MTA, USA). He holds a certification in Applied Mathematics from the Indian Institute of Quantitative Finance. He has been associated with top brands like BNP Paribas formerly known as Sharekhan, Standard Chartered, and Reuters over his decade long career. He has headed a prop book trading desk in his previous assignment, generating alphas in all kinds of market scenarios.
IN CONVERSATION WITH
Mr. Vivek Bajaj
The passion for data, analytics and technology is what makes Vivek Bajaj a financial market survivor. The journey as a market participant started in 2002 when the first trade was executed in the options contract of ITC. Life was simpler and easier during that time. Since then technology and Big data have taken over totally. As an early adapter to the complex tools, Kredent was formed to capitalise on the opportunities. He is co-founder of StockEdge and is committed to bring simplicity in the complex world of market data. He is a Chartered Accountant, Company Secretary and an MBA from IIM Indore. He is a part of various committees of exchanges and regulator and he has been an active contributor in the evolution of Indian Derivatives Market.
About this Face2Face:
In this video of the Face2Face Series, we have with us Mr. Vivek Bajaj, co-founder of StockEdge and Elearnmarkets, who will engage in a candid conversation on Options with Mr. Vishvesh Chauhan, an opportunistic options trader.
You can connect with Mr. Chauhan on Twitter - https://twitter.com/Vishvesh03
You can connect with Mr. Bajaj on Twitter - https://twitter.com/vivbajaj
In today’s current market situation, options trading has become a popular investment avenue. That’s why, in this video, we will discuss the right ways to make money in options trading.
We will first discuss the importance of seizing opportunities in the options segment rather than choosing the buyers’ or traders’ side.
Moving on, Mr. Chauhan will talk about his background and the chain of events that led him to start trading in the market and work with options. He mentions the importance of building confidence, system and a money management process in the stock market.
We will highlight how options are a great way to consistently make profits with some real-life incidents from Mr. Chauhan’s life.
We will also discuss the significance of risk management in trading and investing.
We will also highlight how the Sharpe ratio can help us understand how much risk-adjusted returns we are earning in the market. Mr. Chauhan will explain the risk-reward implications of this ratio with some practical examples.
Next, we will discuss the criteria which Mr. Chauhan uses to decide the fair value of the option price. We will talk about the components of extrinsic value and how the volatility affects fair prices.
There are three important things for all options traders to keep in mind while trading – Delta (the direction), Vega (the volatility) and the Theta (the timing). Mr. Chauhan discusses how these Greeks should be utilized to get the best trades out of the market at a time when the market is suffering from the effects of a pandemic.
With practical examples, we will discuss the significance of the volatility curve. We will talk about how the implied volatility (IV) has changed due to the downturn in the market. Mr. Chauhan will also share a strategy which can be of help to options traders from a conceptual point of view.
Next, we will move to a discussion about keeping positions till expiry. Mr. Chauhan will show us the answer to this question through an example of his own trade.