Comments on: Covered Call Writing In India https://www.thebluecollarinvestor.com/covered-call-writing-in-india/ Learn how to invest by selling stock options. Thu, 09 May 2013 18:19:10 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/covered-call-writing-in-india/#comment-13151 Thu, 09 May 2013 18:19:10 +0000 http://www.thebluecollarinvestor.com/?p=8003#comment-13151 In reply to Alan Ellman.

Some more information:

There are LEAPS in India – but its not allowed for retail traders because of very poor liquidity. But LEAPS are traded by financial institutions/banks in the OTC market (Over the Counter).

Actually, in India, only near month options have enough liquidity. The markets are not well developed as in other countries. One also has to keep an eye on spreads (difference between buy/sell quotes) for many companies.

Only Index (called NIFTY) options are liquid with tight spreads where even July options are quite tradable. But that’s the maximum allowed for retail traders – options that expire 3 months away.

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By: Alan Ellman https://www.thebluecollarinvestor.com/covered-call-writing-in-india/#comment-13148 Thu, 09 May 2013 10:12:21 +0000 http://www.thebluecollarinvestor.com/?p=8003#comment-13148 In reply to Nilesh.

Nilesh,

(Ashwin was kind enough to provide the information in this response):

In India, a covered call can also be executed by buying 1 Futures contract and selling 1 Call option against it. To buy a Futures contract, one has to put up a further 10 – 20% margin upfront though. If we add margins for writing the call option, the total margin requirements are 20% to 40% of the underlying’s contract size.

However, this strategy is recommended only for seasoned derivatives traders with strong money management skills. Just because capital requirements are low, inexperienced traders might take positions in multiple stocks without understanding the risks involved in holding multiple Futures contracts of different stocks. It completely negates all the “low risk” advantages of covered call strategy.

Alan

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By: Nilesh https://www.thebluecollarinvestor.com/covered-call-writing-in-india/#comment-13132 Wed, 08 May 2013 02:03:21 +0000 http://www.thebluecollarinvestor.com/?p=8003#comment-13132 Hi Alan,

I read your link about covered call writing in India –

http://www.thebluecollarinvestor.com/covered-call-writing-in-india/

Link is very useful. I am having only query that –

1) Can covered call only be done by buying the stock and selling options

OR

2) It can be used by buying derivative contract and selling options

because by using point # 2 margin requirements are much lower that point # 1 as it avoid huge cash to own buy stock.

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By: Alan Ellman https://www.thebluecollarinvestor.com/covered-call-writing-in-india/#comment-12920 Wed, 24 Apr 2013 23:54:53 +0000 http://www.thebluecollarinvestor.com/?p=8003#comment-12920 Premium members:

This week’s 6-page report of top-performing ETFs and analysis of ALL Select Sector Components has been uploaded to your premium site. The report also lists Top-performing ETFs with Weekly options.

For your convenience, here is the link to login to the premium site:

http://www.thebluecollarinvestor.com/member/login.php

NOT A PREMIUM MEMBER? Check out this link:

http://www.thebluecollarinvestor.com/membership.shtml

Alan and the BCI team

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By: Alan Ellman https://www.thebluecollarinvestor.com/covered-call-writing-in-india/#comment-12887 Mon, 22 Apr 2013 20:28:06 +0000 http://www.thebluecollarinvestor.com/?p=8003#comment-12887 To our members:

We returned last night from our Atlanta presentation. It was great seeing several BCI members and thank you for attending.

I am a bit backed up with emails and should catch up by the weekend.

Those of our members from California look for an announcement about a new live seminar planned for later this year. I have been invited to speak for a large investment group from Los Angeles and we are just finalizing the date.

Alan

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By: Alan Ellman https://www.thebluecollarinvestor.com/covered-call-writing-in-india/#comment-12886 Mon, 22 Apr 2013 20:17:46 +0000 http://www.thebluecollarinvestor.com/?p=8003#comment-12886 In reply to Laura.

Laura,

If there is post-announcement volatility, I wait for the price to consolidate and if the stock still meets system criteria, then sell the option. Usually 1-2 days will suffice.

Alan

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By: Laura https://www.thebluecollarinvestor.com/covered-call-writing-in-india/#comment-12882 Mon, 22 Apr 2013 14:37:12 +0000 http://www.thebluecollarinvestor.com/?p=8003#comment-12882 Alan,

In your DVDs you say that a stock can be used after the earnings is announced. How long should we wait after the announcement before entering our positions?

Thank you.

Laura

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