Comment on Trading India VIX - Simplified

P R Sundar commented on 27 Sep 2015, 06:15 PM

India VIX is available only futures and no ‘option’ is available.
Even futures contract has become illiquid.

If India VIX is above 22, then markets are likely to go up and down in an unpredictable manner but eventually markets will go down. So selling Call option on every rise should be the right strategy.

If India VIX is below 15, then markets will be stable and likely to move higher slowly. So the right strategy is to sell Put option on every dip.

Buying of option is only for very short term traders who can judge the market movement. Usually people who buy options and hold until maturity will loose money most of the time.

But risk associated with buying of option is very less and correspondingly the chances of winning is also very low.

Selling of options carry unlimited risk, but if you know how to manage your risk and if you have more capital, you can make decent return. You need more capital to sell options as you are required to pay margin money as well as Marked to Market (MtoM) losses. Whereas if you are a buyer of option, then just pay the premium and that is it.

But option seller wins most of the time and loose lot of money when loosing if does know how to manage the risk.


P R Sundar

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