Strategies with Liquid Options only

December 16, 2019
Sensibull

Illiquid options are those without frequent trading. Most of the Options are illiquid. And that gets us into traps such as:

  1. Not getting a trade to exit when you want to get an exit
  2. Getting a wide bid-offer spread, and paying for it
  3. If you are stuck in an illiquid single stock option towards the expiry and not getting an exit, you will have to take physical delivery of the stock. That will be super expensive

Long story short, you should be staying far away from illiquid options

So which ones are liquid options?

  1. Nifty, Bank Nifty, a few big stocks, or stocks where there is news or events
  2. At the money options (ATMs) and Out of the Money Options (OTMs) near the ATM. In the money options (ITMs) are usually illiquid
  3. Near month expiry for stocks, weekly expiries for Bank Nifty and near weeklies and monthlies for Nifty

How do you know if an option is liquid?

Simple. Look at the bid-offer ladder. If the price difference between the bid and offer is wide. How much this difference is, varies from stock to stock, and requires a little bit of experience.

Sounds tough. Is there an easy way out?

Yes, there is! You can forget all of this and just trade in only those stocks which are liquid, with the Strategies Wizard by Sensibull

How does it work?

Very simple.

  1. You tell us your prediction on an index or stock
  2. We will tell you the best liquid option trade for that.

That’s it! Simple as that

We create options strategies using only liquid options. We have our internal secret sauce for filtering the illiquid ones, which is a combination of trading frequency, volume, OI, etc.

Strategies Wizard

Try the New and Improved Strategies Wizard here

Regards,

Team Sensibull

Abid

Derivatives trader turned startup guy. Making the retail trader profitable in the derivatives market is the absurd dream. A trader all my life, I traded derivatives for STCI, ICICI, and IIFL. I started Sensibull in 2013, but that hit regulatory roadblocks back then. This is my second attempt at the same. I went to NIT Calicut and then IIM Ahmedabad. I was a member of SEBI’s AIPAC Committee on hedge funds.

36 comments

  1. Dhyan Pasi says:

    Interesting wanted to know more about it

  2. Stanley says:

    Derivate trade can be profitable if done with a trade plan and be in the Plan

  3. Mahipat says:

    Need to understand what is derivate trade and also how to proceed

  4. RAMKRISHNA says:

    I AM INTERESTED IN IT TO GIVE THE BEST IDEAS.

  5. dhawal maheriya says:

    what about PC jewelers

  6. Susamma says:

    Banknifty 32000 ce dec 19 expiry can buy ?

  7. Manjeet Mudgal says:

    How can I reach your help

  8. ABHISHEK DHANUK says:

    Want to know more about it….

  9. Rishabh Tyagi says:

    Hi!, I am your user since last few months and as you do work on the potential improvement feedbacks/suggestions given by the clients, I request you ‘to improve the trading view charts, they have a lot of bugs and especially if you could put an option of auto-saving the analysis on the charts like in the Zerodha original charts’.

    Thanks for your service.

  10. Arup Debbarma says:

    Interested to get call / put option of Banknifty & Nifty.

  11. Anup says:

    I am interested in it. Eager to know more.

  12. Purna Chandra Sabar says:

    Why not showing my portfolio.

  13. AKLESH says:

    I want to know about sbi, ICICI, and Tata motor

  14. Raj says:

    Its created curiosity to get more details..need to know complete information…

  15. Debi Prasad Biswal says:

    i want know about itc, SBI & INFY, AXIS BANK

  16. Shivashakar says:

    Banknifty weekly options are world’s most liquid , highest multibagger and lowest brokerage option in equity.

  17. Krishna says:

    Team Zerodha, what happens when I sell a XYZ share option and on expiry if it is worthless? Will there be any share settlement? When I sold the option I got the contract note with the required charges. May I know or direct me to other link where I can see the said document with required charges on expiry. Thanks.

  18. Ramswaroop bishnoi says:

    What is your charges on one request

  19. Milind Ingolikar says:

    What’s the minimum capital required and your charge details. Thanks n regards.

  20. Sudhir Belhekar says:

    Kite- kindly work on your orders during 3-30 pm timings..I have lost almost 70k as my exit orders were not executed during 3:15 time frame…it says error while executing the order..what bullshit .. instead of giving alternative options to the customer why don’t you work and make your existing portal better..

  21. Shikha says:

    created curiosity to get more details..need to know complete information. Interested to work as per this strategy. Tell me how

  22. Seetharaman M S says:

    Would it be a good strategy to buy nifty bees for long term (as an investment) and keep selling call options month after month to improve returns?

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