On the day of expiry volatility in market is at its maximum so taking advantage of this information, a trader can make some smart profits on F&O expiry day itself. Next thing you should check is any important global data that is to be released on that expiry day, if yes then see at what time data will be made publicly available. Because at this time market may give wide swings, in terms of nifty it may be about 40 to 50 points, enough to make huge money. Now just wait and watch, till that global news is being released now look at global index such as Dow future or Germany’s DAX and see how they have reacted to that news, if it is good news then just buy 4 lot (300 quantity) of at the money call options on nifty. If news is bad then just buy in the money put option may be 10 lots, you may notice there is big difference in quantities of call and put option. This is because traders react slowly to positive news, where as traders reaction towards negative news is extremely vigorous.
Past experience of F&O expiry trade:
This trade setup is not for low risk traders, as on the day of expiry risk is very high on options trading, also remember 95% option contract expire near 0 (zero). So there is high amount of risk involved and also there is no guarantee that market will react to global news. In my past experience news release such as UK GDP, EURO GDP, EURO PMI, UK Rates decision were some events which coincided with F&O expiry. We were able to gain extremely high returns on nifty option. Like a put options trading at 1.5 went to as high as 18. So, that was a 14 times return or 1400% return.
Even on the day of general budget 2016 – 2017, we saw huge volatility in options as it was a 150 points swing for intraday. But nifty options were trading with high IV (implied volatility), which means there would not have been that expected swing in the prices of options as compared to Nifty futures.
About
I am options writer on bank nifty options. I trade only on Wednesday and Thursday in bank nifty options.
Its been 2 years now and writing options is making me a lot of money. All trades are intraday. So no need to worry about the overnight positions.
Moreover on intraday positions, my broker gives me 10x margins. I am not trading with any money in my account, but I use my shares a margins.
So gaining a lot from share which I am holding for long term and trading activity is just like cherry on the top.
Options buying needs less margin but selling options needs very high margins. But as per logic buy and sell should need same margins right?
Dear Kavita, Your logic is wrong. Risk in buying is limited & you pay the total premium, so broker don’t charge any extra amount. Whereas Selling options has ‘unlimited’ risk. If you fece huge loss, who will pay the money ? Considering own safe side, broker demand more margin from clients.
Bank nifty options are weekly options so 1 opportunity every week. Is nifty also having weekly options?
Nifty long straddle with ATM strike price can be extremely profitable on expiry. I am options buyer on expiry as buying risk is only limited to options premium.