The Inevitable Phases of an Option Buyer

Markets Discussions šŸ’¬ šŸ“ˆ
1

After watching this play out way too many times, I think most option buyers go through the same phases:

Phase 1:
Manually calculates the ā€œfairā€ option price.
Limit order window open. Confidence high.

Phase 2:
Option opens far below the calculated price.
Decides to wait patiently for the premium to ā€œcatch up.ā€

Phase 3:
Confusion kicks inā€”terminal lags, market depth disappears, clicks get delayed.
Frustration peaks. Market order is placed.

Phase 4:
Order executes perfectly at the bottomā€”
right after the sellerā€™s entire premium has been discounted.

Rinse. Repeat. Learn. (Eventually :grinning_face_with_smiling_eyes:)

Curiousā€”how many of you have lived through all four phases?

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2

I donā€™t do all these steps. I just fire 1 level deep ITM options when my algo generates long or short signals on Nifty spot. Pricing anomalies get evened out over a fair number of trades if one is consistent.

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3

Two reasons

  • Exchange issue OR
  • You are Very Slow to reactā€¦.

Donā€™t blame Platform, thatā€™s 1000% perfect..

Isnā€™t it @PravinJ?

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