It is because of the time premium decay. It only mean one thing that there are sellers at large.
During this time, swing trade earns us good but risky because if we expect the share travels between 1280 and 1320,
we usually buy at 1280 after a buy signal but it ends falling to 1250. so, we end up in losses.
At this time, selling options is the only thing we could do.
Most of the retail traders cannot sell the options as they require huge investments
So, here is trick which is known to many but I'm posting this for those few unknown who want to sell any:
"What ever the option you want to sell, first buy the father option away from the one you want to sell and then sell the option that you planned."
If PVR is trading at 1300 and don't cross 1320, we usually sell PVR 1350 CE, it would cost you around Rs .208000.
But you could sell at just Rs .57000 by following the simple trick.
first buy the father option away (which will not cross)= Buy PVR 1400 CE at Rs .14
Now, sell the option that you planned = sell 1350 CE at Rs .27, your broker will ask you just Rs .51000.
Your gain will be 5000 which 9% for 5 days if PVR closes below 1340.
(Incase of selling PE, you can sell 1260 PE with ease but first, you have to buy 1220 PE which can never be touched)
Usually, selling is seen more in the expiry week, but in PVR , the game has already begun. which is way the share is not moving above 1320
Wanna Know how big players earn good (two ways) but loose (no way) nothing and also why share is not moving above 1320 ?
Huge Call option contracts were written between 1300 & 1400 (means Big players sold the call options between 1300 & 1400)
which is why Big players will:
1. a) Sell the shares holding at 1320 and they'll let the share fall.
b) Buy them back soon after the share touches 1280 (one way earning).
2. The above swings result in the Time Premium Decay and thus the big players gain from the options sold too (2nd way of earning).
Eventually, this share ends at or below 1280 on 26th November.
This is called as Trading....
Selling of options when big players are involved gives us guaranteed money.
If you don't believe me, check the August month,
1. Why did PVR traded in within the box until 27th August? (expiry)
2. why did PVR sky rocket after 27th August? (fresh buying's)
Big players never exit, they turn the game to win...
We are not big, So, those who are holding the options, better exit.
Until next Friday, PVR don't go above 1350 but trade within the box.
Happy Trading :)
Market sometimes has to give the chance to those who held the options with patience to exit and also, new idea has been updated.
It formed a flag pattern