- [Instructor] Welcome to the part three
of the Options Trading Strategies video series.
So, we are still in the call options segment,
which is the part two,
and this has been divided into
the current part three,
in which we'll be covering about
naked call options writing.
So in this particular part,
I'll be giving you an overview of
what is naked call options writing,
that is selling options first,
then I'll be taking you through
the basics of this strategy and how it is done.
I'll also be showing you
two most important factors that influence
this call writing strategy.
We'll also be taking a look into breakeven point,
risk and reward profile of this strategy,
along with strike price selection,
that is in the money, out of the money,
or at the money option strike prices,
and some common mistakes to avoid.
So this part is more suitable for
a retail trader.
This is not for a professional full-time trader,
because in this particular part,
I'll be showing you why
you shouldn't be getting into the business of
writing any sort of options
without hedging it properly.
So let's get started.
- [Narrator] In this channel,
we talk about trading, investing,
and market analysis,
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- [Instructor] So I'll begin this part
by explaining the basics of call writing,
or rather, short selling call options.
Now, let me take an example of a stock, Reliance.
Reliance actively trades in NSE and BSE segment.
So let's say you don't own reliance
and you still go and sell
the call option of Reliance first,
what you're essentially doing is that
you're writing short selling naked calls
of Reliance, without actually owning the stock.
So in case you don't understand what is writing,
or what is buying an option,
or what is a call option,
or a put option,
just refer to the part one and two
that has already been released,
so that you can understand this part better.
So, basically, there are two ways
that you can write calls.
One is the naked call writing part
that I just explained,
and other is the covered call writing,
which I'll be taking up in subsequent parts.
There are many other ways to do it,
but those strategies I'll be discussing
at a very later stage.
So let me put it first that
naked options writing,
or short selling options, as you may call it,
it is one of the riskiest option strategies
that you can execute.
Now, why I've taken up this video is because
there's a huge propaganda about writing options
that goes on on many mediums.
There's a false hope that is given
that this strategy can be used
to generate regular income from market.
While it is partially true that it can be done,
there are hosts of circumstances
that you have to consider,
especially the risk that you are undertaking.
So the reason why I said that this video
is more relevant to retail trader
is because a professional trader
usually understands the risk profile
of an options strategy better than
that of a retail trader.
And in this video,
it is my attempt to make retail trader cautious
about selling options,
because of the risk profile
that is completely skewed against him.
So again, this part is more theoretical,
because I want to come to
the common sense part of writing options,
and this part will essentially be
forming a building block for
the many call option strategies
that I'll be covering in the later parts.
So the first thing that is said
about writing options is that
due to time decay,
you can actually make a lot of money,
because most of the options expire worthless.
So, whenever someone tells you that
most of the options expire worthless,
let me tell you
they haven't done their homework well,
because if you go to Journal of Finance
and read some papers on,
the research papers on options,
you would find that this is clearly not true.
The chart that is often shown
is this chart, that is impact of theta,
that we discussed in part two,
that as time progresses,
the value of options moves towards zero.
So this is theoretically true.
Towards the end of the video,
I'll be again showing you this chart
and I'll be putting out some data
so that a few things are absolutely clear.
So one more widely held misconception is that
professional traders are selling
naked options a lot.
Well, let me tell you,
I'm a professional trader,
and in case I execute 1,000 trades,
hypothetically, over five years,
I'll only execute one or two trades
that'll be about selling naked options.
So, I can't speak for all professional traders,
but I started my career in market
as a retail trader,
and now I do this full time,
so which is why I was actually lucky
in my trading career that I never got into
the business of writing options.
I've seen many traders lose their entire capital
just because of writing options
without knowing the underlying risk.
So while professionals do write,
or do sell a lot of naked options,
they do so by hedging their positions.
I don't think any sensible professional trader
goes into the market writing options
without hedging their bets.
So, option sellers actually,
or people who write options,
or in case you are doing this currently,
you need to be aware of time remaining
for expiration, why?
I put up this point.
I hope you have heard about
implied volatility in option.
Again, this was covered in part one or two.
So the time remaining,
let's say there is 10 days to options expiry.
Well, you know what,
if implied volatility in these next 10 days
begins to spike up,
then a lot can go wrong
when you're writing options,
which you might not be aware as of today.
So I hope this video will actually put out
the risk profile for options writing in general,
and it'll help you assess the risk first
before trying to determine what sort of profit
you can make out of this strategy.
And this is something I always emphasize upon
in any video that I do.
The number one rule for any trader or investor
has to be to save money.
Everything else comes later,
whether it is profits,
or anything you want out of market.
Everything comes later.
The first rule that you have to keep in mind
is don't lose your capital.
So this chart I'll be showing you
towards the end,
and then I'll completely leave it up to you
to draw a conclusion out of this video.
So, I'll give you two scenarios here.
One is for option buyer
and one is for option seller.
That is one trader who goes out and buys option,
that is buys a call option or a put option,
and another trader,
who goes out and sells option first,
who's basically an option writer.
So if you're a buyer of option,
90% of money that you'll make,
you'll make in just 10% of trade.
Why it's so?
Because that is the nature of trend trading,
or that is the nature of trading in general,
that you're successful only 20 to 30,
or let's say, 40% of time.
If you're trading futures and equities,
your success rate is somewhere between 35 to 45%,
but when you're trading options,
that success rate actually comes down
to 20 to 30%, just because of time decay.
And when you're writing naked call options,
or even put options,
90% of money, you lose in 10% of trade.
So look at the stark difference here.
When you're an options buyer,
90% of money that you make
will come from 10% of trade,
and when you're an options writer,
90% of money that you have made,
you will lose in just 10% of trade.
That is in case you're not careful,
in case you don't know what is the risk.
So, I'll just put it out this way.
Let's assume a trading sequence
for an options buyer and options writer.
So an options buyer would typically make
a small loss, again, a small loss,
then a small win,
then a small loss,
so on and so forth,
and then there will be
this big win that will come,
because he's an options buyer,
and that will actually cover up
for all the small losses that have taken place.
Now, look at the trading sequence
of an options writer.
An options writer is going to win a lot,
the reason being that time decay
is always on his side.
So he'll be winning small,
again, he'll be winning small,
then there'll be a small loss,
then there'll be a big loss.
This big loss will actually take away
most of the winnings,
and at times, much, much, more.
So I hope you can see the difference.
An options writer usually is successful
80 to 90% of the time,
that is why it is such a huge strategy,
in terms of propaganda that happens,
people who are selling subscriptions,
or people who are giving you tips
to write options.
The reason why that is so successful is because
70 to 80% of the time,
their trades actually do make money.
But I don't think even they understand
what the risk is of writing options,
especially now that weekly options
have been introduced for Bank Nifty,
the kind of propaganda that goes around,
that people should write options on expiry date,
I seriously feel sorry for
the traders who do this,
because they don't understand
what they are doing,
and the risk profile is
completely skewed against them.
So please do keep this in mind
while writing options.
You may be right 70 to 80% of the time,
and make some small money,
but this 10% of the time,
you will lose so big
that it is going to take away
most of your early winnings,
and probably a lot more.
And let me, at this stage,
I do feel, some of you would be thinking
that this is not true.
Let me just explain this mathematically to you.
This is the breakeven point section
that I put out for all option videos.
So, a breakeven point is nothing but a stage
where your option trade would actually
start turning profitable.
In this particular case,
that is of naked call writing,
breakeven point would be a place where
your options trade would
actually start losing money.
So, a breakeven point, actually,
I've represented in this risk profile chart.
So in this particular example,
we are assuming that Nifty
is trading at 10,500 spot,
and the 10,600 call
that we are going to short sell is trading at 50.
So the breakeven point for this strategy,
assuming that you have short sold 10,600 call,
would be 10,650.
That is if Nifty, at the point of expiry,
stays below 10,650,
you would get to keep
this entire 50 rupee premium.
So the breakeven point is calculated
as strike price plus premium received
for this naked call options writing strategy.
So this is the risk profile chart
of this particular strategy,
in case you're writing options.
I've taken 28 days to expiry,
which is a typical cycle.
Some months, it is 24 days,
at times, it is 30 days.
It depends on how the calendar,
or the last Thursday
is placed on a calendar.
So the Nifty spot is at 10,500,
option strike is at 10,600,
it is 28 days to expiry,
the premium is rupees 50.
So when you write a naked call option,
this is the premium that you have received.
In this particular case,
assuming the lot size of Nifty is 75,
into the 50 rupee premium,
so you receive 3,750 per lot
for naked call options sold,
or that is call options short sold for Nifty.
Again, remember that the breakeven point
is 10,650, that is the strike price
plus premium received.
So this becomes your net profit,
that is 3,750 per lot.
Now, the maximum risk for this strategy,
theoretically, it is unlimited.
The unlimited part is actually not true,
unless and until you have some
seriously negative event
that happens in the market.
But let me just show you the realistic risk
that you carry while writing the option.
So the net premium that we received,
or the net money that we received
for one lot was 3,750.
So when, if Nifty expires above 10,650,
which was the breakeven point,
your net loss is 720 per lot.
If Nifty expires at 10,780,
your net loss is 9,900 per lot.
If Nifty expires at 10,900,
your net loss is 18,900 per lot.
Let me not go at 11,000 and 11,400,
because that I've just put out
for illustrative purpose.
Why these three points I've focused upon
is because it is very, you know,
natural for Nifty to move along
about three to 4% in a month,
because that has been the historic range.
So if Nifty strike price,
that is the breakeven price,
is at 10,650,
while Nifty is at 10,500,
you know, you get a lot of months
where Nifty easily moves up two, three, 4%,
and 10,900 is certainly within the reach.
Look at the current market scenario
that we are in.
Every week, Nifty is easily moving
three, four, 5%,
and being the major index,
it is not unthinkable that
a Nifty spot cannot go from 10,500 to 10,900.
That is just about 3.8%.
That is doable.
Now, the first question that comes to mind is,
why would someone wait till 10,900?
He would square off the position
as soon as Nifty gets above the breakeven point.
Well, that is not how trading works.
This works on paper,
but in case you have opened the position,
there is something called
as hope that kicks in.
And as a trader,
when you take a position,
and that starts going against you,
the first thing that a trader starts doing
is he hopes that his position turns into profit,
and this is where the trap of
entire option writing comes into picture.
Because when you start getting into
this sort of thinking,
that you're hoping for
a trade to turn into profit,
then anything can go wrong.
Another reason that I wanna give is gap opening.
Who is to say that at 10,500,
Nifty cannot open at 10,800?
And at that time,
volatility would be so high
that this loss would be much higher.
So for every lot that you have written,
that is naked call option that you have opened,
you receive 3,750 as premium,
but on a realistic basis,
you stand to lose about 19,000 per lot.
That is almost five times more,
and this data is as of
low volatility environment.
Towards the end,
I'll take you through an example
where I'll show you what happened in September,
when markets were falling,
and there were a lot of traders
who got trapped by writing options.
It was very evident,
even on social media,
in case you are on that medium.
So it is not unthinkable.
These things happen very, very frequently.
I've also seen that
while this happens very frequently,
partly, the reason for this is because
the strike price selection,
instrument selection of retail traders,
especially, is completely wrong.
Now, as an options writer,
you need to be careful about three things.
One is selection of instrument,
direction of trend,
and timing of trade.
If you're wrong in either of these three,
then you're setting yourself up for huge losses.
Remember one thing,
time is your friend, yes.
Time decay works in your favor.
As options lose money,
the premiums that you get,
you tend to keep them in your account,
but you also need to remember one thing,
that if your instrument selection is wrong,
and the direction of trend is wrong,
then you are going to land yourself into trouble.
Now, what I mean by this is,
there are some instruments
which are less volatile than others,
and those should be preferred as
an options writing instrument.
Similarly, the importance of trend
cannot be underestimated here.
So let's assume that you are into
a bull market, a very strong bull market,
and you go about selling naked call options.
How do you think that would work for you?
You are essentially moving against
the direction of the trend,
and that will simply make you
lose a lot of money.
Similarly, consider these times
as market is falling.
In case you go and write naked put options,
how that would work for you.
Again, you are going to take huge losses,
because the volatility is so high,
and you are seeing a rapid movement
happening in put options.
In case you write put options,
you are just going to undertake losses.
So, your selection of instrument
becomes extremely crucial,
along with strike prices.
So, one common mistake
that I've seen traders make is
they start writing in the money call options.
Now, that is, you should not be doing that,
because what happens is,
don't forget, in the money call option
actually has intrinsic value and time value.
It is only out of the money call options
which have only time value,
and as time lapses,
or as option expiration date nears,
this time value essentially tends to become zero.
One more thing that you need to keep in mind
is that it's not true that
all options expire worthless.
You should refer to a lot of research papers
in Journal of Finance,
where it is said that almost 40 to 50% of options
expire with some value
at the point of expiration.
So this whole idea that
most of the options expire at zero,
that is clearly not true.
In our particular market,
if you still want to write options,
or you're good at it,
and you've been doing it
at a consistent basis,
the instrument that you need to stick to
is only Nifty 50,
because it's not that volatile instrument,
when you consider it against Bank Nifty
or some individual stocks.
Even the frequent gaps that I was talking about,
these can cause options to move violently,
especially when implied volatility,
that is IVs expand.
So in Nifty, this is still limited,
and in case you want to
undertake this strategy of writing options,
or you have a successful method of doing so,
stick with Nifty 50,
and stick with out of the money option.
One more thing that I want to focus upon
is the psychological aspect.
The two, three things that
you have to consider is that psychologically,
whether you can handle having
written option position open in your account.
Now, the reason I say so is
when you first think of it,
it does not seem that odd,
and you do feel that, you know,
you can handle the situation,
but as you open up the position,
and the market closes,
only then you would know whether
you're suitable for
this particular strategy or not.
Do not forget that large or adverse moves
do happen very frequently in stock market,
and whenever these moves happen,
if you've written on the wrong side,
then you are potentially exposed to huge losses.
So do keep in mind two things,
one, whether psychologically
you can handle this strategy or not,
and second, whether you can set aside
the margin money that is required
for writing options.
Without these two,
I would urge you that,
just walk away from writing naked options,
because there are many strategies
that we'll be covering,
which are much easier on the risks side
and much easier on
the psychological side as well.
So please be honest to yourself,
and do assess whether you are suitable
for such strategies or not.
Personally speaking,
I don't write options at all,
because I don't like the whole idea
of such a risk profile chart,
where I get so little,
and I risk, you know,
losing so much.
Again, this comes down to common sense
and nothing else.
So I'll just move to
the strike price selection part, again,
where I highlighted that out of the money options
for this particular strategy
actually gives you the most comfort
when it comes to overall risk.
So take a look at,
I've highlighted this portion here,
that is Nifty 10,600 spot level.
So this is out of the money put options,
and this is out of the money call options.
So the call option for 10,700
has a premium of 70.
10,800 has a premium of 34.
10,900 has a premium of 14.
11,000 has a premium of six.
So this is what I've mentioned here.
And 11,100 call option has a premium of three.
So the first thing that a trader thinks about
is with Nifty at 10,600,
what are the odds of Nifty moving to,
let's say, 11,000, or 11,100,
with just 10 days to go.
And, why they think like this is that
this 14, six, and three,
these three premium values
seem extremely attractive,
and most of the times,
you will hear that this 14 would go to zero,
six would go to zero,
that is why you should be pocketing
this 14 rupees, six rupees,
and three rupees premium.
While this is partially true,
that quite often, Nifty does not go
from 10,600 to 11,000 with just 10 days left,
unless there is some strong momentum
or event that takes place in the market,
but the possibility always exists.
One more thing to remember,
that in order to profit from this 14,
six, and three premium,
you will have to write huge quantities.
Now, assuming that the lot size is 75,
but for the ease of calculation,
I'll assume that the lot size is 100.
So with one lot size,
if you write a 10,900 call option,
the net premium you'll receive is 14,
that is 1,400 per lot only.
So in case you have to profit 30,000, 50,000,
or one lakh, two lakh, or three lakh,
what you have to do is you'll have to
write huge quantities of this 10,900 call option
or 11,000 call option.
Now, in my opinion,
this is where maximum participants get trapped,
because that one event,
when Nifty will move from 10,600
to 10,900 or 11,000,
this premium of 14 or six
would become 200 and about 100.
Now, just imagine the losses
that you would undertake,
just to pocket this 14,
six, or three rupee premium.
Again, people who do this would say that
this is extremely safe,
and Nifty does not move that much,
and this is easy money to be made.
Let me tell you,
they are horribly wrong.
There are countless accounts where
people lose their entire savings
just because of this type of thinking.
Again, I will just put out one thing,
it is not,
it is a matter of common sense here.
To get this much,
you cannot risk this much.
Now, this is what basic math has taught me,
that I want a risk profile where
I lose little and make more.
You cannot attain financial freedom,
or you cannot get extremely rich,
unless and until you're this
extremely successful professional trader,
by just making this much money,
and you stand to risk this amount.
So I'll just take you back to this example
to illustrate my point.
So with 10 days to expiry,
the premium that we'll receive is 1,050.
What I've done is I've written
10,900 call option, premium is 14.
So 14 multiplied by 75 is 1,050.
So with 10 days to expiry,
with Nifty at 10,600,
with 10,900 call option at 14 rupee premium,
I'll receive 1,050 for one lot.
Look what happens.
At 10,960, just about 300 points away,
you stand to lose 3,500 per lot.
At 11,080, you tend to lose 13,000 per lot.
At 11,200, you stand to lose 22,000 per lot.
Again, let me just limit myself
to first three strike prices,
because odds of Nifty moving seven to 10%
are still fairly low.
But what are the odds of Nifty to move 2.7%?
What are the odds of Nifty to move 3.7%,
and what are the odds of Nifty to move just 5%?
If you, if there is some major event
and it's not that
this has not happened in the past,
if Nifty moves 4.8% or 3.8%,
you stand to lose 13,000 per lot,
and you receive only 1,000 per lot.
In this particular case,
you stand to lose 22,000 per lot,
whereas the premium you receive
is only 1,000 per lot.
This is about nine times more.
This is about 19 times more.
So please do the math here.
It is not unlikely that this does not happen.
I know people say that this happens very rarely,
but again, I'm lucky that we are into times
where this is happening so frequently that
people cannot say that this is an aberration.
This happens, and this happens so frequently,
that over the past seven months,
if you've received 1,000 rupee per lot
for whatever you have sold,
it just takes one month,
or one 10-day interval to wipe it out completely.
And look, whatever money goes, that is fine.
Money can be brought back.
People do get capital from somewhere,
but what about the psychological damage?
The psychological damage
when this plays out against you
is absolutely huge,
and I cannot quantify that.
Let me tell you once more that
I am not scaring you from writing options.
I'm just showing you the pitfall
of not knowing the risk.
There are still some people who do it,
and they do it to perfection,
but for retail traders in general,
please think twice.
What you're making and what you're risking.
As a common person,
as an average person just like you,
let me tell you,
I will think 100 times before
I make this little money
for this amount of risk.
So please think again.
So continuing with the previous example,
like I showed you,
you stand to lose 11 to 12 times, and 20 times.
The point that I was trying to make is that
mathematically, this strategy is not sustainable.
And one month losses will actually wipe out
months of option writing gains,
unless and until you are lucky,
that you miss out on that one month
that this is going to happen.
But like we say,
trading is all about discipline.
It is all about following a process,
day on day basis,
so it is quite unlikely that
you are going to get that lucky,
that in that particular month,
where things are going to go against you,
you would be out of the market.
So again, my whole point is not to scare you,
but please think again of the risk profile chart.
In case you're still comfortable,
please do so at your own risk,
but my point is, just think again.
Let me now take you to
the weekly option strategy segment,
especially since the Bank Nifty options were introduced,
that is weekly options.
Now, there's been this strategy that
you can write Bank Nifty weekly options every week
and gain from it on a consistent basis.
I am not here to ridicule any strategy,
but I'll just show you what happened in October.
Now, this Bank Nifty option,
that is put option, 25,300,
opened at 391, and the last traded price,
you can see, is 100.
But it sounds nice that
you can write this position at 391,
and eventually ride it to the low point,
that is at one.
But in between, look what happened.
On 10th October,
this opened at 391,
made a high at 394.
On 11th October,
it made a high of 958.
So those who have written in the 300 range,
they need to see that next day,
their option price goes up to 900.
And let me tell you one thing,
when an option position
starts to move against you,
the first thing that grips you is fear,
and you just don't know what to do.
Now, think about the trader who wrote at 400,
exited at 900, and the next day,
he's again seeing his option
trading at the 10th October level.
What happens to him psychologically?
Just think about that.
And then, two days before expiry,
you see that the option is trading
somewhere around 50.
Now, look what happens on the option expiry date.
The option opens at six,
and the closing price that you see is 57.
Again, when you see a single digit option,
the thing is that,
people encourage you to write this option,
because hypothetically,
it's heading to zero.
But look what happened on this expiry date.
This option opened at six.
It went as high as 140.
Just calculate, or just think about the person
who has written at seven, eight, 10.
He's seeing the position rise against him
by 10 to 14 times.
And one thing I'll tell you,
if you've looked at an option chart
for a weekly option,
it does not rise slowly.
Once the position starts going against you,
this 10 becomes 20, 60, 80, 100, 120,
in no matter of time.
You just won't be able to exit.
So if you're among those rare breed of traders
who can open up a position at 400,
see it go to 1,000,
and then see it collapse to one,
and then rise to 140,
then you know, it's suitable for you.
But if you do not have that skill set,
again, please think before writing an option.
I'll bring you to one more example.
This is of monthly option,
that is for Nifty in September.
Now, 11,300 put.
Again, I saw this option,
that is why I picked out this example.
It started at 29, it ended at 319,
more than 10 times higher.
This is for an instrument which is
supposedly less volatile,
which is supposed to move less,
which is supposed to,
it's not that volatile because of
the various constituents it has,
both of high beta and defensive space.
But again, if you write this instrument,
and see it go to 200,
which happens quite frequently,
I know some of you might be questioning that
why should I hold a position from 30 to 200?
Well, the fear concept
that I explained you earlier,
that is what happens.
When you're writing
and you see you're losing money,
you tend to get in a situation
where you want to hope that this position
turns into profit,
and this is what actually keeps you
holding onto this position
and eventually, the losses mount.
Another example that I'll pull out
is for a monthly option, Bank Nifty.
So this is 27,500 put option for September.
It opened at 141,
and it made a high of 2,400.
Just do the math here.
Yes, you may not ride it from 200,
let's say, to 2,400.
You might exit somewhere at 600,
or 700, or 1,000, or even 400.
But the point I am trying to make is that
when you're short selling something,
the maximum reward that you can get is 100%.
Right?
But the maximum loss that you can make
is easily 400%, 700%, 1,000, 2,000%.
There is no ceiling to that.
And don't underestimate the kind of events
that can play out.
You just don't know.
Look at 2008, 2011, 2013, 2015, even 2018.
There are lots of traders who have lost
their entire trading account
because they did not understand
how to write naked options
without the underlying,
understanding the underlying risk.
So one more time, I'll tell you,
if you want to write options, please do so,
but please understand the risk.
The reason why I haven't given out
a strategy this week,
and made this as a warning video,
is because I see, even on YouTube,
even on various websites,
this whole notion that
this can be done so easily.
I am not that skillful who can do it,
but I'll be brutally honest to you,
that before trying to calculate
what profit you can make,
please take a look at the risk profile chart
of this strategy,
and see what you are going to execute.
Now, I again pull up
this chart that I showed you.
This is a very famous option chart,
because this forms the basis of
writing naked options,
and how a bright future of writing options
and making easy money exists in the market.
Now, next time someone shows you this chart,
that is the impact of theta on option price,
and the option price goes towards zero,
ask them to show you this chart as well.
Now, this is the same chart
with the option price plotted.
Now, what this chart tells you,
or rather this chart tells you,
is that, yes, over a period of time,
option value decreases,
and it goes towards zero.
What this chart does not tell you is that
as option is moving towards zero,
at times, these events happen,
when option moves from 40 to 150,
or it even moves from four to 300.
So next time you hear all this,
please take a snapshot of this
and remind yourself of what you are getting into.
Maybe a stage might come when market value
gets so skillful that writing option
becomes natural to you,
and you find out a strategy how to do it,
but please consider the risk.
So there are some common mistakes
that I wanted to point out.
Number one is this whole notion of thinking
that option writing,
as a monthly income source,
exists out there.
Well, it exists.
Let me tell you,
I won't tell you it does not exist,
but it exists for the elite
one or 2% people who can do it,
not for the remaining 98% people.
There are many other strategies that exist
where you can make money.
Something as simple as mutual fund investing,
or picking out decent stocks to invest
would give you much higher returns than
a strategy which is
completely skewed against you.
Another thing that I see is
people who give option tips.
Now, they run subscription models
where they'll come and tell you,
write options for unlimited income.
Let me tell you something.
No person in this world other than you
can understand your risk profile better,
so please don't give
your trading account's future into
hands of someone who does not understand you.
Right?
And next time an option tip seller tells you
that you must write this option or that option,
please ask him for a risk profile chart,
and let us see whether he knows
what he's getting into.
So one more important point
that I want to emphasize is,
despite of all this,
if you think what I'm saying is not true,
and you still want to go and write options,
please stay away from weekly call options
and put options.
You just cannot imagine the kind of losses
that you can take.
And second, please don't
leave those positions unattended.
A lot can go wrong, even in 10 minutes.
Let me tell you that.
So I'll just summarize this week's video.
The key message from me in this video is,
without knowing the risk,
please do not get into the business of
writing naked options,
whether it is call option, or put option.
Again, I would urge you to avoid the trap
that goes around the options,
naked options writing business.
Please avoid doing it.
There are just a select elite 1% people
who do this very successfully,
and I will tell you very clearly,
I am not among them.
I cannot do this.
I am a very simple trader
who understands very simple things,
and that is my whole idea of
this YouTube channel,
that I want to put forward very simple things
that people like me can understand
and execute on their own.
And one of the basic things
that I understood in my life
was basic mathematics.
I want to focus on limited risk,
and theoretically, unlimited reward.
I don't want to focus on theoretically,
unlimited loss, and limited reward.
I hope my point is clear in this subject.
So there are many other options strategies,
including many I will cover.
There are many other strategies
that I have put out,
which are very easy to execute with limited risk,
so please focus on that.
I hope I haven't discouraged anyone here
from following this particular strategy
of writing options.
What I've shown you is
the dark side of options writing,
which usually does not come out that easily.
If you meet a very successful trader
in your life,
a person who is very successful in markets
for over 15, 20 years,
he'll probably tell you the same thing,
that, get away from
the business of writing options.
Instead, focus on many, you know,
stress-free strategies that exist out there.
The kind of stress that
you've put on in your life
just by writing options,
you have no idea about it.
So, that's all for this week.
I hope I haven't scared anyone.
I just want to make you aware of
the other side of options writing.
In case you have any doubt about
what I've shown you,
do leave a comment below,
and I'll get back to you as soon as possible.
So thanks a lot for watching this video.
Have a great weekend,
and be safe, guys.
- [Narrator] Click on the subscribe button
and bell icon,
to get instantly notified
when a new video is uploaded.
Thank you for subscribing.
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