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STRAIGHT TALK : ASHWANI GUJRAL

‘Index options have much better liquidity than individual options’


Posted: 2008-03-09 00:26:11+05:30 IST
Updated: Mar 09, 2008 at 0047 hrs IST

: available and hence time value was very important. With longer-term options, options with expiry up to 5 years would be possible and hence traders and investors would have more choices in exercising their views.

Would you recommend waiting for the expiry or squaring off the position and getting the profits, considering the current trend of the market?

In this kind of a sideways market, profits need to be taken off the table at regular intervals, otherwise the market is likely to move sharply in the other direction. In different market contexts, the perspective on profit booking has to be different.

What risk and mistakes must an investor overcome while investing in options?

Investors and traders, first of all, need to intimately know the risk reward of the product and strategies they are using. Only experienced traders should take naked trades with unlimited liabilities. Also, check the implied volatility, time value, and liquidity of the particular strike before buying or selling options....

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