In this article, we will discuss:
- The Science Behind Building a Winning Strategy with Options B.R.O.
- Make the Transition from Speculation to Successful Trading with Options B.R.O.
Options B.R.O. from Samco Securities is revolutionising options trading today. At first glance, it helps you do three crucial things — build, research and optimise your trading strategies. But when you delve a little deeper, you’ll find that this flagship feature in the Samco trading app is so much more than just a strategy builder that gives you the three best trading strategies.
Even though the computations occur at lakhs of calculations per second, this strategy builder in the Samco trading platform, there is a very precise science behind how Options B.R.O. does what it does. By adopting cutting-edge analytical procedures and researching every strategy thoroughly before offering it as a suggestion, Samco’s strategy builder removes the guesswork from options trading — making it less of a speculation and more of a strategic move.
The Science Behind Building a Winning Strategy with Options B.R.O.
Options B.R.O takes into account various key parameters including the implied volatility (IV), Options Greeks like delta, gamma, theta and vega, and a whole host of technical indicators that are pivotal to analysing the market and selecting a strategy.
Let us take a closer look at the science that goes into building a winning strategy using this all-new pioneering strategy builder on the Samco trading app and how each of these parameters plays a role in strategy selection.
The implied volatility (IV) plays a crucial role in options strategy building because it reflects the market's expectation of the underlying asset's volatility. High IV levels suggest that the market anticipates significant price movement in the asset. This typically increases option premiums. Conversely, low IV levels indicate that the market expects stability in the underlying asset’s price, thereby leading to cheaper options. In the Samco trading app, Options B.R.O uses metrics like implied volatility to filter strategies that align with your expected view of the market.
For multi-legged strategies like iron condors and straddles, understanding IV is especially important because it helps you assess the risk-reward ratio.
Take the iron condor strategy, for example. It benefits from low IV conditions, so the strategy builder in the Samco trading app may suggest this strategy if your outlook indicates that you expect low volatility. To set up the iron condor, you need to:
- Sell an out-of-the-money (OTM) put
- Buy a further OTM put
- Sell an OTM call
- Buy a further OTM call
The strategy can turn profitable if the underlying asset's price stays within a certain range. However, a surge in IV after you set up the trade can erode potential profits because it may increase the chance of the underlying asset breaching the established range. Here is where analysis of the Greeks — and vega in particular — becomes critical.
Option Greeks measure the sensitivity of an option's price to various factors. Each Greek adds a layer of complexity and insight into multi-legged strategy planning. More specifically, they help quantify how an option's price is expected to change with movements in the underlying asset’s price, time to expiry and implied volatility. Together, option Greeks are instrumental in how Options B.R.O. refines strategies in the Samco trading platform.
By analysing these Greeks, our strategy builder makes precise adjustments to the strategies selected, so they are optimised for factors such as price movement sensitivity (delta), time decay (theta), and changes in IV (vega). This ensures that the strategies suggested are not just reactive but proactive.
Let’s take a closer look at why each Greek is pivotal to strategy building in Samco’s Options B.R.O.
It measures an option's price sensitivity to changes in the price of the underlying asset. By analysing this Greek, Options B.R.O. filters strategies that are more or less sensitive to the underlying asset’s price, as per your preferences. The more sensitive an option is, the more volatile its price may be (depending on the underlying asset’s volatility).
It measures the rate at which an option's delta changes for each point movement in the underlying asset. This is crucial if you are employing multi-legged strategies because it affects the position's sensitivity to market moves. In Samco’s strategy builder, the gamma helps anticipate and adjust for any potential changes in the delta.
This Greek indicates the rate of time decay of an option's price. It is particularly relevant when Options B.R.O. recommends time-sensitive strategies like calendar spreads, where you sell a short-term option and buy a long-term option on the same underlying asset. The strategy builder in the Samco trading app also factors in the time decay to analyse the maximum profit/loss and the potential profitability of each trade.
This Greek measures how sensitive an option is to any changes in the IV of the underlying asset. Accounting for the vega is essential for strategies like straddles, where you simultaneously buy a call and put option at the same strike price and expiration. As a part of the precise strategy analysis integrated into the Samco trading app, Options B.R.O. factors in the vega too.
Technical Indicators
Technical indicators provide signals and insights into the timing and potential direction of the underlying asset's price movements. For complex options strategies, these indicators can guide entry and exit points. They also offer insights into market trends and momentum, which are critical for timing your traders.
Take a diagonal spread, for instance, where you combine options with different strike prices and expiration dates. Here, technical indicators like moving averages or Relative Strength Index (RSI) can signal the optimal timing for strategy implementation. Entering a diagonal spread when the underlying asset shows a trend reversal pattern on technical indicators can make the strategy more effective because you can leverage the expected price movement over time.
In Samco’s Options B.R.O. these indicators help identify periods of potential market reversal or continuation, leading to strategic decisions on when to deploy or close out a multi-legged strategy. By integrating technical analysis into the Samco trading app, we have ensured that you can enhance the probability of executing a successful trade within the desired timeframe.
Make the Transition from Speculation to Successful Trading with Options B.R.O.
Now that you know what goes into the process of strategy building with Options B.R.O. you only need to choose Samco to transform from a speculative to a successful trader. Even if you already have a trading account, switching to Samco is easy. The Samco account opening process is quick and simple. Once you have an account with us, simply log into the Samco trading app to leverage all the benefits of scientific option strategy building with Options B.R.O..
The best part? You need not pay any extra fees to access these state-of-the-art features. We do not levy any additional charges beyond the standard Samco brokerage fees applicable to your plan. So, download the Samco trading app and try Options B.R.O. today for free!
Disclaimer: INVESTMENT IN SECURITIES MARKET ARE SUBJECT TO MARKET RISKS, READ ALL THE RELATED DOCUMENTS CAREFULLY BEFORE INVESTING. The asset classes and securities quoted in the film are exemplary and are not recommendatory. SAMCO Securities Limited (Formerly known as Samruddhi Stock Brokers Limited): BSE: 935 | NSE: 12135 | MSEI- 31600 | SEBI Reg. No.: INZ000002535 | AMFI Reg. No. 120121 | Depository Participant: CDSL: IN-DP-CDSL-443-2008 CIN No.: U67120MH2004PLC146183 | SAMCO Commodities Limited (Formerly known as Samruddhi Tradecom India Limited) | MCX- 55190 | SEBI Reg. No.: INZ000013932 Registered Address: Samco Securities Limited, 1004 - A, 10th Floor, Naman Midtown - A Wing, Senapati Bapat Marg, Prabhadevi, Mumbai - 400 013, Maharashtra, India. For any complaints Email - grievances@samco.in Research Analysts -SEBI Reg.No.-INHO0O0005847
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