How To Use Sensibull¶
Why am I getting not getting enough buy options in my search results? Why are you always showing sell options?¶
Simple. It is because it makes more sense to sell options than buy options for your query!
Buying options works only if you are looking at a very big move within a very short time, say 1-3 days. If you are looking at a horizon if a week or so for a move to happen, the options you buy will lose time value, which makes buying options a bad idea. On the other hand, if you sell options, this time value loss will make you profits because the options you sold will decrease in price. So if your market view is for a small move, or spans more than a few days, your best trade will usually be a sell option trade.
You can learn more here:
Why can't I see all Bank Nifty Expiries?¶
Bank NIFTY options liquid only in the coming weekly and coming monthly expiry. To be precise, when you are on a Monday, say 6th August, 9 Aug and 30 Aug will be liquid but not 16 Aug. And 16 Aug becomes liquid only by 9th and 10th Aug. We disabled illiquid options to prevent our new users from getting into trouble. Next week's options will come alive on a Wednesday which is 8th August in this example.
Why can't I see all the strikes?¶
We only give 10 strikes above and below the current ATM in Sensibull. This is because the faraway strikes act more like lottery tickets, and is not very prudent to take a trade in.
If you are not seeing all strikes in Option Chain, please try turning this toggle on
Why is there no good trade for my market view?¶
This happens when your move is very small, or your trade duration is too short. Option trades make sense under three conditions, broadly:
- The stock move is big enough to make money on Delta
- The trade duration is long enough to make money on Theta
- There is enough IV change to make money on Vega
If none of the above conditions are met, then your trade will not pass through our filters of minimum profitability
What is the difference between Not above and below? The same question goes for Not below and above¶
Technically, there is no difference. It is just a mental model.
When you say above - you will say it for a bullish view. Example, market is at 24500. It is going to go up and break 24900. So above 24900. Even if you give market not below 24000, it will give the same result. But we tend to think "above 24900" than "not below 24900" in this scenario
Not Below: This is more for a non-bearish view. Example, market is at 24500, there is a support at 24000. So you will say it is not going to break that 24000 number. Even if you give market above 24000, it will give the same result. But we tend to think "not below 24000" than "above 24000" in this scenario
I do not see all the strikes in my results. For example I do not see any in-the-money or out-of the money options. Why is that so?¶
Here are some of the options we filter:
In The Money Options
Any option in the money far from the current ATM strike has a high chance of being illiquid. It also carries the STT play. So we avoid any option sufficiently in the money. Some Deep Out of the money options for buying - We avoid very deep OTM options which are sometimes illiquid.
Strikes which are odd multiples of 50 in NIFTY next month
Strikes which are odd multiples of 100 in BANK NIFTY next on some expiries
Options which are not worth it
- Deep out of the money options for selling - Some options have such low premiums that we exclude them from the sell list. As they say, do not sell lottery tickets. (Unless you are the Government of Bhutan). What’s the point in locking away 60k for a month for 800 Rupees minus transaction charges?
- Very deep out of the money options for buying - We mean VERY. They are practically lottery tickets and have very little value other than pure speculative value. The only reason why you would buy them is “I’m feeling lucky”. And the only people who made money out of “I’m feeling lucky” is Google.
- Deep ITM options for buying and selling - These options, as mentioned earlier are illiquid. There is an STT gamble on these strikes. Finally, the delta on these is so close to one and theta vega are so close to 0 that they are practically futures. So you are better off trading futures which are more liquid without the STT nonsense.
Why is there no total delta on positions page?¶
- If you have taken positions in only one underlying, the delta you see is the delta below that underlying's group
- If you have taken positions in multiple underlyings, there is no such thing called a cumulative delta. This is because Nifty delta is the delta when Nifty moves by 1 point. HDFC delta is the delta when HDFC moves by 1 point. There are two different underlying spot prices involved here. And you cannot sum Deltas in two underlyings because of two spot prices. There is no NIFTY + HDFC Delta as such
- This is the same reason why we do not give total Vega, as we cannot sum two different IVs
- There is a total Theta though, because Theta is the change with number of days, and the passage of days is the same for multiple underlyings. There is only one time.
Why is there no "Not Between" in the view in Options Strategies?¶
The only reason why we did not add that is we figured out from data plus past experiences that most new users lose money on straddle/ strangle buying. So we wanted to discourage them from buying bidirectional strategies.
On paper, they seem like they will make money, but the reality is that they hardly ever work due to high premia and Theta decay. Moreover, most of the times end users buy them during times of events of high volatility, which comes down soon after the event adding to a buyer's Vega Loss.
Because of all of this, we decided to keep them out of the reach of common public. To trade straddles and strangles, you can create them in the builder.
Why do you charge margin for spreads with limited loss?¶
We get what you are saying.
If you sell a NIFTY call spread 11200 Sell 11300 Buy it has limited loss, we should collect only the potential losses. So why do we collect the margins?
The answer to that is:
How does NSE know that you will not square off the buy leg of the spread, which is the protection?
So they will always ask you to post the margin for the sell leg independently.
There is an easier workaround in some specific cases though.
Some times, a future plus option's pay off can be replicated by an option alone. The advantages of this are:
- It has lower margin requirements.
- No illiquidity problems
- Lower transaction costs and STT
So the next time you are thinking of combining and future and an option, please do consider the alternative, which is the option alone
- Buy future + Sell Call -> Sell Put
- Buy future + Buy Put -> Buy Call
- Sell future + Buy Call -> Buy Put
- Sell future + Sell Put -> Sell Call
Why can't I find all the stocks in Options Strategies?¶
The reason for this is - We went for the most liquid stocks and very high market cap ones. This was to protect new users from getting into stocks which are illiquid and end up losing money.
I got no options for a between view¶
When you give a "between" view, we show you options which will remain profitable within this range.
Which means all of this range including the two extremities.
To make it a little more clear, let us take an example.
Your view is that Bank Nifty will be between 27500 and 28500.
Your strategy has to be profitable at 27500 AND 28500 if your view .
But no matter which option you sell, you will lose money if the market takes a 500 point swing up or down. The Theta or Vega you gain will not compensate for the Delta or movement related loss of 500 points. Of course, a far option like 29500 or 26500 might, but they do not give you any sort of meaningful Theta.
You could try with a smaller range and you will see options. Hope this helps.