Raghu Staff answered 5 years ago
My answer is a big NO.
This is something I have learned the hard way. FOMO (Fear of missing out) on a trade. Sometimes a NO trade is a good trade.
eg. The premiums at 1:30 PM (on expiry day) for an option 200 points away will say around 4 to 6 rupees.
Max reward – assuming 5 Rs premium – 5 X 20 = 100
Risk – Assuming a good 100 pointer move against you. The premiums will shoot up to 25 to 50+? – Hence 25 X 20 = 500
What are the chances that this 100 pointer move will occur in the last two hours on expiry day. Let us take a 50% – 50% chance.
If you use discount brokers (MIS margin is approx. 25000), the risk-reward is still ok. Capital erosion is 4%.
If you other smaller brokers, which enable you to write options at 5000 margin, there will be good 20% capital erosion.