15% Guaranteed Returns - Buy both Call & Put options Strategy

[jamit_05]

One thing is for sure that it is not a sure-shot method. There is none.

We have seen the upside. Now, lets peek into the downside. And then devise a plan to manage the losses such that they are commensurate with the profits. Then it is a great trading plan.

I had traded this strategy earlier. My inputs

1) Volatility also goes against. For ex. after taking position VIX drops. Hence, place a SL same as expected average profit is important.

2) Take position when the range is expected to expand. Like after NR7s or before news and not after a big move. Taking up positions without an edge will not result in Net. Profit.

3) Be sure to take positions exactly in middle of two strikes, else the position is direction-biased. Unless, of course, you intend for it to be.

The above is not sufficient for success. After a few cycles of VIX picture will become more clear to the trader.

 

[hmp]

tomorrow is the result and possibly going to include in nifty 50.

 

[Cubt]

tomorrow is the result and possibly going to include in nifty 50.

It is not advisable to go for long strangle/straddle options today, as you have already missed the NR7 day which had occurred 2 days before.

If you had bought 420 CE and 380 PE, on that breakout day, it would have given you 40% returns now.

As Jamit mentioned, volatility may go against as us. Same NR 7 breakout appeared in Reliance on 10th april i guess.

If you entered in long strangle/straddle, it would have given you positive returns till yesterday. But after the result both CALL & PUT options lost value due to decrease in volatility.

am not sure how do we predict this volatility, if there is any way then we could book profit and exit our holdings on the right time. would be helpful if some seniors provide inputs on this.

if you were holding the reliance position now, you would be sitting in 50% loss.

better look out for any NR7 possible pattern in any stocks/index and then decide your trade.

 

[DanPickUp]

@Cubt. How do you personaly analyze the existing vola? Which vola do you use and how far back do you have any data to make any decisions about the actual vola in that specific derivative you trade on.

You may explain that first and then an answer can be given to that.

 

[Cubt]

Hi,
I use the below links to check the IV value for any derivatives.

http://www.volatilitytrading.net/black_scholes_calculator.htm

http://www.nseindia.com/

1st I will enter current market details and calculate IV.
Then i will enter the EOD details for past days and compare it with current IV.

If the current IV is more than the calculated previous values, then i assume volatility has increased.

so on NR7 breakout day, i calculate the IV value, if its lesser than previous day i assume volatility is lower and better to enter the trade.

am not sure whether this is the right way. please correct me if am wrong

 

[DanPickUp]

Hi,
I use the below links to check the IV value for any derivatives.

http://www.volatilitytrading.net/black_scholes_calculator.htm

http://www.nseindia.com/

1st I will enter current market details and calculate IV.
Then i will enter the EOD details for past days and compare it with current IV.

If the current IV is more than the calculated previous values, then i assume volatility has increased.

so on NR7 breakout day, i calculate the IV value, if its lesser than previous day i assume volatility is lower and better to enter the trade.

am not sure whether this is the right way. please correct me if am wrong

Hi

Any better program you can use for that or any other pages which give you automatically numbers which are from the last three months and even longer? May I had a wrong look at what you showed, but could not find such date there.

Comparing vola from today and yesterday and then taking any decisions on that is of no good use. In my opinion even very dangerous when decisions are made on that for option strategies on the long and short side. Just my way of using vola.

Vola really should be low or high on a longer time frame to make any deeper useful decisions out of it. Metastock and OpVue by the way have such tools. Even I talked about S&R in previous posts, those levels are looked at on bigger time frames and there you even can spot many times rising vola when market moves from R to S. So around S vola is in bigger time frames many times higher compare to R. That is what I meant.

Sorry, not can support you on that or even help you, as for that kind of short time trading I not even once in my life included any thoughts about vola. But I also like to see new things, never mind about that as trading is an ongoing learning challenge.

So please move on with your post and surely other readers also will post there experience or opinions on that specific subject.

Good trading / DanPickUp

 

[Einstein]

Are you looking for new clients or what do you want to tell us? Why do you mention: MY CLIENTS?

To explain what you do, you do not need to write the way you just did. Would appreciate if you in the future not mention your clients as other wise I will report you.

Take care. DanPickUp

lol, we have forum police

 

[DanPickUp]

lol, we have forum police

Any problem with that? :lol:

 

[adg123]

Sai,

I dint claim its a new strategy. I know many beginners struggle to make profit in option trading. Even I was one of the victim when I started trading 5 years ago.

It is the strategy am following now and curious to know if anyone is already following it & making profit

Thanks a lot....., I am completely new in Option Trading and suffering a lot..., Have to implement your technique...

 

[TraderRavi]

Thanks a lot....., I am completely new in Option Trading and suffering a lot..., Have to implement your technique...

why are u suffering buddy instead of surfing....