Comfortable profits from trading Nifty.

[jamit_05]

Doing short strangles around atm with the current options month series is high risk and needs to be traded high professionally. Stress is programed. You will need TA knowledge and not only knowledge about the option Greeks. If you suddenly find your self in a trending market, your fixed delta rules are out of question. So forget about it. Here only the break even points do/could lead the game. Very difficult task and most lose money at the end with it.

Problems start once BEP is reached. So, I thought of being clear-cut defensive.

Consider the case of shorting May straddle. Once BEP (say at 6500) is reached, buy March 6500 CE costing 80. From then on what could go wrong? What better month to find out, than the "tides of March"

 

[jamit_05]

Ok, I see. Depending on your brokers account you alternatively can/could sell a MAY strangle with the same income:

Sell five MAY 5500 put @ 72 and sell five MAY 7100 call @ 71.60

Collected for the moment: 718 points

Stress factor: Much lower compare to the atm MAY 6300 short straddle.

I am estimating, that the points where one starts paying M-to-M for May strangle and straddle won't be too far apart. Straddles will start demanding M2M about the same time as strangles.

The Nett Risk:reward ratios are usually tightly tied together on the options table, due to good liquidity.

 

[jamit_05]

Currently, 6300 straddle will be delta neutral. If one can manage to adjust delta, this will be a good trade.

Instead of managing delta and other greeks, i will first try to manage risk via a more direct indicator: Mark to Market Losses. As soon as it starts happening, I know that the delta is now skewed and I need to be defensive, starting right about now. Do not need to rely on indicators.

Will working with two lots for May. Thoda jhatka lagega toa dimaag chalega

 

[jamit_05]

Dnt try this in election month....one big move n account blow off.

Hv tested a protective strategy for the straddle. Will put it to test in this month. In my backtests, I hv learned that I should not expect bumper profits. If proper measures are taken, losses too will be in proportion.

Anyway, thanks for the heads-up.

 

[jamit_05]

Doing short strangles around atm with the current options month series is high risk and needs to be traded high professionally. Stress is programed. You will need TA knowledge and not only knowledge about the option Greeks. If you suddenly find your self in a trending market, your fixed delta rules are out of question. So forget about it. Here only the break even points do/could lead the game. Very difficult task and most lose money at the end with it.

I agree on this.

Current month option straddles hv a radius of 50 points. Within a day or so, these shorted straddles will demand more money. If one intends to hold them till expiry, then it will require a very enterprising trader at the helms.

 

[sanjeev258380]

Why u shrting itm...try otm also...like 6800--5700 of may

 

[gmt900]

Problems start once BEP is reached. So, I thought of being clear-cut defensive.

Consider the case of shorting May straddle. Once BEP (say at 6500) is reached, buy March 6500 CE costing 80. From then on what could go wrong? What better month to find out, than the "tides of March"

If you sell May 6300 straddle with 680 points upper BEP is 6980. When do you take action of buying March 6300CE ?

 

[Somatung]

I am estimating, that the points where one starts paying M-to-M for May strangle and straddle won't be too far apart. Straddles will start demanding M2M about the same time as strangles.

The Nett Risk:reward ratios are usually tightly tied together on the options table, due to good liquidity.

Food for thoughts:

Point one: The range makes the point/different.
Point two: The example is a perfect price hedge.
Point three: Leg in to the strategy to even expand the range.

With the short strangle, we are far more protected to any move on either side with out doing any thing. The biggest risk is always on the down side. So here the short call leg could be choosen tightener to the current future level as markets not crash upwards. The extra money we would get here is invested in the protection on the down side by buying put/s at the needed levels.

 

[jamit_05]

Why u shrting itm...try otm also...like 6800--5700 of may

My objective is to benefit from time decay of premiums. Since, premium is maximum on ATM options I am shorting them. I do not intend to hold them till they expire. I will hold them only for one month.

 

[gmt900]

Food for thoughts:

Point one: The range makes the point/different.
Point two: The example is a perfect price hedge.
Point three: Leg in to the strategy to even expand the range.

With the short strangle, we are far more protected to any move on either side with out doing any thing. The biggest risk is always on the down side. So here the short call leg could be choosen tightener to the current future level as markets not crash upwards. The extra money we would get here is invested in the protection on the down side by buying put/s at the needed levels.

This is a very good trade!

If one gets say 150 points for May 7100/5500 short strangle, upper and lower BEPs are 7250 and 5350 a range of 1900 points.

Even if one pays a net margin of say 65000, there is a bright chance to make 7500 in less than three months. That is a little less than 4 % per month.

There can't be a more safe trade even considering elections are coming up.

In the unlikely event of trade being in danger, there will be adequate time to act and adjust without any losses.