Comfortable profits from trading Nifty.

[Somatung]

The May strangle turned out well. However, the Horizontal Calendar Spread is a point of worry due to the following reason:

Say March expires at 6500 as daily trend is nicely up.

Then the shorted Mar 6200 will expire ITM causing a damage of 300 points
The Long APR 62CE will decay by 70 points.

Against a gain of 135 points in collected premium.

Net loss: 235 points at march expiry. I fail to see the bright side.

Watch it and at end of month lets have a look at it again.

 

[Somatung]

Here the screen shots from today (05. MAR 2014) with the actual prices posted from NSE:

MAR Series:

APR Series:

If others may later want to start to follow those idea, but not have the numbers from today, they now easily can do it at any later stage. It is surely a good exercise to have Food for thoughts and nothing else.

 

[Option.Trader]

Here the screen shots from today (05. MAR 2014) with the actual prices posted from NSE:

MAR Series:

APR Series:

If others may later want to start to follow those idea, but not have the numbers from today, they now easily can do it at any later stage. It is surely a good exercise to have Food for thoughts and nothing else.

Interesting, it's moving in tandem, though why anyone would want to sell such a low volatility option is a?

 

[jamit_05]

<...................>

 

[jamit_05]

63/62 March @ 130
63 April @ 92.4

total: 222.40

Total Collected: 132+101 = 233;

So, far it looks good. There is a strong possibility of gaps due to election season and hence it will be challenging to manage this position. But, isn't that the reason why we are doing this exercise, to strengthen the nerves.

Value of Current Shorted Positions:

63/62 March: 140
63PE April: 82;

Net Value: 222;
Total Collected: 233;

Nevermind, the little profit, I am only happy to see that the positions are not into a loss due to the strong rally that we have seen in the past few days.

It appears that the delta is balanced, and there won't be any need to make any adjustments till thre is a 50 points move on either side. I have 222 points exposed to time decay.

 

[jamit_05]

Looking at the Daily chart it appears that the price is overbought. Consolidation or reversal to the mean is likely, before the trend resumes.

Hence, it makes sense to buyback the sold 62PEs for 23. They are currently contributing very little in time-decay due to their low values.

 

[jamit_05]

update:

63/62 March: 152
63PE April: 80;

Net Value: 232;
Total Collected: 233;

Shorting 63PE April was indeed a good move. It will be a proactive hedge till 6400 Spot. Till then if the pullback does not happen, then I will have to purchase Calls.

 

[jamit_05]

Re: update:

63/62 March: 152
63PE April: 80;

Net Value: 232;
Total Collected: 233;

Shorting 63PE April was indeed a good move. It will be a proactive hedge till 6400 Spot. Till then if the pullback does not happen, then I will have to purchase Calls.

Bought Back 62PEs March for 23;

For 63CE Mar and 63PE Apr; Current Total Value: 131+79 = 210;
(Initially) the total Collected premium was 210;

Breakeven! Wow.

 

[Somatung]

Interesting, it's moving in tandem, though why anyone would want to sell such a low volatility option is a?

It is his idea. He surely had a reason to do it. He is not really able to watch his trades during the day. Maybe this is why he choosed this horizontal calendar spread. http://www.traderji.com/trading-diary/89446-escapes-trading-diary-20.html#post941783 If market closes end of Mar at 6500, the long April 6200 call will be in good profit which will cover the loss of the shorted Mar 6200 call. The different between the two prices at closing of Mar will be his profit.

 

[jamit_05]

It is his idea. He surely had a reason to do it. He is not really able to watch his trades during the day. Maybe this is why he choosed this horizontal calendar spread. http://www.traderji.com/trading-diary/89446-escapes-trading-diary-20.html#post941783 If market closes end of Mar at 6500, the long April 6200 call will be in good profit which will cover the loss of the shorted Mar 6200 call. The different between the two prices at closing of Mar will be his profit.

This is a debit spread, hence is directional. And since the near month CE has been shorted, means it is a Bearish spread. In which case it won't make money if market goes up. The trader was bearish at the time of placing the trade and will make adjustments.