Comfortable profits from trading Nifty.

[jamit_05]

Re: update:

Position 2:

Sold March 64CE/PE straddle to collect 150; As per the expectation that the price will correct to the moving average and then resume trend or go sideways.

Sold March 64CE/PE: 150

 

[Somatung]

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.

Sir, you are confused about what Debit spreads are and what Calendar spreads are. He sold Mar 6200 calls and he bought Apr 6200 calls = Calendar Spread. In this case it is even a Horizontal Calendar Spread as they have the same strike level which is 6200.

Calendar Spreads - Definition:

A type of options trading strategy that uses a combination of options with different expiration dates in order to profit primarily from time decay.

Calendar Spreads - Introduction

Calendar Spread is a term for a group of options trading strategies. It is not the name of a single options strategy as there are many different types of Calendar Spreads. Calendar Spreads have been gaining popularity recently as a way of profiting from time decay in the short term while keeping the possibility of profiting from explosive directional moves in the long term. Due to its ability to profit from time decay across multiple months, Calendar Spreads are also known as "Time Spreads". This tutorial shall cover what Calendar Spreads are, the nature and role of Calendar Spreads as well as the different categories of Calendar Spreads and a detailed listing of all Calendar Spreads. Calendar Spreads referred to here are long calendar spreads.

http://www.optiontradingpedia.com/calendar_spreads.htm

Debit Spreads - Definition

Debit Spreads are options positions created by buying more expensive options contracts and simultaneously writing cheaper options contracts.

Debit Spreads - Introduction

Debit Spread is one of the two kinds of options spreads, the other being the Credit Spread. Debit spreads are usually the first kinds of options spreads that beginners to options strategies use. Debit spreads not only has predictable maximum loss, making it safer in terms of money management, but it also requires a much lower options account trading level than the more complex credit spreads.

This tutorial shall explore in depth what debit spreads are, how they work and briefly introduce the different kinds debit spread options strategies.

http://www.optiontradingpedia.com/options_debit_spreads.htm

 

[jamit_05]

I hv not read books on the subject. But. quite simply, when someone spends money, i.e. make a debit, to buy a spread then he is betting his money that the market will move in his direction. There is no other logic to it.

Secondly, if the near expiry CE has been shorted, then it means that the trader expects the price to go down for the next couple of weeks. Again, no other logic will apply.

Quite clearly, the March expiry is going to be bullish.

 

[jamit_05]

Re: update:

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.

For 63CE Mar and 63PE Apr; Current Total Value: 227
(Initially) the total Collected premium was 210;

That is a drawdown of 17 points. It took a 200 point move to put me in a loss of 17 points...

 

[jamit_05]

Re: update:

For 63CE Mar and 63PE Apr; Current Total Value: 227
(Initially) the total Collected premium was 210;

That is a drawdown of 17 points. It took a 200 point move to put me in a loss of 17 points...

Have decided that I will exit this pair at the next cool-off period, at around 205, as I do not think that it will pay-off well.

 

[Somatung]

I hv not read books on the subject. But. quite simply, when someone spends money, i.e. make a debit, to buy a spread then he is betting his money that the market will move in his direction. There is no other logic to it.

Secondly, if the near expiry CE has been shorted, then it means that the trader expects the price to go down for the next couple of weeks. Again, no other logic will apply.

Quite clearly, the March expiry is going to be bullish.

Sir, do not worry. Nobody questioned your market view. And what ever market view any body has, as long as what he does at the end brings money, as long he did the right thing what ever strategy he followed by trading in his zone.

By the way: Short MAY strangle and short MAY straddle: Both are in profit. Have a nice day.

 

[jamit_05]

Re: update:

For 63CE Mar and 63PE Apr; Current Total Value: 227
(Initially) the total Collected premium was 210;

That is a drawdown of 17 points. It took a 200 point move to put me in a loss of 17 points...

Position 1:
63CE Mar + 63PE Apr = 230;
Total Collected Prem is 210;
Losing 20 points.

The Sold 63CE Mar is a bearish move in an uptrend. Hence, is injurious.

Position 2:
64CE/PE March = 91+62=153;
Total Collected Prem: 150;

 

[jamit_05]

Re: update:

Position 1:
63CE Mar + 63PE Apr = 230;
Total Collected Prem is 210;
Losing 20 points.

The Sold 63CE Mar is a bearish move in an uptrend. Hence, is injurious.

Position 2:
64CE/PE March = 91+62=153;
Total Collected Prem: 150;

Changed Position 1 to suit the situation.

Bought back 63PE Apr at 65;
Bought 65CE Mar 56 and Sold 67CE Apr 51
Debit 70;

Total Collected Premium has now reduced to 210-70=140;
Current Value: 250-70=180;
M-to-M loss is 40 points.

Essentially, since I am expecting a pullback, I hv bought back the Puts. At the same time, I ought to have a hedge for the upside hence purchased Mar 65CE. Due to this debit, I will be getting time decay on lesser premiums. This is a good trade-off, as I am getting a better cushion for the upside damage.

These are the dynamics which I want to get accustomed to. What better way to do it than doing it RT and with high frequency.

 

[jamit_05]

Re: update:

Position 2:
64CE/PE March = 91+62=153;
Total Collected Prem: 150

Position 2:
Purchased 65CE at Rs.66

Total Collected Prem gets reduced to 90;
Current Value is 172-62=110;

Loss: 20 points.

 

[jamit_05]

Hv converted the losing positions into Bull Call spreads, which I will get out of as soon as steam is lost...