Day Trading Stocks & Futures

[Raj232]

Got it, thanks Sarangji for the explanation. Need to gather sufficient capital for selling options.

 

[SarangSood]

Yep, for that reason, I say that Selling Option combos (strangle) is a income generating strategy whereas buying options is like a jackpot strategy, jackpot does not come everyday, and its really bad when it is missed.

The only problem is that quite a lot of margin is required for selling options.



Got it, thanks Sarangji for the explanation. Need to gather sufficient capital for selling options.

I always have position in the markets. But I'm not always writing. As i told earlier that 60-70% of the time writing is going on. It's very important to identify the other days and also make money out of them by buying options. I do that not by plainly buying a combo but other strategies like condor, ratios, spreads etc.

 

[timepass]

Did some calculations... please correct if i'm wrong...
with 6 lacs margin:
750 unit Nifty 10400 PE sell (Rs 100)
750 unit Nifty 10600 CE sell (Rs 100)
If the expiry falls back to 10400 - 10600 range, would average approx Rs 6 K per day .. at the end of the month .. a little less with adjustments..
(Premium recd 1,32,000, based on 22 trading days)

That would be 1400 pts in 22 sessions i.e. 63.63 pts per session i.e. about Rs. 4772 per session.

I guess the calculations will alter wildly if the index expires below 10300 or above 10700

 

[SarangSood]

Wow! For last 15 years .... that's quite inspirational ... That means you are a veteran in the industry... My experience is only two years old.

My father wrapped up his business and joined this line in 1991. So it's kind of a family business. We started trading in option market in 2009. Before that it was only future trading in nifty by hedging it with stock baskets.

 

[Raj232]

Did some calculations... with 6 lacs margin:
750 unit Nifty 10400 PE sell (Rs 100)
750 unit Nifty 10600 CE sell (Rs 100)
If the expiry falls back to 10400 - 10600 range, would average approx Rs 6 K per day .. at the end of the month .. a little less with adjustments..
(Premium recd 1,32,000, based on 22 trading days)

That would be 1400 pts in 22 sessions i.e. 63.63 pts per session i.e. about Rs. 4772 per session.
I guess the calculations will alter wildly if the index expires below 10300 or above 10700

In case the index moves widely, then either prepare for no-profit no-loss if the position can be closed at 10400 or 10600. Else would result in loss .. agreed.

 

[SarangSood]

@SarangSood : Is below calculation expected or is it over-expectation in your experience

Did some calculations... please correct if i'm wrong...

with 6 lacs margin:
750 unit Nifty 10400 PE sell (Rs 100)
750 unit Nifty 10600 CE sell (Rs 100)
If the expiry falls back to 10400 - 10600 range, would average approx Rs 6 K per day .. at the end of the month .. a little less with adjustments..
(Premium recd 1,32,000, based on 22 trading days)

That would be way over expectation. Anything between 5-15% on your capital is what should be expected and aimed for.

So in the example i gave above once market moves 100 points and your strangle goes from 40 to 32, you will have to shift to make the combo equal. So the next combo where you will shift to would be just 24. So there will loss of premium which is the cost of shifting ,though it's not a loss and you made money.

 

[Shiv12345]

My father wrapped up his business and joined this line in 1991. So it's kind of a family business. We started trading in option market in 2009. Before that it was only future trading in nifty by hedging it with stock baskets.

Nice to know sir ... much respect ... Since you have been a part of this industry for so many years, may I ask you what is this archaic thing known as 'DABBA TRADING'?? This was something people practiced years ago. Does it mean that a dabba, box or sandook will be kept at one place and people will throw their money inside it and finally the one who grabs it first and runs away quickly will get everything?? Is this what we call as Dabba Trading?? Thanks ...

 

[SarangSood]

Nice to know sir ... much respect ... Since you have been a part of this industry for so many years, may I ask you what is this archaic thing known as 'DABBA TRADING'?? This was something people practiced years ago. Does it mean that a dabba, box or sandook will be kept at one place and people will throw their money inside it and finally the one who grabs it first and runs away quickly will get everything?? Is this what we call as Dabba Trading?? Thanks ...

Dabba trading is actually trading in whatever stock or commodity you want to, but the stock or commodity will not be transferred in your name because the actual trade is not executed.

It works on the psychology that majority of people lose money in the market and in the end the person who is betting against your original bet will make money.

 

[Shiv12345]

Dabba trading is actually trading in whatever stock or commodity you want to, but the stock or commodity will not be transferred in your name because the actual trade is not executed.

It works on the psychology that majority of people lose money in the market and in the end the person who is betting against your original bet will make money.

Ohh! Ok .. got it now ... Thanks sir. The type of dabba trading which I explained in my previous post was actually something we practiced during our high school days. The only difference was that the person who used to sprint with the dabba straightaway ran towards school canteen and blew away all the money.

 

[afin]

Agreed, To let that money earn money is like.. having a fixed deposit that earns interest equal to a salary.
So @5.75% interest (lets say 5% after tax/TDS) and Rs 50K per month salary.. that needs 1.2 crore investment.

However, thats possible with Bitcoin and Banknifty ... Not so sure about youtube, etc
Although Bitcoin sounds more like lottery, banknifty has given great returns in July 17.

e.g. BankNifty Option 24000 CE bought on 04-Jul-2017 for Rs 54 kept gaining value and was valued at Rs 890 at close by 27th July (it even touched a high of 1022.95 on 27th July).
So basically Rs 54,000 became Rs 8.9 Lacs in 1 month .. however this does not happen every month..

Some special attention and consideration needs to be done to identify those possible bullish times.

This one! On the day of bank recap announcement, a call option I bought at 19 became 222. I exited at 194 and it was essentially a 10x return in a single day. I wish I had money for more than 5 lots that day!

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