GOOD PROFIT: Hedged nifty positions with straddle...

[heeemz]

Update please Heemz.

Murtaza: Sorry, I could not post updates last week as I was tied up with some critical issues to address. I have noted some updates on in my notepad... shall post it soon. (based on changes suggested by Linkon, have got somethings to learn on this though)... shall post it soon.

 

[heeemz]

Now look at it this way, say, you are holding a long at 4504 and u held on till it reached 4580 and then it started to reverse. why are you riding NF back to 4500 and in the process giving up the gains. Why not sell if at say 4575 and then place a buy order at 4573 (assuming 2 Rs as brokerage) and a sell trigger at 4502.
Nifty comes down to say 4530 and then starts shooting up again, you buy it here and ride it up again. that's how you get to milk NF for points and at the same time hedge the positions u carry over for the next day.

options wont decay as fast as NF moves.... so make money with NF and use the options to hedge NF positions....

Linkon: While I am rereading above guidance of yours, I am confused a bit here I think what I have done is a different then what you were trying to explain. I am working on posting those as well.

You are holding a long at 4504 and u held on till it reached 4580 and then it started to reverse. Why are you riding NF back to 4500 and in the process giving up the gains? Why not sell if at say 4575 and then place a buy order at 4573 (assuming 2 Rs as brokerage) and a sell trigger at 4502. Nifty comes down to say 4530 and then starts shooting up again; you buy it here and ride it up again.

Sell at 4575 and buy again at 4573 and a sell trigger at 4502? If we are going to sell at 4575, why buy again at 4573 if we are selling at 4575 due to markets reversing to downwards?

And buy again at 4530 if it starts moving again? If we bought it at 4573, are we buying more in addition to two already holding at 4573?

It would be helpful if you can explain on above points.

 

[AW10]

Do you use the India VIX for timing?

Many say it is un reliable since it uses 50pt stikes instead of the more liquid xx00. Besides options market in India is yet to pick up. I was thinking of using the CBOE VIX because for the most part India markets follow global cues.

LT, Yes, I was refering to Indian VIX that is available on NSE site.
It might not be the best or might have its own limitation.. but atleast it gives some idea about what is going on in terms of market internal.
Generally I use VIX to find relative comparision of current market with past.

More then VIX, I also use the data of current ATM strike price and days left till expiry to compare it with similar data of the past to get an idea market view on implied volatility.
I think you raised the point of ATM straddle going at 300 on Friday, which was on higher side for next 14 days of trading life. It was indicating that IVs are running on high side and it is not time for option buying but odds are stacked for option selling.


Happy Trading

 

[linkon7]

Linkon: While I am rereading above guidance of yours, I am confused a bit here I think what I have done is a different then what you were trying to explain. I am working on posting those as well.

You are holding a long at 4504 and u held on till it reached 4580 and then it started to reverse. Why are you riding NF back to 4500 and in the process giving up the gains? Why not sell if at say 4575 and then place a buy order at 4573 (assuming 2 Rs as brokerage) and a sell trigger at 4502. Nifty comes down to say 4530 and then starts shooting up again; you buy it here and ride it up again.

Sell at 4575 and buy again at 4573 and a sell trigger at 4502? If we are going to sell at 4575, why buy again at 4573 if we are selling at 4575 due to markets reversing to downwards?

And buy again at 4530 if it starts moving again? If we bought it at 4573, are we buying more in addition to two already holding at 4573?

It would be helpful if you can explain on above points.

I think u r getting confused...

We were carrying a short as nifty was below the 4500 mark, Lets look at today's trade.

nifty gapped up to 4550 level and then sold off and came down to 4421, as the low till the last half hour and then it went up tested the 4500 mark and then finally came down, breaking the low 4421 and closing at new low of 4387.

When nifty opened gap up...to 4550 levels, what would I do...
I would observe for the first 5 min and if the high of the day gets broken, i would cover my short and go long on NF, cover my 4500 call. Why, i need to make up for the loss due to gap up. and 70-80% of the time, if the low of the day is not broken within the first 5 min of a gap up, then we wont close the gap. We have to stay long.

But we broke the low of the day, we leave our NF short intact, we cover the 4500 put, which has depreciated thanks to the gap up and wait. Once we reach the bottom i.e. 4421 trendline is broken and we could safely exit our short at 4446... and let nifty go up...

Now the moment nifty goes up, we place a sell trigger at 4446 + 2 rs brokerage = 4448 so that incase NF decides to fall..we are not left behind.

Nifty goes up all the way to 4500. So we place a buy trigger at 4498...it gets hit,,, goes up to 4510 levels and selling starts to drag it down... we place a sell trigger at 4502 and ride it down....till the close....at 4387...

review this... the ride from 4446 to 4498 = 52-2 brokerage = 50 points. Thats what you have milked from the system by not riding it to the mean again.

 

[lazytrader]

LT, Yes, I was refering to Indian VIX that is available on NSE site.
It might not be the best or might have its own limitation.. but atleast it gives some idea about what is going on in terms of market internal.
Generally I use VIX to find relative comparision of current market with past.

More then VIX, I also use the data of current ATM strike price and days left till expiry to compare it with similar data of the past to get an idea market view on implied volatility.
I think you raised the point of ATM straddle going at 300 on Friday, which was on higher side for next 14 days of trading life. It was indicating that IVs are running on high side and it is not time for option buying but odds are stacked for option selling.

Happy Trading

How do you get this data?

I wanted data like change in OI and volume and premium data but can seem to find historic options data.

 

[AW10]

Chk out NSE site, F&O section, historical data, and u shd be able to download
EOD price data for a expiry series. Bit painful that u can download on CE or Only PE data for an expiry date at a time.. but thats the price we got to pay for getting something free.

Happy Trading

 

[vinpiper]

review this... the ride from 4446 to 4498 = 52-2 brokerage = 50 points. Thats what you have milked from the system by not riding it to the mean again.


Hi,
Great analysis

I am not clear abt the brokerage.

At infoline, I get Rs 2 brokerage for 1 lot of Nifty (qty 50) and Rs 2 for sell.
Is this normal ??

Appreciate your reply.

Thanks,
Vinpiper

 

[linkon7]

review this... the ride from 4446 to 4498 = 52-2 brokerage = 50 points. Thats what you have milked from the system by not riding it to the mean again.


Hi,
Great analysis

I am not clear abt the brokerage.

At infoline, I get Rs 2 brokerage for 1 lot of Nifty (qty 50) and Rs 2 for sell.
Is this normal ??

Appreciate your reply.

Thanks,
Vinpiper

Infoline charges are normal. I trade with R K global and the brokerage is a bit lower...

 

[DanPickUp]

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[jaywings007]

review this... the ride from 4446 to 4498 = 52-2 brokerage = 50 points. Thats what you have milked from the system by not riding it to the mean again.


Hi,
Great analysis

I am not clear abt the brokerage.

At infoline, I get Rs 2 brokerage for 1 lot of Nifty (qty 50) and Rs 2 for sell.
Is this normal ??

Appreciate your reply.

Thanks,
Vinpiper

For Rel money its not more than Rs. 25 for a nifty lot for buy and sell....!
I think is the best one...
Pls comment.... if I am wrong..