GOOD PROFIT: Hedged nifty positions with straddle...

[DanPickUp]

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[sumitdasjoshi]

hello danpic you give you e mail address do you want me to send you something or what i cant understand

 

[rajsumi121]

Good mr danpick you delete that post ..and about linkon strategy my view is that strategy is good on paper only ....... no one can make money in this strategy in real coz one cant trade in intraday nifty with such accurecy and so activly like linkon ,s example ..and 2nd thing is if anybody hve golen egg hen why he/she disclose the same in open forum ...anybody including me disclosed coz he/she dont hve confidence in own strategies .. . so technical study and fno ,cash trading is best in market with proper sl n targets in mind ... options are very risky in both way ( buying and selling ) and fvrable to big players only like fii's and dii's ........ bt its my own view and may be totlly wrng ..coz everyboy is learner here .... plz take it in healthy way .

 

[DanPickUp]

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[sumitdasjoshi]

Yeah this is very good add+voise i will always keep that mind thank and i think it will definately help me and other to have proper set of mind thanks.

 

[Mangafreakz]

As you see, it is very simple. Moving average which show me the trend. Very simple, isn't it ?

If some one can not trade such an easy picture, how can he trade a more complicated one ?

Secrets : If there is a secret in trading, then it is that one, that every thing has to be as simple as possible.

You have to work like a brick wall builder. You have to do every time the same trade.

We say in my country : To many cooks spoil a meal.

In traderji is a lot of information and that is what most people here confuseses. So you have to be very selective, what kind of threads you want to concentrate on !

You choose one strategy and you choose the credit spread, because you are a beginner.

You choose one thread here in traderji, where they make real trades with credit spreads on the nifty or what ever.

You choose one thread, which gives you ideas, for your mental power, because that is the biggest part in trading and not systems and strategies. You can know different kind of strategies, it is the decision to make the trade, what finally can bring you the money you want. And this decision is made in your head and for this you need psychological power to control your feelings, because you will get afraid to lose your money, you put in the trade.
And that is why most of you search and search, because they are afraid of losing money, but this is part of trading and all the people which not can stand that part, never will become traders.

If you can accept the losing part from money, you then suddenly feel more free to take a trade, because you are prepared for some losses ( you must use stop losses ) and you no more think, that you have to search for system and indicators and what ever.

The rest will come with experience, like in any other business. As more experience as you have, as more money you will gain. But you have to start once !

Next : You use one software program to analyze your threads. This is a must !

You choose one broker with a good platform, where you have some indicators to use and you have to prove by your self, that you are able to make a regular income from that over a period from at least six months.

The first money you make now with trading, you may spend to poor children, because you have a lot for free here in traderji and I hope you have this courage.

Later you can invest in more trading education like books and so on, but this is later.

You now start with credit spreads and THAT'IT !!!!

Good luck

DanPickUp

As Dan already said KISS(keeping it simple and stupid) :thumb:
If its a complicated system , its rather possible you wont be understanding and making a mess.

 

[aditya14]

SIMPLE
Yeah agree with that.Whenever i try to do too much i falter more often than not.So pick your poison and make it amrit.

 

[DanPickUp]

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[Karanm]

I am not a good options trader. They have a different mindset. Intraday movement is treated as noise and plenty of analysis goes when they develop a strategy. Their stop loss is in percentage and risk reward ratio is awesome.

What i do is more like rambo going to war while options traders are more like an ace sniper. Mine looks awesome but is never safe. True option traders give awesome results and is totally safe.

At the end, its all about risk / trade management. Thats a subject i am just learning...

Sir, what I can make from your Statergy is that we take only One Trade in a settlement, at the start we take a trade and at the end of the series we square off, am I right ?
Sir, what is the Success Ratio of your Statergy and what Risk/Reward Ratio when we trade with your Statergy.
Lastly we would have taken 36 trades in last 3 years, Sir in how many months we would hve made profit & in how many months we would have lost money.
I would be obliged for your information and guidance.
Regards
Karanm

 

[Karanm]

This is the modified version of a strategy I played and the progress is documented in this thread...

http://www.traderji.com/options/27603-nifty-straddle-target-whole-premium.html

Now, the strategy has become a bit complex and the old rules no longer apply. There were certain design flaws and the rules have been modified so that I can add to my profit without having to add extra risk. I find this is to be the safest and most profitable way to play nifty positions.

The process might sound a bit complicated, but making money in this market is never simple and easy. there is no short cut.

last month i was able to gain 34 thousand by using this strategy but a good amount of it was luck. I acheved my targeted profit early and i exited.

I have initiated the following positions yesterday, on 21st April09


-- Nifty long on 2 lots at 3402
-- Nifty 3400 PE may 2 lot sold at 215
-- Nifty 3400 CE may 2 lots sold at 230

Total investment about 1,25,000 /-
Profit target : 40,000 plus


How I want to play these positions



shorting straddles (i.e. selling both calls and puts of the same strike price) is a neutral strategy where the expectation is that market will remain range bound and at the end of the series, you get to keep a portion of the premium that u receive.
for example,
I shorted 3400 call May at 222
and shorted 3400 put May at 203
total premium received = 445

my lower break even is 3400 - 445 = 2955
and upper break even is 3400 + 445 = 3845

If nifty closes between 2955 and 3845 when the series closes on 28th May09, I stand to make a profit.

Now my target is to use this 445 points as my hedge, so every time bad luck happens, I end up loosing some of the targeted profit. Itll take a lot of misfortune for me to loose 445 points playing nifty. And if I am lucky, I can add to that 445 points. Let me explain how

Below 3400, I will short nifty and above 3400 I will go long.

Below 3400, the nifty shorts and short 3400 put act like a covered put and the amount of points I gain by shorting nifty will be marginally nullified by the loss on shorting 3400 put. But the other leg, 3400 call will loose value more rapidly and ultimately bring the straddle to a profit.

And likewise, above 3400, it becomes a covered call and the amount of points I gain by going long on nifty will be marginally nullified by the loss on shorting 3400 call.

So eventually, I get to keep the whole premium i.e.445 points. This strategy looked fine on paper but when I put it to trade, gap ups and gap downs were tearing this strategy to shreds. Plus I had to rely a lot on luck and thats not good for any strategys success rate. Plus I noticed that every time nifty comes back to the strike price, I was gaining on the straddle but I was giving up profits from nifty.

What I mean is I shorted nifty at 3397 and it went down to 3360 levels, the 3400 put gained in value, 3400 call lost some value and nifty short was in good profit. But when nifty started going back to 3400 levels, why should I let the profit I made in shorting nifty go away by riding it back. I closed the short at 3365 and put a sell nifty trigger at 3367 and hence I can safely wait it out, for nifty to break 3400 on the upside and 3367 on the down side. And when nifty started falling, I can short it again and ride it down for some more profit. but the main golden rule is not to let nifty go down without me. 3400 and 3367 becomes the range and I have to ride nifty breaking out in either direction.

I welcome any comments or observations or criticism. The very purpose of posting the progress is to attract opinions and that will help me weed out any more flaws.

Sir, can we only Sell Call & Puts and not trade future lots ?
Lastly what loss I would have suffered in case Nifty would have gone below 2955 or above 3845, specially in the last 3/4 days of the settlement.
Regards
Karanm