Help in developing my strategy

[prasham]

Hi,


I am a businessman and don't really have too much time to study loads of technical or fundamental analysis. Options have always fascinated me and am looking to try it out this time since our markets are slack due to GST. Please don't start any debate on GST here.

I have been reading a few short books, articles and have watched a few videos on youtube about option trading. One thing that's appealed the most is selling far out of money options of Nifty. I have started paper trading on basis of what I've learned so far just to see if my observations are good enough.

Currently I am observing the following
1) Options Chain Open Interest - Highest number of calls & puts to determine broad market range.
2) Change in OI to see the change in trend

If I see the range as Nifty 9700 - 9400 I short calls and puts approx 200 points above and below this range. I haven't figured out where to keep the stop loss. I feel that theta will take is course and over the time these options will expire worthless giving me full profit.

The inputs I want from the experts here...
1) Is this a decent strategy ?
2) Am I missing something here ?

Note: I am not looking for huge profits. A little side income will be sufficient.

 

[vagar11]

Please analyze data for atleast 4-5 years for option strategies. One black swan event will wipe you out from the market. Think about stop loss.
Download data from nse site and check.

 

[doss186]

Instead of analysing calls and puts try to give importance to daily trading range of options.
That's where you make some profit. For example an option might trade from 1 Re to 2 Rs. The net change is 100%. Another option might trade from 40 to 60Rs. The latter will give you decent profits though net change is minimal but the trading range is greater