Here a post for option lovers with infos you also can use in your market
Ok, If you had a look at the above link, you saw that this member V'nod47 did mention a Collar for a market which should move up or stay at least sideway for the next few days, which should be Infosys So theta would work on the short option side as well as on the long option side and at least the different of those pair is a profit if market does what mentioned. If market falls heavy and fast, limited loss is given and if market moves up heavy, limit profit is given.
What is a Collar: Collar strategy:
http://www.theoptionsguide.com/the-collar-strategy.aspx
Here a Costless Collar (Zero-Cost Collar):
http://www.theoptionsguide.com/costless-collar.aspxf
Here EOD chart on Infosys:
http://i58.tinypic.com/vaj5.png
Trend of Infosys is now up since quit a while like in Nifty. Now let me mention just one way how to trade the chart. No TA will be mentioned. Take what ever you use on TA or PA trading and if you want, just adapt the way shown to any tools you use for your personal trading.
I also will not mention any stop loss levels, as this is individual and any way basics. The strategy is not mentioned in any book the way I show it here, so I guess some here will not understand it in dept. But that doesn't matter in no way, as trading can be done in different ways, starting from beginners up to what ever level. Here we go:
As trend is up and we want to profit from it, we start the strategy after receiving a buy signal from our system by buying a call at the begin of Nov Series. We can choose the Now 4000 call when market was at 3900. Now we keep that call and do manage it day by day during the markets up move. (Here questions will come up how to do this part. Test it the way you feel comfortable to do it. I also had to test such ways of trading by my selfs.)
After market reached around 4175, our call is deeper in the money and we face a move back to 4100, which are 75 points. From the profit we made on the Nov 4000 call, we spend some for a long Nov put (Like the Nov 4050 put) when our sell signal is generated. Now we have a long Nov call and a free, long Nov put. This two option legs option strategy is called: Long Strangle.
So far we have traded the up move and we have traded a short, back move by keeping always one leg which is the long Nov 4000 call and add one more leg which is the Nov put. This is called: Leg in.
Now after market started to move up again, we sell our long Nov 4050 put after our system generated the buy signal (I call it buy signal, but you can program your system vice versa. That is your choice). Now we have left our long Nov 4000 call. In most cases, we face some loss with the put, but we still have profit with our long Nov 4000 call leg, which now runs again in the up move. As this long Nov 4000 call is in the money, time decay has no impact to it.
At 4225, we want to reduce our risk as market may could face an other fall and we decide to do a Collar instead a long Strangle or what ever all is possible here. And here we face many different possibilities. So in this case we keep the long Nov 4000 call and sell one Nov 4200 put atm. At the same time we short the stock. Now we have an incredible Collar for the down side and if market starts to fall or to stay sideways, we just watch.
Now I have given and other way how you can trade an up, down and sideway market with leg in and leg out. What I mentioned can be very well improved and it can even further be traded with increasing the risk. But that would expand the page here.
What ever you choose, do it safely and do it in your comfort zone. Take care and good trading / Dan