My Daily Options Trading Diary

[AW10]

Hi AW10,

On above strategy, what would you suggest for this expiry ?

Regards

Simu,
This depends on what is your anticipation for Oct month about market direction and kind of opportunities /strategies that you will be using in days to come.
Say, if you are bearish and feels that mkt will keep stopping, on downtrend, and then pullback etc. And your strategy is to sell PUTs on those days.
Then u can buy the protection for those trade at this time when it is cheap.. Say 4500 PUT is available in 20 Rs. the intention of buying this put is is not to bet on it..
but to use it as future protection for puts that u are going to sell. So as market falls, you can sell 4600 /4700 puts at appropriate time without worrying about so called unlimited risk of short put..

If you are bullish then u can buy 5400 Calls in 20Rs.. and sells 5300/5200 calls when mkt goes up (to benefit from pullback or possible reversal), without taking Unlimited risk of short call..

If you don't take this step now, and when mkt has come down to 4700 , and u want to sell 4600 PUT with protection at 4500. then u might be paying a lot more
to buy the protection and hence will reduce your profit potential.

So it is more of drawing your battle plan for days to come and be prepared for it right from now.

Beauty of option trading is that u don't have to predict the market.. you can follow the market and adjust your positions with well defined risk limits.
Do chk out my Low risk option trading - thread for more idea about how to limit risks using Spreads. What I am doing here is creating 1 loosing of Spread in advance when
it is coming at very low cost.

Happy Trading.

 

[lazytrader]

You haven't mentioned if any of those were scratch trades. I will go ahead anyway cause I won't be able to post often anymore.

Now, using the stats calculated in the excel sheet we can get your earnings/trade by the formula:

EPT= (Avg win size * win% - avg loss size * loss%)/100
[divide by 100 because the win and loss are in %age, if rato then dividing by 100 not necessary]

In your case it is, (8714*48.15 - 13660*51.85)/1000 = -2886

Which means that you lose Rs.2886/trade, ofcourse you can do profit/trades but that wouldn't give you the complete picture.

From the above equation you'll see that there are 4 variables (2 are related viz win% and loss%, when one goes up other will go down) but still working on each of these four is importanat to maximize the earnings. You will also need to keep in mind that there is a range from the win% and loss%, if any one gets to an extreme then earnings will reduce. Keeping the win% between 65-80% is good enough. Remember the goal is to increase earnings not to will all trades (which can be done by closing trades too early).

Secondly, you will not be able to choose your profits but you can choose your losses. Cutting losses will reduce your avg loss but cutting them too early is also a bad thing, you might be out of a potentially profitable trade.

 

[jakhariamehul]

hello everybody

 

[lazytrader]

If you are bullish then u can buy 5400 Calls in 20Rs.. and sells 5300/5200 calls when mkt goes up, without taking Unlimited risk of short call..

This strategy is assuming upside is limited to 5300. (it is confusing when you read the sentence the first time)

 

[lazytrader]

(Continuing from post#132, missed some part)

A word on avg loss & avg win: The ratio of avg loss/win is your average risk reward ratio. I think it is better to use this in the calculation since that you keep your win/loss in perspective. If you are making 10% more pofits but loss is 15% then it's a step back. In absolute terms you might have been making 500 more in profit while 300 more in losses but it's more important that you keep within the limits of risk than the extra profits. So you if you divide the whole equation by the average loss instead of dividing by 100 then you get the percentage profit. This forumula will remain consistent even when you increase position size.

 

[Flock]

Vikas,

I saw your query on RK Global on the other thread. I have been using RKG for futures for over a year now. So far everything is perfect. Nothing amiss. They really charge you only Rs. 9 per lot. Other charges, are usual things like STT, service tax, nse turnover tax, stamp duty, etc, which everybody charges.

Their software is fast (if you use ODIN). But .... the quote server disconnects at least once in an hour, and charting is pathetic in ODIN anyway. Not a problem if you have some other reliable data feed. Like I use PIB for the charts and orders through RKG ODIN. Nice combination.

 

[AW10]

This strategy is assuming upside is limited to 5300. (it is confusing when you read the sentence the first time)

LT, I have edited my post and included the clarification.
"
If you are bullish then u can buy 5400 Calls in 20Rs.. and sells 5300/5200 calls when mkt goes up (to benefit from pullback or possible reversal), without taking Unlimited risk of short call.."

Whether upside is limited to 5300 or not, I don't know (for that, matter nobody knows).. so lets draw our battle plan and let market tell us the reality.
I know for fact, that mkt will not go in one direction, it will have pullback and reversal.. and if I have to benefit from them then I need to manage my risk.
So, I am just taking risk mgmt step now. And ready to loose that money with option expiry. Ofcourse, during the month, I always have choice to save on this 20Rs committed loss by squareoff at any moment.

Happy Trading

 

[findvikas]

Vikas,

I saw your query on RK Global on the other thread. I have been using RKG for futures for over a year now. So far everything is perfect. Nothing amiss. They really charge you only Rs. 9 per lot. Other charges, are usual things like STT, service tax, nse turnover tax, stamp duty, etc, which everybody charges.

Their software is fast (if you use ODIN). But .... the quote server disconnects at least once in an hour, and charting is pathetic in ODIN anyway. Not a problem if you have some other reliable data feed. Like I use PIB for the charts and orders through RKG ODIN. Nice combination.

Thanks Flock, I have decided to go for RK... just for F&O as their brokerage is very less. My breakeven is almost Rs. 4 with Kotak in Nifty Options while its coming just merely 50-60paisa with RK.

 

[findvikas]

Thanks LT, and apologies for not being able to respond as I was busy all day and could not come online. The equation is very much helpful. This were not really scratch trades, but 'somehow' I acted smart to see the trend reversal soon enough to have small gain instead of big losses. As those were Intraday trades, I managed to close my positions in marginal profit... but since I was taking naked positions overnight... like in case of RIL.. they never gave me a chance to take small profit and opened up in big losses. One mistake I made, and learned now is that instead of closing my RIL with 30% loss... I averaged it down and later got 100% loss

Another thing I realized is that a chunk of my losses were coming from my brokerage, specially in case of Nifty trades.... breakeven is around 4rs for single lot... now imagine i am paying 4rs for a premium of 50... 8% of the gains eaten by brokerage... grrrrr.... decided to move over to RK for F&O with flat 9rs brokerage.

You haven't mentioned if any of those were scratch trades. I will go ahead anyway cause I won't be able to post often anymore.

Now, using the stats calculated in the excel sheet we can get your earnings/trade by the formula:

EPT= (Avg win size * win% - avg loss size * loss%)/100
[divide by 100 because the win and loss are in %age, if rato then dividing by 100 not necessary]

In your case it is, (8714*48.15 - 13660*51.85)/1000 = -2886

Which means that you lose Rs.2886/trade, ofcourse you can do profit/trades but that wouldn't give you the complete picture.

From the above equation you'll see that there are 4 variables (2 are related viz win% and loss%, when one goes up other will go down) but still working on each of these four is importanat to maximize the earnings. You will also need to keep in mind that there is a range from the win% and loss%, if any one gets to an extreme then earnings will reduce. Keeping the win% between 65-80% is good enough. Remember the goal is to increase earnings not to will all trades (which can be done by closing trades too early).

Secondly, you will not be able to choose your profits but you can choose your losses. Cutting losses will reduce your avg loss but cutting them too early is also a bad thing, you might be out of a potentially profitable trade.

(Continuing from post#132, missed some part)

A word on avg loss & avg win: The ratio of avg loss/win is your average risk reward ratio. I think it is better to use this in the calculation since that you keep your win/loss in perspective. If you are making 10% more pofits but loss is 15% then it's a step back. In absolute terms you might have been making 500 more in profit while 300 more in losses but it's more important that you keep within the limits of risk than the extra profits. So you if you divide the whole equation by the average loss instead of dividing by 100 then you get the percentage profit. This forumula will remain consistent even when you increase position size.

 

[VJAY]

Vikas,

I saw your query on RK Global on the other thread. I have been using RKG for futures for over a year now. So far everything is perfect. Nothing amiss. They really charge you only Rs. 9 per lot. Other charges, are usual things like STT, service tax, nse turnover tax, stamp duty, etc, which everybody charges.

Their software is fast (if you use ODIN). But .... the quote server disconnects at least once in an hour, and charting is pathetic in ODIN anyway. Not a problem if you have some other reliable data feed. Like I use PIB for the charts and orders through RKG ODIN. Nice combination.

Dear flock,
is their webbased term ok?in odin any disconnection when trading ex.order execution.....waiting for order confirmation.....pl give some of your good and bad experiance with them....