NIFTY Options Trading by RAJ

[Option.Trader]

Yes you are right. It is another good way of looking at it instead of saying BIG Move etc.. So take naked positions towards the MAX Pain (which normally happens the last Friday or Monday or Whatever day) and then immediately go for Credit Spreads at the MAX Pain strikes. This Single Strategy every month should give at least 20% profit.

So somebody can come up with Strategy like TTM (Two Trades in a Month)

But like in this month what happens if the MAX Pain keep on Changing? In this month I think anyway it did not really matter because anyway the market stuck to the original MAX Pain of 5900. So the MAX Pain that we got after the BIG move was a Fake one...

I like this, reduce the trades. My only confusion remains when Max pain goes to a new level. When Max pain was at 5800 for good part of month, taking puts @6040 would still be off mark, but I guess Max pain didn't stay at 5800 after fed results, so @6040 it should have shifted to 5900 and 240 points was still in offing, just can't be sure if this is the way it unfolded

 

[VJAY]

VJAY's thread on "Journey with OPTIONS"

note: I am posting the comments here because VJAY's thread is a read only thread.

VJAY thanks for starting a new thread and recording the OPTION data at the end of the day for NIFTY. So if the trades you have taken for SEP-13 were real trades then the Credit spreads of 5900Ce-5900PE should have given max profit today. So VJAY can share with us why he took the 5900CE-5900PE pair.

For the other pair 5800CE-6000PE, Actually it should have been 5800PE-6000CE. The CE and PE should have been reversed or since the MAX OI was at 5700PE-6000CE pair it could have been the credit spread of 5700-6000 pair also.

Anyway good prediction and good Credit spreads

For other who do not know which thread I am talking about, below in the link
http://www.traderji.com/members-discussion-forums/89938-journey-options.html#post869556

Dear Raj,
No not a real trades ...am too confusing in options ...but now started to gain some confidence in learning ...thanks for your this thread and shared Tool....:clapping:
I took that 5900 pair same way you discribed it ..near 5900 last friday ...
Yes the other pair its interchanged ..thanks for pointing it

 

[adg123]

Thanks Raj, very informative...

 

[gmt900]

We have to always Learn from the market. Most of the time in the last 4 days of expiry the Credit Spreads should give you profit. While I am saying this in Retrospective, I also took 5900PE @ 20 today and closed with a Loss of 4 points.

Just from continuous learning perspective, My observation of the last 5 days of expiry is as follows.

See if the Friday before the Expiry if there is a BIG Move and goes near the MAX Pain - If yes Buy the Credit Spread. Like for this month the MAX OI on Last Friday (5700-6000 Pair) was around 36 and today it closed at Zero.

If Friday there is no BIG move, then you can expect the BIG move on Monday and you take the Credit Spread on Monday EOD.

For example for this month, Last Thursday and Friday were BIG moves. On Friday the MAX Pain was at 5900 and so If somebody had taken CREDIT (SOLD) spread of 5900PE-5900CE then it would have given a profit of around 150 points. Or if somebody taken 5700-6000 Pair at 40 it would have given 40 points.
P S : sorry for the big font size. Didn't realise it will be soo big

Let us try to remember this for the OCT-13 expiry.

Others who want to try this can backtest it for the past months.

I took long butterfly spread on Monday. Sold two lots of 5900C and 5900P, bought two lots of 5950C and 5850P. It assured me a max loss of 450 Rs for two lots and possible maximum profit of 4,550 if nifty closed exactly at 5900.
I closed the position with 1535 profit at 10.30 today. If I had not closed position, profit would have been 2750. In my opinion, the beauty was it was a very safe trade with possible max loss of 450. The decision to go for 5900 butterfly spread was based on max pain of 5900 on Monday. Upper and lower BEPs were @ 5855 and 5945 resply. Later I wondered whether I could have taken two long butterfly trades, one for 5800 and the other for 5900. That would given me a wider range of BEPs with very low max loss.

 

[ss16021981]

i have just upload oct series in excel sheet in that F10,K10,L10,M10 is showing BUY signal what that indicate v should buy tommorow 6100call & 5800 put is it so as today is my first day of excel sheet

 

[adg123]

(Higher) STT Charge of Rs. 1,471/- against selling of 200 units PE5900 @16.5/- (for Rs.3,300/-) - Isn't really odd ?
Again another huge loss...
After getting warning msg from Zerodha, I thought probably it would be not more then Rs.100/-, Really a BAD BAD experience.
Anyway, Another EXPERIENCE gaining...!

 

[VJAY]

(Higher) STT Charge of Rs. 1,471/- against selling of 200 units PE5900 @16.5/- (for Rs.3,300/-) - Isn't really odd ?
Again another huge loss...
After getting warning msg from Zerodha, I thought probably it would be not more then Rs.100/-, Really a BAD BAD experience.
Anyway, Another EXPERIENCE gaining...!

zerodha's message near closing at expiry helps many options traders to aware the situation.....so still many are trapping after their awaring message ...
"Advices not helps many....they need experience.....some are do worst even after experience"

 

[ss16021981]

according to excel sheet max pain was @ 5900 & pivot was@ 5860 so i took 5500 put @43 now trading @ 50 made high of 52.55

 

[healthraj]

The Premium for NIFTY Futures are still HIGH. OCT-13 at 62.8 and NOV-13 @ 98. So get ready for some VOLATILE Sessions in the coming days until the Premium comes down to say 30.

The INDIAVIX also has come down slowly from 27 to 26.7 to 25.7 to 24 in the last four days.

The Premium is brought down from 63 to 49. And the VIX gone up by 5% to 25. So another simple strategy to SELL or BUY. If the Premium is around 1% the operators would like to take some easy money out by Selling or Buying. I am not sure if this can be applied to Stock Futures. But as for us my observation goes, it is applicable for Index but very rare opportunities in Index

 

[healthraj]

according to excel sheet max pain was @ 5900 & pivot was@ 5860 so i took 5500 put @43 now trading @ 50 made high of 52.55

Please use the MAX Pain only for taking positional Trades or during Expiry.

For Positional trades if the current NIFTY value is away from MAX Pain by around 4%-5% (240-300 points in NIFTY), then take a Trade which will lead you to the MAX Pain. The Expiry strategy we covered in the last 4 days.

Otherwise do not give much importance to MAX Pain. The Series is just now starting.

There was may be one more observation which people can use to take positions at the end of the Expiry.

At the end of the AUG-13 expiry, the AUG-13 MAX Pain was at 5400 but the SEP-13 MAX Pain was at 5500. Which indicates that the SEP-13 will go up. So somebody could have taken a BUY call.

Similarly At the end of the SEP-13 Expiry the MAX Pain of SEP-13 was at 5850-5900 but the OCT-13 MAX Pain was at 5800. So somebody can start the Series with a SELL call.

I don't know if it works always. It is just my observation. So people need to observe and build their own system based on the OptionsChain data.