NIFTY Options Trading by RAJ

[healthraj]

Pairs Trading status

5800-6000 Pair - Now the price is 152. So GMT was right enough to close it with 10 points. Others I hope you closed 50% at least with 10 points.

Probably we can now trade 5700-6000 Pair since 5800 is in the Money. Try to SELL when the NF is around 5785

SBIN 1700-1900 - Opened at 92.75. Now the Price is 86. The MAX OI is still at 1800. So I think we can still hold this pair so that we can close it when there is a Pull back.

 

[jamit_05]

Raj, OT.

I need to purchase Calls to hold during the impending pullback. Which one do you think is most effective.

I think 5900 CE is a sound bet.


Another approach, with better chances of profits.

Take a bull call spread of 5800-5900 for a debit of Rs.44 in equal qty of the shorts I am holding. This would mean, if market keeping going down below 5800, then shorts earn... and if they jump even 50 points above 5800 I will book profit.

Whats your take on it?

PS: This is all motivated by Dan's suggestion to make your profits work and not your capital.

 

[healthraj]

Raj, OT.

I need to purchase Calls to hold during the impending pullback. Which one do you think is most effective.

I think 5900 CE is a sound bet.

Agreed. 5900 CE. But if it is Real Reversal then 6000CE will have the max benefit. But 5900CE is the Safe bet.

 

[healthraj]

Raj, OT.

Another approach, with better chances of profits.

Take a bull call spread of 5800-5900 for a debit of Rs.44 in equal qty of the shorts I am holding. This would mean, if market keeping going down below 5800, then shorts earn... and if they jump even 50 points above 5800 I will book profit.

Whats your take on it?

PS: This is all motivated by Dan's suggestion to make your profits work and not your capital.

I am not good at these stategies. Need to spend some time to learn. That would mean you are taking a Bullish view. So it is not a neutral Strategy. So why not simply buy 5900CE. What is the advantage of Selling a 5800CE for 110 and Buying 5900 CE for 67. You mean our risk would be reduced by 110-67=43 points.

 

[jamit_05]

Agreed. 5900 CE. But if it is Real Reversal then 6000CE will have the max benefit. But 5900CE is the Safe bet.

I am short, so I have to be loyal to bears for the time being... So I will buy only with the pullback in mind. Will buy 5900 CE later tomorrow. Wednesdays usually scrape off premiums.

 

[healthraj]

Pairs Trading status

5800-6000 Pair - Now the price is 152. So GMT was right enough to close it with 10 points. Others I hope you closed 50% at least with 10 points.

Probably we can now trade 5700-6000 Pair since 5800 is in the Money. Try to SELL when the NF is around 5785

SBIN 1700-1900 - Opened at 92.75. Now the Price is 86. The MAX OI is still at 1800. So I think we can still hold this pair so that we can close it when there is a Pull back.

Closed the Pair 5800-6000 at cost and Sold the Pair 5700-6000 for 117.
I am still holding the SBIN pair 1700-1900

So my open positions for today are

NIFTY 5700PE-6000CE Pair
SBIN 1700PE-1900CE Pair

 

[healthraj]

I am short, so I have to be loyal to bears for the time being... So I will buy only with the pullback in mind. Will buy 5900 CE later tomorrow. Wednesdays usually scrape off premiums.

So it is good that you are thinking about people like us who take Short positions

 

[Option.Trader]

17l added in calls and 9l in puts (5800-6200) and you are still bullish?

Once again as I mentioned before, To me OVERALL means the ATM strike (5800)+2 OTM strike + 2 ITM Strikes.

So if we take the strikes from 5600, 5700, 5800, 5900 and 6000, the Sum of the CHG in OI indicates a Bullish trend. Overall CE @ 12.1L Overall [email protected]. Remember in the morning the CE was at 12L and it closed with 12L. But PE has increased significantly from 3L to 15L, the reason for mentioning as Bullish. The market to me closed with a Bullish signal.

Let us see tomorrow what happens

May be I have to take the CHG in OI for all the strikes. Anyway Let us see if my logic works for tomorrow. I took the ATM+ 2 ITM + 2 OTM.

I think there is a flaw in this argument of taking only a few strike price for knowing the trend, especially in the first week of trading. The kind of premiums that 5900,6000,6100 CE were having was mind bogging. 5900 was actually full 100% premium with no intrinsic value. In these cases, the higher OTM strike levles do tend to have greater writing for obvious reasons. Thats the reason i pointed out to 17L vs 8L analogy... even today, i failed to see any bullishness in market especially from options side(PE's getting unwound, CE's getting added).. to top it, unless we see some good OI built up (>70L), these are just conjectures at this point of time.
Technically, Fibo levels (50%) have been breached, so next support is only at 5720. Also Fundamentally there is no evidence of change in economy... so not sure what will enable a pullback? are you talking about pullback or dead cat bounce? And time and again, on RBI policy day, around 10:40-11:00 u see a spike in Index which is to trap the bulls.

 

[Option.Trader]

I am short, so I have to be loyal to bears for the time being... So I will buy only with the pullback in mind. Will buy 5900 CE later tomorrow. Wednesdays usually scrape off premiums.

Jamit,

Most of the times, these hedges just limit your profits. I would still believe in shorting if there is a dead cat bounce.. .maximize your profits.
I understand your credit spreads, but in a pure bearish market, these just are irritants. I would encourage you to continue with your levels and if you still wish to protect against swings, wait for OI build up to indicate a reversal, until then continue the party with shorts and add more to the fun

 

[Option.Trader]

20 points in 20 mins and still running

Ended the day with 32 points in profit .. less risk with less reward for the conservative trader