NIFTY Options Trading by RAJ
- Thread starter healthraj
- Start date
- Tags nifty options chain raj oat
6900PE with 60 points profit. In the hourly charts, there is a Buy signal. MAX OI changed from 6000-7000 to 6500-7000. So will retain 6000PE Sell. Will take additional SELL at 6500PE.
So will close 6900PE and take New Positions
SELL 6500PE-7000CE @ 276. (7000CE Sold at 223 is now at 142. So retaining )
BUY 6700CE @ 275.
SOLD 6000PE @ 59, Which is now at 32 - Will retain this also...
Ideally it would be better if there is a difference of 10% between the 6500-7000 Pair and 6700CE.
To put it simply. Closing 6000-7000 Pair and 6900PE for 160 points profit and
opening 6500-7000 Pair along 6700CE
So will close 6900PE and take New Positions
SELL 6500PE-7000CE @ 276. (7000CE Sold at 223 is now at 142. So retaining )
BUY 6700CE @ 275.
SOLD 6000PE @ 59, Which is now at 32 - Will retain this also...
Ideally it would be better if there is a difference of 10% between the 6500-7000 Pair and 6700CE.
To put it simply. Closing 6000-7000 Pair and 6900PE for 160 points profit and
opening 6500-7000 Pair along 6700CE
Dear Rajendra Chavan
you been excellent on your on going strategy...
off late I discovered this
http://www.traderji.com/options/28235-good-profit-hedged-nifty-positions-straddle.html#post301893
this and your strategy is having same scheme but there are some interesting differences like-
No 1-
you went with OTM short strangle at max OI to fund your directional options play
he went with ATM short strangle where the fund is more to play with it as well as ATM have more time decay and most of premium eroding
No 2-
you are playing with options to capture the direction
he is playing directly with futures where premium eroding which will happen on your long option is not there and you can capture more directionally
No 3- more importantly
Remember I was mentioning a covered call or put to you
But here its a mixture of your idea as well as mine as
his strategy act as protected covered call or protected covered put
its a WIN WIN situation if you simulate and see one
No 4-
My addition to this system is that one can close the old ATM short straddle when underlying moves to next strike only to open an other ATM short straddle
risk skew is something that i need to study on both during huge gaps ... can you share your inputs once you are free as you been observing this kind of a trade since long?
Thanks you rajendra chavan & linkon7
you been excellent on your on going strategy...
off late I discovered this
http://www.traderji.com/options/28235-good-profit-hedged-nifty-positions-straddle.html#post301893
this and your strategy is having same scheme but there are some interesting differences like-
No 1-
you went with OTM short strangle at max OI to fund your directional options play
he went with ATM short strangle where the fund is more to play with it as well as ATM have more time decay and most of premium eroding
No 2-
you are playing with options to capture the direction
he is playing directly with futures where premium eroding which will happen on your long option is not there and you can capture more directionally
No 3- more importantly
Remember I was mentioning a covered call or put to you
But here its a mixture of your idea as well as mine as
his strategy act as protected covered call or protected covered put
its a WIN WIN situation if you simulate and see one
No 4-
My addition to this system is that one can close the old ATM short straddle when underlying moves to next strike only to open an other ATM short straddle
risk skew is something that i need to study on both during huge gaps ... can you share your inputs once you are free as you been observing this kind of a trade since long?
Thanks you rajendra chavan & linkon7
My comments
1. Selling ATM Options is fine as long as the Volatility is stable or goes down. If it shoots up like it did in the last two months. Then Selling ATM options is like a suicide. So I would never recommend selling a ATM Option pair. The only time it would work is when we are 100% sure that VOLT will down drastically.
2. I do not use Options to take direction. I use Price movement or the hourly charts to take direction. I use Options only find the weekly/monthly range and to make sure that it will not cross this range. For example the MAX OI for MAY-14 series was at 6000-7000, meaning it would not go above 7000 or go below 6000. Now it has changed to 6500-7000. So it might not go below 6500.
3. Yes if you are Trading Futures, you can cover it with a Call or Put or With a Pair. To put it simply I use Naked call/Put along with the pair and you can also Futures. If you are anyway taking a direction why not trade options instead of Futures. So it depends what is your primary trade? Is it Futures or Options.
4. Once this is dependent on the Volatility.
The Major difference with my strategy is that I want to build something which is VOLATILE Neutral. So I am selling OTM Options annd Buying Puts / Calls. The only problem with my strategy is that if the stock goes completely FLAT then the Long Call/Put be on the loosing side, Whereas if somebody has taken Futures position, then there is no Volatility impact on Futures.
So in a FLAT market, it would be better to SELL the OTM pair and go for LONG / SHORT call on Futures
So in a DIRECTIONAL / TRENDING market, it would be better to SELL the OTM pair and go for LONG ATM CALL/PUT
What is Rajendra Chavan ?
1. Selling ATM Options is fine as long as the Volatility is stable or goes down. If it shoots up like it did in the last two months. Then Selling ATM options is like a suicide. So I would never recommend selling a ATM Option pair. The only time it would work is when we are 100% sure that VOLT will down drastically.
2. I do not use Options to take direction. I use Price movement or the hourly charts to take direction. I use Options only find the weekly/monthly range and to make sure that it will not cross this range. For example the MAX OI for MAY-14 series was at 6000-7000, meaning it would not go above 7000 or go below 6000. Now it has changed to 6500-7000. So it might not go below 6500.
3. Yes if you are Trading Futures, you can cover it with a Call or Put or With a Pair. To put it simply I use Naked call/Put along with the pair and you can also Futures. If you are anyway taking a direction why not trade options instead of Futures. So it depends what is your primary trade? Is it Futures or Options.
4. Once this is dependent on the Volatility.
The Major difference with my strategy is that I want to build something which is VOLATILE Neutral. So I am selling OTM Options annd Buying Puts / Calls. The only problem with my strategy is that if the stock goes completely FLAT then the Long Call/Put be on the loosing side, Whereas if somebody has taken Futures position, then there is no Volatility impact on Futures.
So in a FLAT market, it would be better to SELL the OTM pair and go for LONG / SHORT call on Futures
So in a DIRECTIONAL / TRENDING market, it would be better to SELL the OTM pair and go for LONG ATM CALL/PUT
What is Rajendra Chavan ?
This is a question, which has come so many times. It is only a theory. But it works. So from my point of view it is a safe assumption to make. All we want to find out is where is the Resistance and Support. And whererver you have the MAX OI or COI, Take a SELL or BUY accordingly. Now whether the FIIs are buying or SELLing does not matter.
Let us take the NIFTY Example for this month.
MAX OI is at 6500PE and 7000CE. All we want to know is that the range for this month would be 6500-7000. MAX COI is at 6800-6800. It could be Breakdown or Breakout. In this case it was a BREAKDOWN @ 6800. It also indicates that NIFTY will not cross 6800 today.
Let us take the NIFTY Example for this month.
MAX OI is at 6500PE and 7000CE. All we want to know is that the range for this month would be 6500-7000. MAX COI is at 6800-6800. It could be Breakdown or Breakout. In this case it was a BREAKDOWN @ 6800. It also indicates that NIFTY will not cross 6800 today.
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