NIFTY Options Trading by RAJ

[ashish1980]

Again Salute to hardworking and givingness of Raj Sir:thumb::thumb::thumb

http:// www.4shared. com/file/CRMvQsBIce/RAJ_OTP_for_NSE_Index_and_Stoc.html

plz remove space ............

 

[drrkgupta]

Thank You very much for the links Ashsih ji and Health Raj Sir. Please share any other excels which may be helpful in trading options and futures!

 

[premkumartalreja]

Raj for 1 lack you am sell 2 pairs so the max profit would be 120*100 that's 12000

 

[BabaMagic]

Dear Traders,

Please be careful if u see a sudden upmove in Nifty today.

If Nifty Spot trades between 7300-7314, Short the futures or buy puts to get maximum benefit of this false breakout, if it happens.

I am expecting this false breakout most likely to happen today, if not than on Monday.

Happy Trading!

 

[trump]

Well if one wants some risk protection against selling naked pairs i.e. a strangle in this case u can buy higher strikes to initiate a iron condor. Its limited risk and limited reward strategy. For any violent mkves , which is not uncommon one has to adjust the wings. Its not only the amt of credit one shld only focus upon but the size of the spreads is also important.

 

[lemondew]

Hi healthraj,

Please confirm or correct me
1)when more people are shorting Ce / CE price will go down/ CE OI will go up /market will go down
2) when people are short covering CE /CE price will go up/CE OI will go down/ market will go up.

3) When people are buying CE/ CE price will go up/ CE OI will go up/ market where is it expected to go??? Do you rely on long positions too

4) When people are long unwinding CE/ CE price will go down/ CE OI will go down/ market where is it expected to go??? Based on long positions

Thanks,

 

[lemondew]

Thanks for the wonderful tips.

First of all i never said the June would clse between 7250 and 7400. The levels were looking at the Hourly chart.

1. For Selling in NIFTY I have some magic Premium numbers. Otherwise I don't sell. The magic number is around 120.
When we sell at 120, normally the Reversal will happen around 90 (30 points), If there is no reversal then the next target would be 60 (another 30 points from 90).
So sometimes when you don't get a pair for 120 in the second or thid week, Look for a pair with a premium of 90 points... But you have to keep watching the pair.
I will sell only when the combine premium of the Call and the Put is around 120. IF ALL is WELL, it will surely give 30 points.
For example today the MAX COI was in 6800PE-7300CE and the Combined premium is 126. So it is a candidate for Selling.

2. And the other point is the difference between the strikes should be around 500 points. Last week I sold 7000-7500 and the difference is around 500.
The difference between 6800 and 7300 is once again 500 points.

3. The Last point is when the MAX OI pair is not at 120 or 90. Find a COI pair so that the combined premium is around 120...


Some simple number crunching to show the profits one can get in SELLING and those who believe that Selling options will not give a HUGE Profit.

There are 4 weeks in the Expiry.
The combines premiums starts at 120 and roughly there are 20 trading days. Since we are selling we are looking for some 120/20 = 6 points to erode every day. And Ideally if you have chosen the right pair in the beginning of the month, you should get the Full 120 points.

At the end of the first week, the 30 points would be lost and 120 will become 90
At the end of the second week another 30 points would be lost and 90 will become 60.
In the third week 60 will become 30
And on the dayy of expiry 30 will become 0.

So Ideally if somebody has a Capital of 1 Lakh then they can SELL 200 quanities and ideally they can get a profit of around 200 * 120 = 24000 in a month. Even if one gets 10000 then it is a huge profit. On top of this if one can intelligently combine it with a Long Put or Call then they can make more profit.

I have been observing the Premiums and this is how it happens.... You can take a pair and watch the Premiums before you believe

For example take the Pair 6800-7300 and See the Pair's value on 26-Jun-14.

So how do we find the pair for Stocks.

For NIFTY it works like these and it should work in a similar fashion for Stocks also.

For NIFTY since you need minimum two strikes to SELL the Difference would be 100 points. Add 20% (NIFTY Historic Volatility). that would be 120 points. So ideally on Week 1 of Expiry you should be able to find a Pair with a Premium of around 120.

Let us take SBIN.
SBIN Strike is 20 points. And the HIST VOLT is now at 60%.

So we would need to find a pair whose value would be 20+20=40 + 60% * 40 = 40 + 24 = 64.

The MAX OI is at 2500-2700 with a combined premium of 120. But we would need only 64 points. So we can choose outside 2500-2700. Say 2260-2760 with a comined premium of 68.

So everyday you should get around 3.2 points.

By the end of First week 64 should become 64-16 = 48
Second week 48 should become 32 and so on ...

Please observe and take your own decision to trade... I might be wrong... But these are some of my observations and Tips to Enter the SELL positions for PAIR trading.

 

[new2trade]

First of all i never said the June would clse between 7250 and 7400. The levels were looking at the Hourly chart.

1. For Selling in NIFTY I have some magic Premium numbers. Otherwise I don't sell. The magic number is around 120.
When we sell at 120, normally the Reversal will happen around 90 (30 points), If there is no reversal then the next target would be 60 (another 30 points from 90).
So sometimes when you don't get a pair for 120 in the second or thid week, Look for a pair with a premium of 90 points... But you have to keep watching the pair.
I will sell only when the combine premium of the Call and the Put is around 120. IF ALL is WELL, it will surely give 30 points.
For example today the MAX COI was in 6800PE-7300CE and the Combined premium is 126. So it is a candidate for Selling.

2. And the other point is the difference between the strikes should be around 500 points. Last week I sold 7000-7500 and the difference is around 500.
The difference between 6800 and 7300 is once again 500 points.

3. The Last point is when the MAX OI pair is not at 120 or 90. Find a COI pair so that the combined premium is around 120...


Some simple number crunching to show the profits one can get in SELLING and those who believe that Selling options will not give a HUGE Profit.

There are 4 weeks in the Expiry.
The combines premiums starts at 120 and roughly there are 20 trading days. Since we are selling we are looking for some 120/20 = 6 points to erode every day. And Ideally if you have chosen the right pair in the beginning of the month, you should get the Full 120 points.

At the end of the first week, the 30 points would be lost and 120 will become 90
At the end of the second week another 30 points would be lost and 90 will become 60.
In the third week 60 will become 30
And on the dayy of expiry 30 will become 0.

So Ideally if somebody has a Capital of 1 Lakh then they can SELL 200 quanities and ideally they can get a profit of around 200 * 120 = 24000 in a month. Even if one gets 10000 then it is a huge profit. On top of this if one can intelligently combine it with a Long Put or Call then they can make more profit.

I have been observing the Premiums and this is how it happens.... You can take a pair and watch the Premiums before you believe

For example take the Pair 6800-7300 and See the Pair's value on 26-Jun-14.

So how do we find the pair for Stocks.

For NIFTY it works like these and it should work in a similar fashion for Stocks also.

For NIFTY since you need minimum two strikes to SELL the Difference would be 100 points. Add 20% (NIFTY Historic Volatility). that would be 120 points. So ideally on Week 1 of Expiry you should be able to find a Pair with a Premium of around 120.

Let us take SBIN.
SBIN Strike is 20 points. And the HIST VOLT is now at 60%.

So we would need to find a pair whose value would be 20+20=40 + 60% * 40 = 40 + 24 = 64.

The MAX OI is at 2500-2700 with a combined premium of 120. But we would need only 64 points. So we can choose outside 2500-2700. Say 2260-2760 with a comined premium of 68.

So everyday you should get around 3.2 points.

By the end of First week 64 should become 64-16 = 48
Second week 48 should become 32 and so on ...

Please observe and take your own decision to trade... I might be wrong... But these are some of my observations and Tips to Enter the SELL positions for PAIR trading.

In this strategy, if one is buying 7400CE June at 72-75 what is the target we are looking at for 7400CE ? Thanks

 

[jetking]

First of all i never said the June would clse between 7250 and 7400. The levels were looking at the Hourly chart.

1. For Selling in NIFTY I have some magic Premium numbers. Otherwise I don't sell. The magic number is around 120.
When we sell at 120, normally the Reversal will happen around 90 (30 points), If there is no reversal then the next target would be 60 (another 30 points from 90).
So sometimes when you don't get a pair for 120 in the second or thid week, Look for a pair with a premium of 90 points... But you have to keep watching the pair.
I will sell only when the combine premium of the Call and the Put is around 120. IF ALL is WELL, it will surely give 30 points.
For example today the MAX COI was in 6800PE-7300CE and the Combined premium is 126. So it is a candidate for Selling.

.

daer raj,

would like to know,if mkt start going up from here,than how to protect the sold pair?
because the 7300CE is at 108 and 6800PE is at 12,so very little protection is there,if mkt start moving up
what adjustment you suggest in this case?
thanks

 

[new2trade]

If the rate cut sentiment based buying comes in today or Monday, 7500 will come pretty fast. The sentiment is positive so buying will happen. Currently 7400 CE is available lower, is this a good price to buy at ?