NIFTY Options Trading by RAJ

[healthraj]

A straight question - what is your success rate trading naked calls/puts using change in OI logic ?[/B]

Dear Kcsusha,

Frankly, i dont mean to underrate opion chain analysis.
my idea is that our friends here would come up with suggestions.

So you think that just by pulling and criticizing people, You will get something out of them . This forum is for sharing and not for sucking.

So rather than being always critical, you also start contributing and sharing your ideas, your strategies. May be you will get something back.

I am not saying OAT is the ultimate and you can become a millionaire. It is just an alternative approach to using charts.
As I have always said, it works best in a Range bound market. For an Intraday trader, the COI works most of the time.

The most important thing is that I never promoted or encouraged Naked Options trading. I always have encouraged Pair trading and my target for the month was not more than 20%. So if somebody is looking to make 100% daily or monthly, then OAT is not to be used, Use some Coin tossing.

 

[healthraj]

NIFTY This month

NIFTY has been very volatile this month.
But the Beauty is that MAX OI has been at 8000/8100-8500. So whenever it came to 8000 or 8100, it was an opportunity to BUY.

And it has moved 250 to 350 points depending on where you Bought.

And if one has sold the Pair 8000/8100-8500, they would have surely made profit.

 

[hardik229]

Raj,

Only one thing, as you mentioned, I traded 8100 @ 61 - 8500 @ 57 pair on 11th. Then after volatility increased like anything. At one time 8100 Put was trading @ 156 (High on 13th May). If I do not exit on 13th then definitely I am on profit. Nifty did not break 8100 after 11th. What should I do? I should have exited or waited till it break 8100? I know it is based on the risk appetite. If we have a risk appetite then what should be done? Or what is the ideal way to trade?

I did on paper only.

Thanks..!!
Hardik Shah

NIFTY This month

NIFTY has been very volatile this month.
But the Beauty is that MAX OI has been at 8000/8100-8500. So whenever it came to 8000 or 8100, it was an opportunity to BUY.

And it has moved 250 to 350 points depending on where you Bought.

And if one has sold the Pair 8000/8100-8500, they would have surely made profit.

 

[healthraj]

Raj,

Only one thing, as you mentioned, I traded 8100 @ 61 - 8500 @ 57 pair on 11th. Then after volatility increased like anything. At one time 8100 Put was trading @ 156 (High on 13th May). If I do not exit on 13th then definitely I am on profit. Nifty did not break 8100 after 11th. What should I do? I should have exited or waited till it break 8100? I know it is based on the risk appetite. If we have a risk appetite then what should be done? Or what is the ideal way to trade?

I did on paper only.

Thanks..!!
Hardik Shah

You entered when NIFTY was around 8300. You should Enter the Pair either When NIFTY was at 8000 or 8100.

Or Simply Put Enter the Pair when the Stock is at the MAX OI @ PE or CE to make it relatively less Risky.

The other important Rule for Pair Trading is that Make sure, one leg is minimum is 75% and the other leg is 25%.

So basically Pair trading does not mean we are neutral. We are still betting for an UP or DOWN move. We are only hedging further UP or DOWN movement.
To make it further less Risky, also confirm your positions using Hourly or Daily Chart...

 

[hardik229]

I understand Raj that we should have taken a pair near to nifty @ MAX OI. Can you please provide answer my second question was, I should have moved out of the pair on 13th? Or I should wait until it breaks 8100?

What would you do? What is the ideal way?

Appreciate your response.

Thanks..!!

You entered when NIFTY was around 8300. You should Enter the Pair either When NIFTY was at 8000 or 8100.

Or Simply Put Enter the Pair when the Stock is at the MAX OI @ PE or CE to make it relatively less Risky

 

[singlap]

Raj , Now market is towards upper end of range i.e. towards 8500. Does it make sense to sell 8500/8100 pair when market is somewhere close to 8400.
And if it crosses 8500 , should we close the trade with whatever p/l ?

 

[healthraj]

I understand Raj that we should have taken a pair near to nifty @ MAX OI. Can you please provide answer my second question was, I should have moved out of the pair on 13th? Or I should wait until it breaks 8100?

What would you do? What is the ideal way?

Appreciate your response.

Thanks..!!

I thought every trade has a Stoploss. So Yes if your Stoploss was hit, you should have closed your positions.

 

[healthraj]

Raj , Now market is towards upper end of range i.e. towards 8500. Does it make sense to sell 8500/8100 pair when market is somewhere close to 8400.
And if it crosses 8500 , should we close the trade with whatever p/l ?

MAX OI is at 8100-8500. So Wait for 8500. See if NIFTY moves further UP. Right now the intermediate Trend is UP in Daily charts. In hourly charts the TREND is UP.

At 8500, if the MAX OI @ CE remains at 8500, then you can SELL a pair involving 8500CE

 

[VJAY]

You entered when NIFTY was around 8300. You should Enter the Pair either When NIFTY was at 8000 or 8100.

Or Simply Put Enter the Pair when the Stock is at the MAX OI @ PE or CE to make it relatively less Risky.

The other important Rule for Pair Trading is that Make sure, one leg is minimum is 75% and the other leg is 25%.

So basically Pair trading does not mean we are neutral. We are still betting for an UP or DOWN move. We are only hedging further UP or DOWN movement.
To make it further less Risky, also confirm your positions using Hourly or Daily Chart...

Dear Raj,
Thanks for your posts...what would be your stops for this pair shorts if entered arround 8100 ...please share how you use stops for pair trading...

 

[healthraj]

Dear Raj,
Thanks for your posts...what would be your stops for this pair shorts if entered arround 8100 ...please share how you use stops for pair trading...

For NIFTY I normally find a Pair with 125+ as the Premium and Keep 30 points as the Stop loss. So if I SELL a Pair at 125, I will close the Pair either at 95 (30 points profit) or at 155 (30 points Loss).

My stop loss is not based on the NIFTY price. But on the Premium price.
Meaning, Let us say I sell the Pair at 8100 for 125, Now if NIFTY moves to down to 8050 and moves my Premium to 155, then I will close my pair with a loss. I will not wait to see what happens at 8000. So my stoploss is not NIFTY price at 8050 or 8000, it is the premium going up by 30 points.