Nifty Option's trading.... Earn regardless of where the market goes !!
- Thread starter arnav_rulz
- Start date
Now i gave this Strategy when market was @ 4330 fighting in a range of 4300 to 4400...
Rationale for Giving the strategy ...
1)What i have Done here is that Sold Out of the Money calls & Puts Of such a strike Price which are a major Resistance(4600) or Support (4200)
2)According to My Thinking it was Very difficult for market to cross any of the given level easily, But 1nce crosses they could give a good breakout.
3)My initial plan when i made was that --->
a)Although being a strong Resistance, if at all 4600 was crossed in the early stages , it would have taken atleast some time to cross it, there would have been some time erosion in the value of the option...
b)Accoring to me @ that time the 4600 Call would have had been trading for something like max 140-150.... and we would have covered the 4600 calls 1nce the resistance had been broken.
c)Assuming that such a big hurdel of 4600 was crossed if would have safe to assume that maybe 4200 wouldnt have to taken out in that same month, so we would have kept Sold.
d)If 4200 was not breached in that month considering market was a good uptrend, we would have earned 3000-5000 in the month even if our Resistance level was taken so early ...
Similar Situation can be said if 4200 was taken out, then we would kept our 4600 calls sold, and maybe earn 3-5k or maybe just get out without any losses...
PRESENT SITUATION (above 1ns are IF THAT had, had happened what we would have done...)
1)Markets are easily trading in our range of 4600-4200.
2)It's been just 3-4 days since we made the strategy but IF had say squared off all our Positions in the morning today, we would have had booked a profit of 4000 already !!
3)What we actually did was, Cover our 4200 in the morning @ around 115 because I was a little bearish, so y take any risk ? if say markets didnt fell today n went up, we still had a cushion where we got have squared off our 4600 Calls and got out without any losses... maybe even gained a bit..
What Actually Happened >
1)Market's went down, barely touched our 4200 level and bounced back !! good for us anyway lol.
What to do now ??
1)Since We originally sold both calls and puts.... We received a total premium of 33,000 and 1nce we squared off our 4200 put @ 115 we lost 23,000 worth of our premium...
2)We still have 10,000 worth of premium in our hand right now ... So 2 things can be done...
a)One can keep a stop of Rs50 on the 200 4600 Calls we have sold and get out without any loss.
Or
b)1 take a Lil bit of risk and keep the Calls sold till 4400 is not breached (another big resistance...)
Most probabaly in case B also you would get out without any loss or maybe a small loss.
If your levels are not breached.... you can easily earn 10,000 in this trade/strategy.
**Im not saying, we cant have a loss in this strategy as this is definitely not arbitrage, but we can trade intelligently and earn from this and earn regardless of where the market goes !! We wont take any positional calls just try and keep our self safe
*i hope i was clear enough and could help you understood what i meant If you have any suggestions, they are most welcome
Arnav your strategies are gud , but the thumb rule in such trades are either book all together or dont book at all. rolling your margin intraday is fine .. if you were bearish for the day and booked your put early in the day .. either at the bottom u shud have sold put agian or shud have covered the call as well.
Now i gave this Strategy when market was @ 4330 fighting in a range of 4300 to 4400...
Rationale for Giving the strategy ...
1)What i have Done here is that Sold Out of the Money calls & Puts Of such a strike Price which are a major Resistance(4600) or Support (4200)
2)According to My Thinking it was Very difficult for market to cross any of the given level easily, But 1nce crosses they could give a good breakout.
3)My initial plan when i made was that --->
a)Although being a strong Resistance, if at all 4600 was crossed in the early stages , it would have taken atleast some time to cross it, there would have been some time erosion in the value of the option...
b)Accoring to me @ that time the 4600 Call would have had been trading for something like max 140-150.... and we would have covered the 4600 calls 1nce the resistance had been broken.
c)Assuming that such a big hurdel of 4600 was crossed if would have safe to assume that maybe 4200 wouldnt have to taken out in that same month, so we would have kept Sold.
d)If 4200 was not breached in that month considering market was a good uptrend, we would have earned 3000-5000 in the month even if our Resistance level was taken so early ...
Similar Situation can be said if 4200 was taken out, then we would kept our 4600 calls sold, and maybe earn 3-5k or maybe just get out without any losses...
PRESENT SITUATION (above 1ns are IF THAT had, had happened what we would have done...)
1)Markets are easily trading in our range of 4600-4200.
2)It's been just 3-4 days since we made the strategy but IF had say squared off all our Positions in the morning today, we would have had booked a profit of 4000 already !!
3)What we actually did was, Cover our 4200 in the morning @ around 115 because I was a little bearish, so y take any risk ? if say markets didnt fell today n went up, we still had a cushion where we got have squared off our 4600 Calls and got out without any losses... maybe even gained a bit..
What Actually Happened >
1)Market's went down, barely touched our 4200 level and bounced back !! good for us anyway lol.
What to do now ??
1)Since We originally sold both calls and puts.... We received a total premium of 33,000 and 1nce we squared off our 4200 put @ 115 we lost 23,000 worth of our premium...
2)We still have 10,000 worth of premium in our hand right now ... So 2 things can be done...
a)One can keep a stop of Rs50 on the 200 4600 Calls we have sold and get out without any loss.
Or
b)1 take a Lil bit of risk and keep the Calls sold till 4400 is not breached (another big resistance...)
Most probabaly in case B also you would get out without any loss or maybe a small loss.
If your levels are not breached.... you can easily earn 10,000 in this trade/strategy.
**Im not saying, we cant have a loss in this strategy as this is definitely not arbitrage, but we can trade intelligently and earn from this and earn regardless of where the market goes !! We wont take any positional calls just try and keep our self safe
*i hope i was clear enough and could help you understood what i meant If you have any suggestions, they are most welcome
Now i gave this Strategy when market was @ 4330 fighting in a range of 4300 to 4400...
Rationale for Giving the strategy ...
1)What i have Done here is that Sold Out of the Money calls & Puts Of such a strike Price which are a major Resistance(4600) or Support (4200)
2)According to My Thinking it was Very difficult for market to cross any of the given level easily, But 1nce crosses they could give a good breakout.
3)My initial plan when i made was that --->
a)Although being a strong Resistance, if at all 4600 was crossed in the early stages , it would have taken atleast some time to cross it, there would have been some time erosion in the value of the option...
b)Accoring to me @ that time the 4600 Call would have had been trading for something like max 140-150.... and we would have covered the 4600 calls 1nce the resistance had been broken.
c)Assuming that such a big hurdel of 4600 was crossed if would have safe to assume that maybe 4200 wouldnt have to taken out in that same month, so we would have kept Sold.
d)If 4200 was not breached in that month considering market was a good uptrend, we would have earned 3000-5000 in the month even if our Resistance level was taken so early ...
Similar Situation can be said if 4200 was taken out, then we would kept our 4600 calls sold, and maybe earn 3-5k or maybe just get out without any losses...
PRESENT SITUATION (above 1ns are IF THAT had, had happened what we would have done...)
1)Markets are easily trading in our range of 4600-4200.
2)It's been just 3-4 days since we made the strategy but IF had say squared off all our Positions in the morning today, we would have had booked a profit of 4000 already !!
3)What we actually did was, Cover our 4200 in the morning @ around 115 because I was a little bearish, so y take any risk ? if say markets didnt fell today n went up, we still had a cushion where we got have squared off our 4600 Calls and got out without any losses... maybe even gained a bit..
What Actually Happened >
1)Market's went down, barely touched our 4200 level and bounced back !! good for us anyway lol.
What to do now ??
1)Since We originally sold both calls and puts.... We received a total premium of 33,000 and 1nce we squared off our 4200 put @ 115 we lost 23,000 worth of our premium...
2)We still have 10,000 worth of premium in our hand right now ... So 2 things can be done...
a)One can keep a stop of Rs50 on the 200 4600 Calls we have sold and get out without any loss.
Or
b)1 take a Lil bit of risk and keep the Calls sold till 4400 is not breached (another big resistance...)
Most probabaly in case B also you would get out without any loss or maybe a small loss.
If your levels are not breached.... you can easily earn 10,000 in this trade/strategy.
**Im not saying, we cant have a loss in this strategy as this is definitely not arbitrage, but we can trade intelligently and earn from this and earn regardless of where the market goes !! We wont take any positional calls just try and keep our self safe
*i hope i was clear enough and could help you understood what i meant If you have any suggestions, they are most welcome
Fine n thanx arnav. But, compared with brokerage & other taxes on such huge quantities (lots of diff strike pricess) the gross profit (even 10K) may not match is what i feel. As u being do these strategies it might be very easy to do. Can we try this. Let mkt move up/dwn say 5-8% (or @ imp supp/res level) then writing 2-3% above OTM options is safe. Ur views/comments pl.
Krishna
Krishna
Thanks Arnav for explaining your strategy (it is nothing but "Selling a Strangle").
In my view, this 4200-4600 strngle has 2 breakeven points - 1) 4600+ premium recieved and 2) 4200-Premium recieved.
As long as market is within two breakeven points, there should not be any hurry to book profit. "Selling " strategies have time in our favour and with every passing day, our profit is going to go up.
If square-off is required, then it has to be for complete position. otherwise, after closing one leg, the strategy changes from "range bound mkt oriented" to "mkt direction oriented".. (in your case, after closing PUT position, you are left with bearish position and any upmove is going to heart now). Had it been left as it was, any loss in Call premium due to upmove would have been compensated by fall in the premium of PUT.
Happy Trading
In my view, this 4200-4600 strngle has 2 breakeven points - 1) 4600+ premium recieved and 2) 4200-Premium recieved.
As long as market is within two breakeven points, there should not be any hurry to book profit. "Selling " strategies have time in our favour and with every passing day, our profit is going to go up.
If square-off is required, then it has to be for complete position. otherwise, after closing one leg, the strategy changes from "range bound mkt oriented" to "mkt direction oriented".. (in your case, after closing PUT position, you are left with bearish position and any upmove is going to heart now). Had it been left as it was, any loss in Call premium due to upmove would have been compensated by fall in the premium of PUT.
Happy Trading
you can try optionsoracle. best part is - it is free with realtime options data from nse. you can test various strategies in realtime.
http://www.samoasky.com/
Pravin
http://www.samoasky.com/
Pravin
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