Nifty Option's trading.... Earn regardless of where the market goes !!

[arnav_rulz]

what if we sell / buy 4100 STRADDDLE ( 4100 P + 4100 C )
and what if we buy 4100 STRADDLE ???
since u said Oct is the breakout month we either go
to 3700 -3800 ot we go to 4600 - 4700
so will it not be to buy or sell a straddle of 4100 or 4000 or 4200

I never said Oct WILL BE a breakout month...
All i said was that I THINK OCT COULD be a breakout month ...

Also Buying a 4100 Straddle almost defeats the purpose of the thread as, as on today's date if you make this straddle you wont be in profits till atleast 4450 or 3750 is broken ... which is a BIG risk...

Caz a lot of possibilties that market may go to 3800 during this month and recover back only to close at say 4200 in which case you lose a LOT of money ....

No point using this strategy .... A big NO from my side ...


*Selling the 4100 straddle again a big NO because OCT COULD be a breakout month, thus any move above/below 4450/3750 would turn you into losses ...

For this month either dont make straddles or if you make 1, then look for making Wider spreads like i made earlier where your range is quite big ...

Range = 3800-5000


Buy 50/100 4400 Put @ 230
Sell 100/200 4100 Put @ 115

(*investment fully recovered)


Buy 50/100 4600 Call @ 105
Sell 100/200 4800 Call @ 50

We are already trading in profits for this strategy ... And if any1 is following this strategy and wants to protect his/her downside upto a greater extent then that could also be donecaz to many of you markets may be looking bearish unlike me ....

But this thread doesnt take a positional view, but just wants to earn where ever is goes without even flowing with the flow !!

 

[arnav_rulz]

Just repeating the rationale Behind my strategy's(because i have seen a lot of doubts ppl are facing...) for any1 missed this post and is still confused about the strategy which might look complicated....

Strategy for the month of Oct.... (based out the Range given by post of the ppl here when market was trading @ 4400)

Range = 3800-5000

Buy 50/100 4400 Put @ 230
Sell 100/200 4100 Put @ 115
(*investment fully recovered)

Buy 50/100 4600 Call @ 105
Sell 100/200 4800 Call @ 50
(*investment of Rs 500)

One of the Basis doubts ppl faced when i told that we could earn around 10k even if market remained btw 4400-4600

Dear Arnav_rulz,
I worked out in detail your suggestions. I don't at all figure out how you've arrived at the 10K figure. In fact, after putting up the margin money for writing 4 lots, the best case scenario that I see from my tables is about 5k (maximum), that is if you foreclose some of your positions in the no-gain range. Have I missed out something or am I making a mistake somewhere?!
[Some assumptions I have made are (a) entry is at about 40 days ahead and selective sq off is at 10 days to expiry, (b) the IV is range-bound.]

Here is the explanation As to what my plans would be as the month comes to an end/time decays ....

Well i didnt get you completely, what i think you were asking me was that if say, the market was 4500, 10 days before expiry... How would we manage to earn 10k, right ?

Well 1st assumption, Im trading in 100/200 nifty.

2nd, its assumed that, when nifty is trading @ 4500, 10 days prior to expiry ... then at that time ...

4400 Put would trade something around 75-80
4100 Put would trade something around 15-20

So if we would square off both 4400 & 4100 puts we could earn around 4-5k

Similarly when we square off 4600 & 4800 call we could earn about 4-5k then We Could manage to earn about 10k if nifty trade between 4400-4600....

*If 10 days prior to the market, say we are bullish and do not expect heavy downside, then what is can do is square off 4400 Put @ 75(ie earn 7500)
Let the 4100 puts and 4600&4800 Calls remain there...(vice versa if we are bearish)

This way if the market moves according to our way and say closes @ 4700, then we could earn 10,000 + 7500 (from 4400 Put) ie 17,500.

And in case, the market falls but manages to close above 4100, even then we would earn 7500.

I hope ive cleared your doubts , if you didnt get anything do ask me again

 

[bandlab2]

Im srry bandlab, but i guess your broker does not follow the Nse Rules....

1)You dont have to pay margin on covered Calls...

I.e you u sell 2 out of money calls and buy 1 At the money call, your total premium = (normal market for 1 blank call sold + only 3% for the other1 because it is covered...)

2)Margin is 25% are you kidding me ?

Only is volatile or maybe normal future Stocks margin = 25% otherwise for nifty margin is only 10-14%(that too caz these days its more volatile...)

3)i have mentioned this earlier too that its not necessary that you give all your margin in cash .... (most ppl have long term stocks, and instead of keeping them aside in the demat account, why not give it as a margin and try to make full use of them.

4)Earning say 10-20k average Every Month with your long term stocks worth 2 lakh only (which are otherwise idle) is a return of 5-10% monthly while taking very less risk is not a bad deal according to me...


If you feel i am wrong somewhere... plz do tell me ..

I have acounts with icicidirect, 5paisa, sharekhan. none of them allows the margin as you mentioned. each trade is treated inividually. buy oct future, sell nov future, yo need to maintain 2 times margin

nifty margin is around 14%, but they have trigger prices where they square off the position, thats why another 10% extra margin is needed for safety. in this kind of volatile market, you need more margins to avoid huge gap ups/downs

who is your broker ?

 

[arnav_rulz]

each trade is treated inividually. buy oct future, sell nov future, yo need to maintain 2 times margin

I never said if you buy Oct future and sell Nov Future, then you will have to maintain 3% margin or 1 time margin...

You cannot have covered calls or Futures with different Expiry dates... (this is also as per Nse ...)

nifty margin is around 14%, but they have trigger prices where they square off the position, thats why another 10% extra margin is needed for safety. in this kind of volatile market, you need more margins to avoid huge gap ups/downs

who is your broker ?

See this might be true for FUTURES, but should not be thr for options ....
This is because thr is no mark to mark payment for options...

Im not too sure about the above rule, but am sure that this is also not accordance with NSE rules ...

ICICI, 5paisa and stuff ppl are thieves , their service aint the best and they charge high, and just to protect themselves completely they charge soo high...

My broker is an individual share broker named - Star Finvest ..

But other's also charge brokerage as per Nse terms such as UNICORN .

I guess you will have to talk to your broker about such service or better chose a broker who follows NSE rules ...

 

[bandlab2]

i talke to my brokers about this issue several times, but they dont want to change their rates. very few ppl trade in options, and those who trade mostly do it to hedge their cash positions. thats why they dont get such requests from many ppl

the trigger price concept is to protect the trader against volatilities. lets say you write nifty 4000 call at 110, if nifty goes to 4500, your call be 500 rs and you need to 390 rs to the broker. what if you dont have enuf cash or stocks ? naked call/pt writing is dangerous. although we have opposite positions also to neutralize the write risks, their stupid s/w doesnt recognize it

i am paying 100 rs per one contract. in futures, 0.02%

 

[arnav_rulz]

i talke to my brokers about this issue several times, but they dont want to change their rates. very few ppl trade in options, and those who trade mostly do it to hedge their cash positions. thats why they dont get such requests from many ppl

the trigger price concept is to protect the trader against volatilities. lets say you write nifty 4000 call at 110, if nifty goes to 4500, your call be 500 rs and you need to 390 rs to the broker. what if you dont have enuf cash or stocks ? naked call/pt writing is dangerous. although we have opposite positions also to neutralize the write risks, their stupid s/w doesnt recognize it

i am paying 100 rs per one contract. in futures, 0.02%

Well hard luck i must say my friend ...

Its sad to find Broker's not following Nse rules properly .... (thank god mine is !!)

Well i guess with your brokerage system thr is Almost no point using my strategies ...

Btw since this has more of a discussion of brokerage n margin stuff thread temme how much brokerage does your broker charge on options ?

.02% of strike price ? or .75% or the premium ?

Earlier i gave .02% of the strike price but i got it changed to .75% of the premium because earlier trading the options of small value was not favourable due to the brokerage being charged on Strike price..

 

[detrich]

Dearest Arnav,

It was so good to see somebody trying to help others by posting this thread. But i have to say,sadly though, I completely disagree with you here. When you quote about NSE guidelines regarding brokerages. Well post internet trading the malpractice amongst the brokerage houses have been quiet reduced and Bandlab2 is right what he says about the margin and squaring-off process and Banlab2 it is not the issue of s/w. The issue is regarding the materialistic value of your contract. When you are holding it at that time it's value is nill. Because there is just no realistic gurantee that the contract will end in ITM at the end of contract month and as for your(Arnav) prediction I would be greatly oblige if you could tell me about how you chose the Nifty level's and your pricing method's for pricing options.

 

[arnav_rulz]

Dearest Arnav,

It was so good to see somebody trying to help others by posting this thread. But i have to say,sadly though, I completely disagree with you here. When you quote about NSE guidelines regarding brokerages. Well post internet trading the malpractice amongst the brokerage houses have been quiet reduced and Bandlab2 is right what he says about the margin and squaring-off process and Banlab2 it is not the issue of s/w. The issue is regarding the materialistic value of your contract. When you are holding it at that time it's value is nill. Because there is just no realistic gurantee that the contract will end in ITM at the end of contract month and as for your(Arnav) prediction I would be greatly oblige if you could tell me about how you chose the Nifty level's and your pricing method's for pricing options.

Man im srry i really didnt get you .... Could you be a lil more specific .. like maybe give an example about what you mean ..

As per the last line about my pricing method of options ... I gave my strategy during the live market hours ....

I do not chose any nifty levels .... I try and make different strategies for different ppl who have different levels of nifty in there mind as per their analysis.

This strategy is basically a hedge strategy where you try and earn every month in an uncertain yet ranged bound markets ...(ie within a span of 1000-1200 nifty points)

 

[detrich]

dear Arnav,


my current startegy is as follows.


Selling Nifty Call-4100 which will cost me-28700+280(brokerages and taxes etc)=28980+20500(as a safety hatchet incase my margin is eaten up.CMP of this contract is 128. So atleast i expect to get 5000-6000 out of this.Because I am expecting this contract to expire worthless.

Buy a Nifty Put-4000 @ 185.20*50= 9260+150=9410.
Total Investment-28980+9410=38390.
I expect Nifty to go down below 3600 mark.

So let us wait and watch how this pans out.

 

[arnav_rulz]

dear Arnav,


my current startegy is as follows.


Selling Nifty Call-4100 which will cost me-28700+280(brokerages and taxes etc)=28980+20500(as a safety hatchet incase my margin is eaten up.CMP of this contract is 128. So atleast i expect to get 5000-6000 out of this.Because I am expecting this contract to expire worthless.

Buy a Nifty Put-4000 @ 185.20*50= 9260+150=9410.
Total Investment-28980+9410=38390.
I expect Nifty to go down below 3600 mark.

So let us wait and watch how this pans out.

Dude you sold a call @ 4100 ? and brought a put @ 4000 >?

aah wat if market end up 4500 :S ? you are double bearish !! Not a strategy to follow in this thread ... (earn regardless of where nifty goes !!)


Also This is not what i was asking about .... I Wanted to ask --

1)On What issue do you disagree with me ? (as per your 1st post 1st line)

But i have to say,sadly though, I completely disagree with you here.

2)What did you mean by this? (in your 1st post)

Well post internet trading the malpractice amongst the brokerage houses have been quiet reduced and Bandlab2 is right what he says about the margin and squaring-off process and Banlab2 it is not the issue of s/w. The issue is regarding the materialistic value of your contract. When you are holding it at that time it's value is nill. Because there is just no realistic gurantee that the contract will end in ITM at the end of contract month