Nifty Options Vertical Spread Trading

[DanPickUp]

Hi Dan,

I'm not sure you checked my PM or not..Meanwhile I went through the video on non-linear charting setup which you posted(#53) earlier in this thread and after watching it again I realized that its all about identifying the overall trend of the market which is required for spread trading and not too much TA.

Thanks once again for this video.
https://optionvue.webex.com/optionvu...D35BBD0D2CAFE5

I have decided to follow the trend by using values mentioned in the video..
EMA's 13, 21 & 34
MACD 5 & 34
I will use the 3 bar and 5 bar method to enter the trade.

Just wanted to ask you about the exit...should we wait for all the moving averages to cross over? and by that we can say the trend is changed?

Thanks once again.

Hi

As my PM inbox was full, it seems that I accidentally also deleted yours. Sorry about that.

The webinar I posted to make people thinking and analyzing them self's about how much TA they want or use in there spread trading.

About your question: TA is good and common sense is better. Do you have the possibility to backtest the used MA's in your TF with your charting software? If so, you will have the best calculated MA's in that specific TF and now it is your decision to wait until all of them have crossed or if you want use your common sense to take a decision. Best you combine it, as in trendy markets it is ok to wait and in sideways markets you need to use your experience in price action readings. But I guess, this you already know and I only can support you in what you know.

If you have any more queries, my PM box now has again space. Take care and have a nice weekend / DanPickUp

 

[ananths]

Traded a bearish Put spread today looking at the longer term trend.

Buy 5200PE / 5100PE @ 127 / 98

Total cost = 29 points.

Saw some pull back today and sold 5000PE at 69 and covered @ 62...profit 7 points.

Net cost of the spread = 22 points. :thumb:

Sold 5000PE @ 35

my plan is to cover 5100PE today and hold 5000PE...let us see how it works :thumb:

 

[ananths]

Covered 5100PE @ 42.
Now the status is as below,
Long 5200PE @ 127.. CMP is 59..at loss 68 points
Short 5100PE @ 98...booked @ 42 profit 56 points
Short 5000PE @ 35..CMP is 33.
Also reduced the risk by 10 points already.

Now holding spread is 5200/5000PE

 

[ananths]

Current position

5200PE -75
5100PE +56
5000PE +7
Others. +10

Net P/L = -2 points

 

[ananths]

Current position

5200PE -75
5100PE +56
5000PE +7
Others. +10

Net P/L = -2 points

Blood bath in market....will 5360 hold for today?
Current pisition
5200PE -18
5000PE - 25

Net P/L +23 points per lot.

Max profit possible is 180 points....will wait and watch.

 

[TraderRavi]

Dear All,
I'm starting this thread to track the performance of vertical spread trading in Nifty options. This strategy involves buying and selling options. There are two types - Credit spread and Debit spread. I think this type of strategy suits beginners and low risk options traders.

There is nothing new in this strategy. Basic idea is lifted from the topics discussed in below two threads -

By AW10 -
http://www.traderji.com/options/30597-low-risk-options-trading-strategy-option-spreads.html

By Dan -
http://www.traderji.com/options/66266-option-trading-danpickup.html

Setup:- If the spread is in the direction of the market we will be benefited. So its advantage if we know the market direction. This is a low risk strategy..hence even if we are wrong we will not lose much.However cutting our loss would be always good. So we need to and identify the support and resistance levels of Nifty.

Debit Spread -
Buy 1 lot ATM option and sell 1 lot OTM option.

Credit Spread -
Sell 1 lot of ATM option and Buy 1 lot OTM option

(Note - this can be ITM option and ATM option also)

All comments and suggestions are welcome.:thumb:

Thanks,
Ananth.

m interested, will track your trades .........

 

[TraderRavi]

Traded a bearish Put spread today looking at the longer term trend.

Buy 5200PE / 5100PE @ 127 / 98

Total cost = 29 points.

:thumb:

u bot 5200 pe and sold 5100 pe, 127 x 50 = 6350 premium paid and 98 x 50 = 4900 premium received ,
1) wat is the exact margin needed for this trade ?
2) wat is the max risk and max profit in this trade ?

 

[ananths]

I have covered all the positions now in this spread..final status is below,

5200PE bought at 127..sold at 34 = -93
5100PE sold at 98...bought at 42 = +56
5000PE sold at 35 ..bought at 18 = +17
Other hedging trades = +10

Net P/L = +10 points

I was expecting more returns from this spread but market changed the direction..still there is time but its too far from the spot now...so better to start a new spread. I'm just waiting for the market to find another resistance so that we can buy another put spread with lower RR. :thumb:

 

[ananths]

1) In zerodha, it shows around 16K to 17K margin for each spread pair together. I trade only with 50% of total capital and remaining capital i use for minimizing the risk by selling OTM strike price.
2) Maximum risk is the price difference and max profit would be 100 minus max risk. (its usually R/R 20/80 or 30/70)

u bot 5200 pe and sold 5100 pe, 127 x 50 = 6350 premium paid and 98 x 50 = 4900 premium received ,
1) wat is the exact margin needed for this trade ?
2) wat is the max risk and max profit in this trade ?

 

[jagankris]

I have covered all the positions now in this spread..final status is below,


I was expecting more returns from this spread but market changed the direction..still there is time but its too far from the spot now...so better to start a new spread. I'm just waiting for the market to find another resistance so that we can buy another put spread with lower RR. :thumb:

Nice.
Why not start a call spread as the markets are trending UP ?
Rupee strengthening.
Govt may not like the share markets to fall again to 5100 - just political with elections nearing.
Any specific reasons for bearish put spread alone.