Nifty Options Vertical Spread Trading

[ananths]

Spread trade #2

Bot 6000CE/6100CE at 92/55
Total cost 37

Risk on trade 37 is bit high..but look at IV call side its 27...

Currently this spread has 5 points profit. Will reduce the risk by selling OTM calls 6200 tomorrow onwards if there is opportunity. It will give good rewards because currently high IV...if it falls, the option prices will be low.

 

[ananths]

Lil disappointed with my trade today. I got it right by selling 6200CE @ 30 in the morning...but did not cover when it was giving good 8 Points.Then kept a SL at 27 and it hit in a whipsaw. After that it went up to 17....my target was 20....
Now the cost of the spread reduced to 35.

 

[ananths]

Hi gmt900,

I took the following trade today:

SOLD OCT 5900C @200

5100P @52.5

BOUGHT SEPT 5950C @80

5050P @14

Total inflow 252.5

Total outflow 94.0

Net inflow 158.5

If I were to buy Oct 5950C and 5050P instead of Sept, there would have been no possibility of loss but net inflow would have been substantially less.

The BEPs are 4847.5 and 6152.5 on the lower and upper side resply.

This trade has to be closed before Sept expiry.

I have taken a fairly safe range of 800 nifty points, since I am trying the strategy for the first time. Even then because of the spectacular run of nifty,
EOD positon is as follows:

Oct 5900C -40
Oct 5100P +6.4
Sep 5950 +38
Sep 5050 -3.2

Total Profit 1.2.
Nifty has been making wild swings last few days. So I will have to wait for a few days before thinking about the adjustment I may have to do to this trade. As for the type of adjustments, I will have to think of alternatives and weigh pros and cons.
My purpose is to use this strategy for` regular income rather than expecting handsome profits. In the event of losses, they should be very small so that over a period of time one should make a decent profit, say at least 4% to 5% per month.

How is this trade doing now?
I just observed that you sold next month option and bought this month options...The market was in range bound this week so just want to know the outcome from this trade.
I think to get the time value benefit its better to sell the current month options rather than the next month...but you may have other plans to play the next month options.

Today I was looking to trade 50 point strike prices in NIFTY and they are tradeable now..with ask & bid of almost 1 point which is ok to trade.

I'm holding 6000CE/6100CE still and with a loss of 5 points as of now. Next weeks strategy would be to cover 6100CE for a good profit and use the 6050CE to hedge the long call...it has 14 points more premium than 6100CE and in the second half of the month time decay is faster...:thumb:

 

[gmt900]

Hi gmt900,




How is this trade doing now?
I just observed that you sold next month option and bought this month options...The market was in range bound this week so just want to know the outcome from this trade.
I think to get the time value benefit its better to sell the current month options rather than the next month...but you may have other plans to play the next month options.

Today I was looking to trade 50 point strike prices in NIFTY and they are tradeable now..with ask & bid of almost 1 point which is ok to trade.

I'm holding 6000CE/6100CE still and with a loss of 5 points as of now. Next weeks strategy would be to cover 6100CE for a good profit and use the 6050CE to hedge the long call...it has 14 points more premium than 6100CE and in the second half of the month time decay is faster...:thumb:

ananths,
I have closed the strategy with a 5 points loss. I realised that I was trying something by reading a book without clearly understanding the implecations.
Now I will try something simpler like credit spreads.
Will look forward to learning about your trades.
All the best !

 

[TraderRavi]

Spread trade #2

Bot 6000CE/6100CE at 92/55
Total cost 37

Risk on trade 37 is bit high..but look at IV call side its 27...

@ 13 Sep,
6000CE @ 62 (30)
6100CE @ 32 (23)
So 7 points in red , but as u paid more premium than u received, so if nifty does not move on upside, losa will increase, is it ?
and loss fixed at 37 points even if nifty goes to 3000 or 8000 ?

 

[ananths]

@ 13 Sep,
6000CE @ 62 (30)
6100CE @ 32 (23)
So 7 points in red , but as u paid more premium than u received, so if nifty does not move on upside, losa will increase, is it ?
and loss fixed at 37 points even if nifty goes to 3000 or 8000 ?

Yes sir....max losa is 37 and max profit would be 80 points.....next month onwards im planning to trade 50 point strike prices which will reduce max losa to 10-15 points.

 

[TraderRavi]

Yes sir....max losa is 37 and max profit would be 80 points.....next month onwards im planning to trade 50 point strike prices which will reduce max losa to 10-15 points.

ok this trade is bull call spread, will read this weekend about vertical spreads from guy cohen book to understand these.........

 

[TraderRavi]

Yes sir....max losa is 37 and max profit would be 80 points.....next month onwards im planning to trade 50 point strike prices which will reduce max losa to 10-15 points.

max reward = Difference in strikes - net debit = 100 - 37 = 63 points
80 points kaise ?

 

[ananths]

max reward = Difference in strikes - net debit = 100 - 37 = 63 points
80 points kaise ?

oh yes...its 100-37 = 63 points max profit in this case...I usually take 20 points risk and 80 points profit trade..but this time i took 37 points risk...
To cover this risk I sell OTM calls when market is going down...this time i sold 6200CE once..but did not book profit timely.

 

[ananths]

Now 50 point strikes available in NIFTY its great benefit for spread traders...you can get pair with 15-20 points risk now and can do day trading or short term trading with minimum risk and if there is 50 points move in nifty it can generate 5-10 points per lot.