Nifty Options Vertical Spread Trading

[pakatil]

I entered Trade on 14 th. 5600 PE Long.....40, 5500 PE Short 20. At close it was in Loss of 6 pts.

Y'day we had gap down, my kneejerk reaction was to exit Short at Entry and ride the Long. Finally exited Long 102......62 pts gain. Surely not the way to Trade a Pair.

Overall in this month, Pairs have been profitable.

 

[DanPickUp]

I entered Trade on 14 th. 5600 PE Long.....40, 5500 PE Short 20. At close it was in Loss of 6 pts.

Y'day we had gap down, my kneejerk reaction was to exit Short at Entry and ride the Long. Finally exited Long 102......62 pts gain. Surely not the way to Trade a Pair.

Overall in this month, Pairs have been profitable.

So you had a debit spread and no credit spread. That is why you had only 16'500 margin in India, isn't it? or would your margin be the same with a credit spread in India? A credit spread vice versa your debit spread (5600 short and 5500 long)

 

[pakatil]

I don't know......debit or credit spreads. Still a novice in Options. Ys for this set up.....Broker charged 16,5000

Cheers

 

[DanPickUp]

I don't know......debit or credit spreads. Still a novice in Options. Ys for this set up.....Broker charged 16,5000

Cheers

That set up is a debit spread as you get less money with the sold option compare to your bought option. That even needs less margin in my place. On the other hand: If you got more money with the sold option compare to what you have to pay for your long option, that is called a credit spread and that even needs more margin over here.

http://www.theoptionsguide.com/debit-spread.aspx

http://www.theoptionsguide.com/credit-spread.aspx

 

[ananths]

I entered Trade on 14 th. 5600 PE Long.....40, 5500 PE Short 20. At close it was in Loss of 6 pts.

Y'day we had gap down, my kneejerk reaction was to exit Short at Entry and ride the Long. Finally exited Long 102......62 pts gain. Surely not the way to Trade a Pair.

Overall in this month, Pairs have been profitable.

Sir,
That was a good trade, though its not the way to trade pair, we are utilising the opportunity to get the max returns...after all that is what we need at the end of the day. However one who cant manage the risk should follow and stick to the plan.:clapping:

 

[abcpankaj]

-icicidirect offers lower margin on spreads , but there brokerage is way too high
-religare offered me spread margin @ 25% of normal option sell margin , can check that out
-one can use his long term portfolio of stocks/MF & get margin against it to improve yields
-don't know any reliable discount brokerage which offers margin against stock/MF holdings or lower spread margin vs naked option sell.

ps: As has been rightly pointed out that only nifty has enough volumes to trade spreads ( even bank nifty sept options had rs10+ bid/ask spread on friday open) , One can consider Usd-Inr currency options to diversify ..we have decent volumes there (but again not , a lot in next months series)

 

[abcpankaj]

regarding ratio spread :
for next few weeks horizon ,one can consider ratio of long one 5100 & short two 5000 sept puts for a credit of 22.
- if market keeps falling , keep the ratio on
- if market stops falling ,5000 puts can be covered for some profit & 5200 shorted to convert it into vertical spread



regards,

 

[ananths]

5400PE has highest OI and highest change in OI. Is 5400 acting as support?
IV in PUTs have reached 27+....

I'm holding debit bearish spread 5500PE / 5400PE..executed on Friday...Will look for another down move in NIFTY to exit around 5400 level.:thumb:

 

[ananths]

Market is falling below the Low of the Day...and change in OI is also changed to -ve for 5400PE.which was over 16,000,00..when I posted the above post..I'm bit confused now.. so exited the position at 5410 levels.:clapping:

 

[ananths]

my observation on change in OI was right...market fell further down and broke 5400..My target is 5350..Should have held the position. Now its too late to enter the trade again..so let me wait and watch.

I had 10% profit this month..So no need to hurry :rofl: