Option trading strategies that i hope will work.

[AW10]

i bought today 2 lots 2900 pe at 137 and 2 lots 3100ce at 116 .........( not simaltaneously....at different times)

my plan is ....if my 2900 pe points reaches 253 + brokerage....i will square off my pe ......then i will breakeven........having 3100 ce for free........

I wish to know that my plan is correct ....i seek suggestions and explanations against this .....because if it works ......i wish to follow this strategy again........kindly advice me.....

regards
vijayakumar

The postion that u are in is "Long Stangle..". You can read a lot on this.
Your cost of this joint positon is 253. The breakeven point for this trade is 2900-253 = 2647 on lower side, and 3100+253 = 3353 on upper side. i.t. Nifty has to cross 2647 or 3353 before expiry for this position to make money. If nifty does not cross these levels then with each passing day, your options will loose due to time decay.
This position will always have one loosing leg. Only when NIFTY crosses these Breakeven level, gain of one leg will be more then loss on other. Otherwise, sorry to say, IMO, it is loosing trade.

You want to sell PE at 253 but do you know what will it take to make the premium of 2900 PE equal to 253 ? What is the probability of those condition to come before
expiry ?

Do think on these lines.. Read about Strangle strategy and find out when is the right time to use them and most importantly when not to use them.

Happy Trading.

 

[terminator_123]

The postion that u are in is "Long Stangle..". You can read a lot on this.
Your cost of this joint positon is 253. The breakeven point for this trade is 2900-253 = 2647 on lower side, and 3100+253 = 3353 on upper side. i.t. Nifty has to cross 2647 or 3353 before expiry for this position to make money. If nifty does not cross these levels then with each passing day, your options will loose due to time decay.
This position will always have one loosing leg. Only when NIFTY crosses these Breakeven level, gain of one leg will be more then loss on other. Otherwise, sorry to say, IMO, it is loosing trade.

You want to sell PE at 253 but do you know what will it take to make the premium of 2900 PE equal to 253 ? What is the probability of those condition to come before
expiry ?

Do think on these lines.. Read about Strangle strategy and find out when is the right time to use them and most importantly when not to use them.

Happy Trading.

Also, the big swings in nifty are slowly ironing out... the trading range seem to have transformed from 2700-3200 to 2850-3100... so better break out or cut losses when you can.. sell both of them separately (like you have bought) when the trend is in your favor..

 

[AW10]

Sharekhan does not allow After mkt order in F&O segment (as of 13-Nov-08).
They allow it only for equities. ICICIDirect does allow this in F&O segment.

Haven't verified exchange acknowledgement of my order so don't know exactly when they are transferred. I use limit price in all my after mkt orders so that I know at what price my orders will be executed..

Happy Trading.

 

[chandra_mohan7519]

Dear PKSDEN,


I wish to inform you that AW10 Sir is on vacation.... so your post may get delayed to answer... Hope once he is back sure he will try his best...


regards
chandra mohan

 

[detrich]

Dear readers of this thread,

I am so sorry I have not been able to update this thread. But as soon as I get something worthwhile I definately. The only advice that after reading so many posts is that please do not go in for stragles and spreads without having a proper confirmation. Because this are trading markets. There will not be greatr deal of movement so end of the day they will just bite the dust due to time decay.

 

[AW10]

Can you confirm if ICICIdirect .. charges correct margins in multi-leg option trades. I once tried Bear put spread which should not have any margin but they charged. Secondly though 2L / 3L is mentioned in documentation I could not find any form to execute those orders. Their customer service also did not reply. In standard call/put orders i incur nearly 2% brokerage..
I would like you to also recommend a good online trading provider for Options with multi-leg trades, low margins and low brokerages.. i checked with indiabulls and 5paise.. they had same brokerage for options..

Sorry for the delay in reply.
ICICIdirect charges margin for any short option positions. They don't care if you have long position or not / what is their risk due to spread etc.
2L/3L trades - I couldn't figure that our too. so gave up. So living with the limitation of thier platform.
I am quite poor in finding right broker and testing their platform. So can't recommend any borker for multi-legged strategy. IMO, each broker's platform has some or other limitation.. so rather then looking for perfect solution, my approach is to be realistic and move on.
Certianly, I am open for others feedback if they find any good broker.

Happy Trading

 

[ramesh innani]

--------------------------------------------------------------------------------

http://essentialsb4uinvest.blogspot....system_12.html
USE THIS CHART FOR TRADING.

 

[gunavadhi]

thank you.i will try

 

[munde_77]

The postion that u are in is "Long Stangle..". You can read a lot on this.
Your cost of this joint positon is 253. The breakeven point for this trade is 2900-253 = 2647 on lower side, and 3100+253 = 3353 on upper side. i.t. Nifty has to cross 2647 or 3353 before expiry for this position to make money. If nifty does not cross these levels then with each passing day, your options will loose due to time decay.
This position will always have one loosing leg. Only when NIFTY crosses these Breakeven level, gain of one leg will be more then loss on other. Otherwise, sorry to say, IMO, it is loosing trade.

You want to sell PE at 253 but do you know what will it take to make the premium of 2900 PE equal to 253 ? What is the probability of those condition to come before
expiry ?



Do think on these lines.. Read about Strangle strategy and find out when is the right time to use them and most importantly when not to use them.

Happy Trading.

Usually everyone (on tv or by brokers) ask to buy one put and one call .So I used to buy one put and on call and lost most of the time, but now a days I do opposite. Sell one call and sell one put.These strategies are best in range bound market. If volatile avoid. By doing opposite I am gaining overall.

Sell PE 2600 76 Sell CA 2900 64
So the breakeven will be on dowside 2460 and on upside 3040
Usually I make money like this only. Any comments welcome

 

[bandlab2]

Usually everyone (on tv or by brokers) ask to buy one put and one call .So I used to buy one put and on call and lost most of the time, but now a days I do opposite. Sell one call and sell one put.These strategies are best in range bound market. If volatile avoid. By doing opposite I am gaining overall.

Sell PE 2600 76 Sell CA 2900 64
So the breakeven will be on dowside 2460 and on upside 3040
Usually I make money like this only. Any comments welcome

selling strangle is a good strategy. however this time market may test 2250. so be careful on downside. i would have sold 2800 call at 103 and 2500 put at 49