Option trading with DanPickUp

[DanPickUp]

Hi Dan,please correct if I am wrong. I am implementing a notional Iron condor.
Say Nifty is at 4800, I know there is a solid support at 4800 and a bounce can come any time. I sell a credit put spread at 4800. Say I am proved correct and market bounces to 5000 and now I know there is a strong resistance at 5050, so I leg in a credit call spread at 5000

1. Is this the correct way to implement Iron Condor
2. What to do if Nifty dosnt rises and falls

Dear Jain.er

- What you show is a way of many ways to implement such an iron condor. First a directional trade and then again a directional trade. Very fine but there is no absolute correct way, just different ways. I mean: Test what is possible in your market. Play around with ideas and you will find many other ways to trade options. I also had to learn it like that.

- What would you do if Nifty does not rise and fall ?

DanPickUp

 

[jain.er]

Dear Jain.er


- What would you do if Nifty does not rise and fall ?

DanPickUp

I knew this question was coming

May be buy back the spread and sell another one may be one or two strike lower

 

[DanPickUp]

I knew this question was coming

May be buy back the spread and sell another one may be one or two strike lower

Dear Jain.er

http://www.traderji.com/options/66266-option-trading-danpickup-4.html#post644483

If Nifty not moves much, then vola will be low.

Some other simple strategies you can do in such cases:

- Calendar calls or calendar puts.
- Covered calls or covered puts.

Good trading

DanPickUp

 

[tnsn2345]

Dear Dan,

Good initiative to start a thread on such a subject which IMO is quite difficult to explain/ teach through written communication. I have gone through the entire thread and appreaciate all the hard work - posting charts, links etc, you have put in to make the topic lucid.

With your permission, I would request all newbies / budding options traders to take real trades (only ONE lot setups will do) to understand and experience yourself what all Dan has written and will write here. Treat losses, if any, in such trades (by trading ONE lot setups) as fees you have paid to learn the art from Dan. But that will make your learning faster and also help you pose real life questions for discussion on this thread.

Best wishes,

Regards,

 

[DanPickUp]

Hi

Some thing to test or to question your TA skills. TA skills either used on pure price action or used with what ever more or less quit simple TA systems which are presented here in this forum ( MA's, Bollinger Bands, Volume, RSI, ADX ). The link was posted a long time ago from Placebo:

http://www.chartgame.com

Implementing options can be done on pure TA. Most of the directional option traders do make there decisions on TA and many, many fail. Why? They do not give enough time to the live of the option or/and choose completely wrong entry levels on the chart.

Short time options have a fast time decay and as market many time first go in the opposite direction, specially when entered on the wrong levels, the value of the options looses heavy and then market changes in the direction we assumed right, but the loss now is so big on that short time option that the value not can recover. Keep that in mind and be very careful when starting to trade options in that way !

Next point: Depending on the time frame and implied volatility you also will have to choose between itm, atm or otm options. Your work to test what works best in your market.

Third point: Also be very sure about the quality of the filled's with market orders on short time frames. The bid ask spread can easy kill any of your possible profits. If market orders are filled very badly, you can change to limit orders. But this kind of directional option trading then is done better on bigger time frames as limit orders are only filled when limit is reached.

Have a nice weekend

DanPickUp

 

[Option.Trader]

Dan,

I have been reading your posts with interest. I feel the advanced strategies are good to execute in US markets where the far month options are liquid. People have made huge money in Options and the book Big short shows one of them. But in India, only the current and near month options are really liquid and ner months premiums are huge. I believe only writing options will ever make money in Indian markets. Writing in trend 10 days before the next month contract starts, is a good way to collect huge premiums.
As an example, at the start of June month, the trend was down, and approaching the support levels of 4800. it even went down to 4760. The Nifty 4700 Jun PE was trading at 110. With a double bottom formed, it was a low risk strategy to sell the put. If you had done so, today the premium is nearing 20.. a profit of nearly 90 rs in a week. The same holds good with the current trend. As nifty approaches 5200CE which is a strong resistance, writing a 5200 CE at say 100 should be very profitable

 

[DanPickUp]

Dan,

I have been reading your posts with interest. I feel the advanced strategies are good to execute in US markets where the far month options are liquid. People have made huge money in Options and the book Big short shows one of them. But in India, only the current and near month options are really liquid and ner months premiums are huge. I believe only writing options will ever make money in Indian markets.

Writing in trend 10 days before the next month contract starts, is a good way to collect huge premiums.

As an example, at the start of June month, the trend was down, and approaching the support levels of 4800. it even went down to 4760. The Nifty 4700 Jun PE was trading at 110. With a double bottom formed, it was a low risk strategy to sell the put. If you had done so, today the premium is nearing 20.. a profit of nearly 90 rs in a week. The same holds good with the current trend. As nifty approaches 5200CE which is a strong resistance, writing a 5200 CE at say 100 should be very profitable

Dear Option.Trader

I am clear about some of your comments and that is why I told to be careful when trading options on pure TA in India.

Even than: Thanks to give a hint to the option traders in Indian market as I only can give ideas from outside. Hope some other Indian option traders do comment on your idea or will come in with other comments or hints.

Thank you

DanPickUp

 

[prabhsingh]

If you are option writer and eating out premium then does Mark to Market happens on daily basis if the underlying Instrument moves in Opposite direction?

 

[jain.er]

Ys MtM happens on daily basis, whether you buy or sell options

 

[Option.Trader]

Its much better than Futures. You can supply margin and this moves the stop loss trigger price to a more manageable level