Regular Income From Markets. Risk Free. Takes no Time

[jamit_05]

August Series?

August series... yes.

Aiming to gain 2% time decay with each passing day. Will post the change in premium each day. If at some point we feel that there is a big move in the offing, we could either buy them back or take a futures position.

So, pls keep the thread posted with any important impending news.

Tks.

 

[vssoma]

Details of trade:

Shorted 50 OTM pairs:

5200 CE 96.35
5100 PE 79.35

Credit 175.70 - 3.70 expense = 172 credit.

Thus our breakeven point on the:

upside is

​

5200+172 = 5372;
downside is

​

5100-172 = 4938;

Will look to cover with equal number of future lots.

dear jamit,
can u pls. let us know how much margin is blocked for your two positions, cause now a days almost all are offering covered margins, ( short+buy = no extra margin), where , you shorted two different elements.

 

[gurmy.]

Shorting a pair of 50 OTM and receive credit. I hope to keep a big portion of this credit. How will that be done? By use of futures. The general way is going to be this.

Each time the price start to go above any of the strike I will purchase or short with futures as cover. I will hold the futures till the stop is hit or a reverse entry is given. I do not expect much income from the futures as it is not the idea.

The only Problem area is see is Huge insane gaps.

Will start it now... and will continue all month. I do not know about the rest, but Gurmy will sure thank this post . Hari I hope you are still around.

WELCOME BACK AMIT
it is my personnel understanding that in option trading real money is made by selling only,
all big players buy option,only to hedge their position,
one thing i would like to mention for the followers of this thread that shorting of option is a double edge sword
one big move will spoil every thing
so if u dont know how to handle big moves,dont attempt it
amit i like 100 otm,it give more room to play with
thanks and best of luck

 

[jamit_05]

dear jamit,
can u pls. let us know how much margin is blocked for your two positions, cause now a days almost all are offering covered margins, ( short+buy = no extra margin), where , you shorted two different elements.

Yes, this is margin intensive work. But, if it is successful then I guess it will be worth it.

I will inquire with RKG about "no extra margin" for the futures leg.

For options the margin is around 20K, for futures 28K.

 

[jamit_05]

WELCOME BACK AMIT
it is my personnel understanding that in option trading real money is made by selling only,
all big players buy option,only to hedge their position,
one thing i would like to mention for the followers of this thread that shorting of option is a double edge sword
one big move will spoil every thing
so if u dont know how to handle big moves,dont attempt it
amit i like 100 otm,it give more room to play with
thanks and best of luck

Thanks for the welcome and am glad you expressed your mind.

Yes, I am a little shaken at the thought of crazy moves, which come in forms of gaps or intraday moves. The atmosphere is such too.

Since, I will be following the pair on an intraday basis I will protect myself from most of the big moves...... except an unfortunate kind which comes when there is no cushion or futures lot to cover. A surprise gap, which comes after a prolonged sideways action.

Yes, 100/150 OTM is a better option. At expiry one would lose 50 points less with 100 OTMs, since one leg is definitely going to be ITM at expiry.

 

[gunsho]

Shorting a pair of 50 OTM and receive credit. I hope to keep a big portion of this credit. How will that be done? By use of futures. The general way is going to be this.

Each time the price start to go above any of the strike I will purchase or short with futures as cover. I will hold the futures till the stop is hit or a reverse entry is given. I do not expect much income from the futures as it is not the idea.

The only Problem area is see is Huge insane gaps.

Will start it now... and will continue all month. I do not know about the rest, but Gurmy will sure thank this post . Hari I hope you are still around.

Good luck my friend. Interested to see how you manage the futures trade. (like which timeframe to reverse / SL / re-enter).

Use to trade with straddles instead of the strangles which you have taken currently. Just wanted to share my knowings. Works as a good monthly cashflow. But some months with many whipsaws on the future trades, takes away the premium from shorts and will end up in minimal losses also. Ofcourse there is no holy grail :lol:.

Linkon thread on this.
http://www.traderji.com/futures/41903-target-500-nifty-points-per-month.html#post443841


Similar discussions.
http://www.traderji.com/advanced-tr...profit-through-nifty-strategy.html#post702782

 

[jamit_05]

Gurmy,

At expiry an option leg being ITM is damaging. This can be taken care of.

We are using futures to cover a leg. After a 100 point move we could square off the ITM leg and short the current ATM option. This loss can be offset by the futures profit. After two such shifts, we can have a good chance of keeping NS between the two strikes at expiry.

Lets see how the coming days unfold.

 

[jamit_05]

Good luck my friend. Interested to see how you manage the futures trade. (like which timeframe to reverse / SL / re-enter).

Use to trade with straddles instead of the strangles which you have taken currently. Just wanted to share my knowings. Works as a good monthly cashflow. But some months with many whipsaws on the future trades, takes away the premium from shorts and will end up in minimal losses also. Ofcourse there is no holy grail :lol:.

Linkon thread on this.
http://www.traderji.com/futures/41903-target-500-nifty-points-per-month.html#post443841


Similar discussions.
http://www.traderji.com/advanced-tr...profit-through-nifty-strategy.html#post702782

The only diff betw short straddles and strangles is the difference in strike. Is that what you mean? I have shorted 50 OTMs that is almost like a shorting a strangle.... however, I intend to convert it to Straddle before expiry using the futures profit.... I will try not to have a leg ITM at expiry... but cannot help it if it is a one side strong move...


I will be using the broadest timeframe to cover the option pair by trading futures. Hence, 15 or 30 mins... depending on the solidarity of the setup.

Thanks for the links.

 

[gunsho]

I will be using the broadest timeframe to cover the option pair by trading futures. Hence, 15 or 30 mins... depending on the solidarity of the setup.

Thanks for the links.

Straddle or Strangle is ok. I love this strategy, as this gives a good monthly inflow from the premiums + futures to cover the loosing leg of option.

What I wanted to share is the worst case situations => the whipsaws in futures trades.

For example, when you have shorted 5200CE+5100PE, you want to go long above 5200 and short below 5100 in futures (This is what I read in your first post). If you trade 15 min timeframe, I assume you wait for a close above/below strike price and take position. This will have some slippage (more with big timeframe). Sometimes considerable. And when market goes up and below some round numbers (5200 is one crazy number) considerable times, the brokerage + loss in futures will eat up a lot. If we have to live with this, we have to (doesn't happen all the months) .

 

[jamit_05]

LinkOn

Hi Gunsho,

Browsed through linkon's thread, a very elaborate, intense, advanced and informative at that.

It has drafted out some really nice techniques and thought processes to gain maximum profits. At one point the focus shifted from simply gaining from time decay of the shorted option pair to maximizing profits from NF. Now, that is a twist in the tale.

One snippet from the thread:


3400 CE bought at 230 has a current price of Rs. 234 is at a loss of Rs. -400
3400 PE bought at 215 has a current price of Rs. 148 is at a profit of Rs.6700
Nifty Futures long Innitiated at the averaged price of 3253 has a current price of Rs. 3473 is at a profit of Rs. 22000

Total = profit of Rs. 28300


Total profit is Rs.28300; out of that NF profit is 22000 and rest is of Options. This thread is trading futures aggressively. And that was possible in 2009... now the market is different, moves are sluggish and few and far between.


I have resorted to using a really broad timeframe to trade futures. So that, I have fewer futures trades. Hence, the focus will be only singular "defending the shorted pair". At month end, our majority profit will be from the option pair credit... that is around 175 points only. A little too simple... but easy (or so I think)