What are the criterias to choose any kind of option strategy?

[DanPickUp]

Dear Aditya

The analyze picture you show is very nice. Risk reward looks good. If market moves down to around 4700, you even have the maximum profit for that particular strategy and if it further moves down you have a broken leg which still can make money.

If you want to bring up the up tail of the strategy, play around with your matrix. I am not familiar with a system which only has at each 100 point strike level one option. The markets I trade have some times on each 0.5 point strike level an option and so you can fine tune the strategies down to 0.5 point market moves. To explain here such kind of absolute fine tuning would not make any sense. As told, the picture you show makes absolute sense if market now makes a down move.

Any way: We have the fourth criteria on the table: Direction of market as we not implement a bear strategy when market is likely to move up.

Good trading

DanPickUp

 

[Sunny1]

Dan...

Just now I am thinking about straddle /strangle...I am not option geek...yet...but wanna try..

Every month nifty makes about 250 point move in either direction...there fore going long straddle /strangle makes sense.

So my plan is : buy atm ce and pe start of every month... and close either when nifty crosses 250 point move..

As I am not option expert ...I dont know pitfalls I might face .So I want you to guide me and tell how is the plan...though I am studying any draw backs I might face

 

[DanPickUp]

Dear Sunny1

Do you have any option analyzing software running on your computer?

 

[Sunny1]

Dear Sunny1

Do you have any option analyzing software running on your computer?

YEs option oracle...just downloaded

 

[DanPickUp]

Now, before asking to many questions, please play around with your matrix. That is the way I/We also have to do it. By doing so, many questions will be answered and what is not answered post and ask.

If any one want to go in to deeper option trading strategies, this kind of work is daily work. If you not like to sit down and analyze on your matrix, then the time will come you will lose your patient in it. As markets move every day, you any way will have to use your matrix to see where you are with your positions.

Giving a live example from parts of my work:

In the last two weeks I did again analyze around 100 files full with different trading strategies on any kind of levels. Absolute theoretical work and even I had to tell my self: Stay cool and work through it. I am clear, that it is very dry work, but there is no go around it.

DanPickUp

 

[Sunny1]

yes I am playing with it.....I have no problem analyzing whole day ....as it is interesting.

The reason I ask you is because I am going to apply this strategy tomorrow itself otherwise i have to wait one month.

In hurry I do not miss anything so asked .....

as option is tough to understand I will go slow with my playing and analyzing

 

[adityasaraf007]

Dear Aditya

The analyze picture you show is very nice. Risk reward looks good. If market moves down to around 4700, you even have the maximum profit for that particular strategy and if it further moves down you have a broken leg which still can make money.

If you want to bring up the up tail of the strategy, play around with your matrix. I am not familiar with a system which only has at each 100 point strike level one option. The markets I trade have some times on each 0.5 point strike level an option and so you can fine tune the strategies down to 0.5 point market moves. To explain here such kind of absolute fine tuning would not make any sense. As told, the picture you show makes absolute sense if market now makes a down move.

Any way: We have the fourth criteria on the table: Direction of market as we not implement a bear strategy when market is likely to move up.

Good trading

DanPickUp

For Nifty all the Strikes are 100 points apart..... We cannot create any other Strikes....

BTW, today all the Global markets seem to be Up..... Anyways, we have a long series which expires on 30th Aug... Let's see.... We might also see some major positions being created tomorrow as it would be the first day after expiry....

 

[DanPickUp]

Dear Sunny1

By the way: That was not a personal critic. Just the way it is in that very specific kind of option trading business.

Now to your straddle and strangles. If you do it the first time, please do it on paper . Why? Do it and then let us look at it in two weeks. By the way: Keep an eye on time decay

Good trading

DanPickUp

 

[Sunny1]

Yes I will keep eye on time decay ...as I played option in past ..so time decay and volatility I am aware of...

I am in the trade lets see what happens..... I am somehow sure this will work..

position: 5100 CE PE (204.75 total)

 

[DanPickUp]

Yes I will keep eye on time decay ...as I played option in past ..so time decay and volatility I am aware of...

I am in the trade lets see what happens..... I am somehow sure this will work..

position: 5100 CE PE (204.75 total)

Ok. Now long call 5100 and long put 5100. Fine.

What is your next step? Just waiting what happens or what is in your mind?

Could you post a screen shot from your market?

Time frame one bars and is it possible for you to update this screen shot and your positions shown in Option Oracle day by day in the coming three weeks every day to compare some data include your live traded straddle?

DanPickUp