Trading NR7 setup

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Sunil

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If the HOD & LOD are held strictly till EOD, then we have an NR4 day - a small step of contraction towards the Budget Day.
another contraction day tomorrow will be like an icing on the cake - a morale booster for straddles/strangles
 

AW10

Well-Known Member
Murtaza,

What are u exits - i.e. Target and stoploss ?
As you are long on the options - do u have any timebased stop criteria ? (i.e. if target or stop is not reached in next # days then close the position.

With long straddle, time decay is going to hit both long positions and one of the position is guranteed to be a looser cause market can be only at one place i.e either above 4300 or below 4300.
Because of odds stacked against straddle buyer, your exits are important. You want to see big move and if that doesn't happen then get out quickly either in profit or in loss.

Like we broke from NR7 days high of 4318 on the day of expiry and saw the 100 / 125 pts upmove in next 2 days. So if someone has not quickly encashed on this breakout then the position might be loosing money when market is retracing.

So get your exit plan ready in advance for all the scenarios.

Happy Trading.
 

MurAtt

Well-Known Member
AW10

Thanks for the warnings. Initially I had thought about just taking this straddle past the budget and exiting the same BUT now I am having some different thoughts.

ST da's view was different abt premiums being high now and will drop after budget, same with AK Ghosh on his thread -- so I will exit the straddle and try for a strangle or maybe sell a straddle for 2-3 days timeframe for drop of premiums (not yet decided - coz its a bit risky just in case the mkts move against me).

Lets see -- strangle is the best bet as of now, low investment, low risk BUT if nothing new in the budget then again a drop of premiums will erase whatever little value it has ...

ALL favours the market .. nothing to the trader .. Jai Ho
 

bandlab2

Well-Known Member
if u sell 4400 stradle based on closig price, you wold have got 420 points and this covers 4000-4800 range. as an insurance buy 5000 call for 26 rs and 3900 put for 58 rs, you still have 340 points in yr pocket.

i will paper trade this strategy. i dont expect a circuit break on monday or tuesday. if nothing happens in budget, expect the premims to drop substantially.
 

Sunil

Well-Known Member
If the HOD & LOD are held strictly till EOD, then we have an NR4 day - a small step of contraction towards the Budget Day.
another contraction day tomorrow will be like an icing on the cake - a morale booster for straddles/strangles
Yesterday was an NR4 day.

For NR4-2 / NR7 today, we need an intraday range of less than 100 pts in Nifty Future.

If done, then a minimum 200pts breakout/breakdown is nearly assured on Monday - the Budget Speech Day
 
Today ,If Nifty Doesnt break 4250 or 4440 this will be a NR4 on weekly . NR7 is missed by 3 points

Low High Diff
3673 4509 836
4092 4488 396
4450 4637 187
4365 4693 328
4207 4601 394
4143 4384 241
4250 4440 190 --- This week.

Naresh
 

AW10

Well-Known Member
Naresh, 3 or 4 points here are there are ok. Personally (and practically) , I would call it NR7 week and will be ready to take swing trade based on daily Timeframe on the break of it. In essence, it still means a week of narrow range (contraction) price movement which is good enough signal for swing trade on daily TF.

Day trade - look for NR7 on daily chart and trade intraday to benefit from expansion
Swing trade - look for NR7 on weekly chart and trade on daily timeframe for expansion.

Happy Trading.
 

AW10

Well-Known Member
if u sell 4400 stradle based on closig price, you wold have got 420 points and this covers 4000-4800 range. as an insurance buy 5000 call for 26 rs and 3900 put for 58 rs, you still have 340 points in yr pocket.

i will paper trade this strategy. i dont expect a circuit break on monday or tuesday. if nothing happens in budget, expect the premims to drop substantially.
Bandlab, certainly a nice option trade to benefit from high premium. Nicely covered for the risk as well.

Will be looking forward to discuss this. In my observation, straddle will never give max profit (cause difficult to find the strike price of 4400 where market will close on expiry)..
So always there will be some residual value in the straddle.
But we should close it before the expiry.
Till that time, let inevitable facts, i.e. time decay and drop in premium to reasonable level work in our favour.

Happy Trading.
 
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