Earn 180% profit through nifty strategy

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R

rajgiri21

New Member
#31
#31
linkon7 said:
Your intention is to exit nifty below ur strike price... and buy it back when it climbs above it.

I would rather Initiate a Naked 5200 put short.

When I initiate the naked put short, my view would be that NF will take support above 5215, the low of the day, when we gap-ed up and extended the whole EOD trading range upwards. Everyday, the market dynamics change and depending on my current view, my action point can be to

short nf below 5200 and make it a covered put..
or
buy 2x 5100 put and make it a ratio spread...
or
buy 5300 put and make it a bear spread...

The potential profit /loss curve of your covered call (nf long + 5200 call short) is exactly the same as my naked 5200 put short...! Difference is in the variety of action points.

Trading options is a whole different ball game. There has to be room to alter the delta of your positions and you have to cater to all what if scenario...
Click to expand...
Dear Linkon 7,

If we initiate a 5200 PE short, if the market moves to 5500 on expiry i will end up in loss right? Say at current price 5200CE Aug is 165 and 5200 PE Aug is 105, if i sell both it will give me a premium of 270 points. But then if on expiry nifty is @ 5500, CE will be 300 and PE will be 0, which will be a 30 points loss to me and the same goes if market closes below 4900.

In the option u said the profit depends on the movement from my strike price say if it closes away 100 points from 5200 either way my profit will be reduced by 100 points.

It increases my profitability but on whipsaws wont i be in trouble? or shd we exit on certain points? And also pls throw some light on how much margin will they charge for this hedging!!!

Thanx in advance!!!
 
DanPickUp

DanPickUp

Well-Known Member
#32
#32
rajgiri21 said:
Dear Linkon 7,

If we initiate a 5200 PE short, if the market moves to 5500 on expiry i will end up in loss right?
Click to expand...
Dear Rajgiri21

Ups, your option knowledge :) ? or was it just a typing mistake

Short put = Market must move up, so we buy back the short put for less money.

Short call = Market must move down, sow we can buy back the short call for less money.

Fun beside: It was meant in the whole context of your question. I am clear about that.

Now to what you mention: If you implement such a strategy, short straddle, you would only do that when volatility in the market is high and when the market is trading in a range.

Use Option Oracle to see your break evens, as the break evens on each side are your stop loss points or your adjustment levels for the short straddle.

Margins to enter any short leg in India is 25'000 Rp, which must be in the account at the moment you enter the trade. After both legs are implemented and you are hedged, you should have a reduced margin. Ask your broker as they have different margin rules.

Good trading

DanPickUp
 
Last edited:
R

rajgiri21

New Member
#33
#33
DanPickUp said:
Dear Rajgiri21

Ups, your option knowledge :) ? or was it just a typing mistake

Short put = Market must move up, so we buy back the short put for less money.

Short call = Market must move down, sow we can buy back the short call for less money.

Fun beside: It was meant in the whole context of your question. I am clear about that.

Now to what you mention: If you implement such a strategy, short straddle, you would only do that when volatility in the market is high and when the market is trading in a range.

Use Option Oracle to see your break evens, as the break evens on each side are your stop loss points or your adjustment levels for the short straddle.

Margins to enter any short leg in India is 25'000 Rp, which must be in the account at the moment you enter the trade. After both legs are implemented and you are hedged, you should have a reduced margin. Ask your broker as they have different margin rules.

Good trading

DanPickUp
Click to expand...
Dear Dan,

Lol.. It was typo error!!! :)

Yeah thanx it would be gr8 if the market is in range!!! Regarding the margin i thought it would be 25,000 less the premium which is effectively abt 13,000.. but if we take this we will always be out of the money in one option, so i wanted to know whether we wil charged more!!! anyways tat i wil check with my broker!!!
 
linkon7

linkon7

Well-Known Member
#34
#34
rajgiri21 said:
Dear Linkon 7,

If we initiate a 5200 PE short, if the market moves to 5500 on expiry i will end up in loss right? Say at current price 5200CE Aug is 165 and 5200 PE Aug is 105, if i sell both it will give me a premium of 270 points. But then if on expiry nifty is @ 5500, CE will be 300 and PE will be 0, which will be a 30 points loss to me and the same goes if market closes below 4900.

In the option u said the profit depends on the movement from my strike price say if it closes away 100 points from 5200 either way my profit will be reduced by 100 points.

It increases my profitability but on whipsaws wont i be in trouble? or shd we exit on certain points? And also pls throw some light on how much margin will they charge for this hedging!!!

Thanx in advance!!!
Click to expand...
where have i mentioned shorting 5200 call...:confused:

5200 put short.. has exactly the same effect as your NF long and 5200 call short position... and carries the same risk profile.... difference is in the way of what-if scenario handling...
 
K

kundank7

Member
#37
#37
Can Someone help he, I wanted to put one strategy in AMIBROKER. Since I do most trade in Bank Nifty Future.

Strategy - Automatic Buy Trigger "Open Price and Low Price is same then go long''

Plz some one help me.....
 
onlinegtrash

onlinegtrash

Well-Known Member
#38
#38
Step 1: Buy Nifty futures for the near month say now Nifty 31Aug 2012 @ 5265

Step 2: Sell "in the money" option say 5200CE 31Aug2012 @ 165
Click to expand...
This is same as selling naked puts!
Its not 'risk capped' but 'reward capped'...

Think what happens when market falls drastically and goes below 5100.
Your CE profits stay 165 max but losses from futures will continue mounting if markets continue falling.
This is actually more risky than you think because the risks are hidden and unlimited.
You will be winning for 8 months in a row but one drastic loss (like that of infy yesterday) can take away all the profits plus equity.
Ofcourse...there are naked put sellers out there making a living, but make sure you understand the risk!

Note: am not options pro, if you find something wrong in my statements do correct me!
 
R

rkkarnani

Well-Known Member
#40
#40
kundank7 said:
Can Someone help he, I wanted to put one strategy in AMIBROKER. Since I do most trade in Bank Nifty Future.

Strategy - Automatic Buy Trigger "Open Price and Low Price is same then go long''

Plz some one help me.....
Click to expand...
Dont use Amibroker, but have this in my record, see if this is what you need.

***************************
Buy = Open == Low;

Sell = Open == High;

Noise = High > Close;

AddColumn(Open,"Open");
AddColumn(Close,"Close");
AddColumn(High,"High");
AddColumn(Low,"Low");

Filter= (Buy OR Sell) AND Noise;

AddColumn(IIf(Buy,Open,Null)," open=low ", 6.2,1.2,colorGreen);
AddColumn(IIf(Sell,Open,Null)," open= high ",6.2,1.2,colorOrange);

*****************************************************
 
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