Lets develop a strategy

jamit_05

Well-Known Member
#21
Based on something similar to what rkkarnani has posted, if one has to sell OTM opions, How to decide at what strike should we sell???
RKK has stock and is selling OTM options against them.

For ex. if you were holding SBIN of whatever rate. Then find out a strong resistance... which is 1800.

Sell 1800 CEs for Rs.10 now.

The expiry could close above 1800, in which case you will have to cough up the difference. Else, the Rs.10 premium is yours.

Most options expire worthless, so this approach has an additional edge for the writer. However, you much know in what market conditions to sell.

Right now, the market is threatening to break all resistances... so selling may not be advised.
 

rh6996

Well-Known Member
#22
Trying to Post trade details of Selling OTM Options in 2013 as per a Chandeliers Stop :

01. 27 Dec 2012, Buy signal, Selling PUT for Jan 2013 Strike : 5800, chandelier value is 5766. Nifty Future closed at 5914 !

5800 PE Jan 2013 Sold at close on 27th Dec 2012 @43.10
Thereafter till expiry did a high of 44 and ended at zero !

02. 4th Feb 2013, Sell signal, Selling CALL for Feb 2013 Strike 6100, Chandelier at ~6120. NF closed at 5996.

6100 CE Feb 2013, Sold at close on 4th Feb 2013 @ 37.00
Did a high of 35 and ended at zero!

03. 6th Mar Buy Signal : NF close 5841 Chandelier :5673
5700 PE March 2013 Sold at close on 6th March @ 25
Did a high of 46.60 on 14th Mar when NF did a Low of 5805 and closed at 5940. Also noted that 5700PE did a low of ~8.30 !

Sell signal came on 18th Mar and Put was covered at ~18.40 and a Call of strike 6000 was sold at 13.65 and this expired at zero.

(Shall post for other months soon, as its quiet cumbersome to get the Option data.)
 

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