Advanced Nifty Option Strategies

[gmt900]

I am sorry DanPickUp,
I did not mention this, but I had entered into short straddle @ 5900C for rs 18 and 5500P for rs 14. Hence , I have not taken any action to modify the trade so far. As of now 5900C is at 1.35 and 5500P is at 17. I intend taking action only if NF goes below 5500. In case I get to buy back both call and put for rs 5 or thereabouts I might square off the position and enter into a suitable short straddle for Dec series.
Thanks and regards,
gmt 900

 

[gmt900]

A CORRECTION. PLEASE READ STRANGLE IN PLACE OF STRADDLE.
gmt 900

 

[DanPickUp]

Hi

Dear Gmt 900, got your point and thanks to inform me.

Coming back to the original left three legs, we still have the long Nov 6000 call, the short Nov 5600 put and the long 5500 put. As market not want to move up as I expected because of the American market, lets find an other way to survive as we are on the down side in danger. Is this a problem? Not really if we know what to do. But what about volatility?

As we are never married neither to any strategy not to any trade, let us find a small solution to the given situation which looks like that: http://i47.tinypic.com/294jxhx.png. I explained what that means in the past and if you not understand, then read here again: http://www.traderji.com/options/74905-advanced-nifty-option-strategies-6.html#post740955 .

Now to just one solution with which we can handle to remove risk on the down side: We sell the Nov 5700 call now for 8.55 Rs. http://i50.tinypic.com/125mm48.png In that way we will bring in again some money in our account with no big risk. The whole strategy then looks like that: http://i45.tinypic.com/35bias9.png

Now we have space for the upside and on the down side any may little occurring loss is nearly hedged. With other words: We transferred the existing risk on the put side to the call side. Its a pure risk adjustment and such ideas and trades are the daily bread of any option strategy trader.

Good trading

DanPickUp

 

[DanPickUp]

Hi

As market finally moved up a bit, our Nov 5600 put has lost lot's of value. Yesterday we still had a value of Rs. 53.00 and now I see only a value of Rs. 31.00 and that means profit.

http://i49.tinypic.com/350qa0o.png

The new sold Nov 5700 call for 8.55 has now a value of 11.85. Next we can do is to risen our risk on the put side if we are bullish for tomorrow. We roll up the short Nov 5600 put in to a short Nov 5700 put. If market moves up, our profit will be bigger and our risk on the down side is again bigger. No risk no fun or no risk no profit. That is the way it looks now with the long Nov 5500 put, the short Nov 5700 put, the short Nov 5700 call and the long Nov 6000 call: http://i50.tinypic.com/21cefx0.png

Good trading

DanPickUp

 

[DanPickUp]

Hi

Only a few days more to go for that short strangle, which is at the moment a broken wing short butterfly or depending on the choices of the legs even a broken wing short condor.

Depending on your outlook for tomorrow: If bullish you would keep the position as it is ( broken wing short butterfly) and if bearish you could take the profit you made on the short 5700 put and roll it down again to a short 5600 put. You then would have again a broken wing short condor.

Get it or is this to much? If so, I told that I am going to watch the idea until it expires and then I any way will not confuse you more as I may already do. But that is pure option strategy trading and nothing else. And that are even normal strategies which not include any synthetic positions. I normally trade only synthetics, but that is stuff I not will teach on any forum. If you are interested in a synthetic strategy then you keep an eye on the following thread which is from an Indian trader and at the moment the idea is in profit. http://www.traderji.com/advanced-trading-strategies/76421-nifty-future-hedge-trading.html#post741664

Back to this thread: The rolling up to the short 5700 put gave a better return today compare to be short the whole day in the 5600 put. If you bought back the 5700 put even around the high today, you would have made around 25 to 30 Rs, which is not a bad profit for the idea in just one day. The short 5600 put had a smaller profit as it is not so much atm/itm like the short 5700 put.

But such plays also depend on how much you have to pay on commissions to your broker and how accurate your trading is. If very low commissions and watching the screen the whole day, you can do it and if very high commission and you not like to watch the screen all day long, you better not play such little games.

Good trading

DanPickUp

 

[BlackHwk]

Ufff.. What an informative thread!
Thanks a ton for sharing.

Hope to hear a lot more from you Dan.

 

[gmt900]

Hi

Only a few days more to go for that short strangle, which is at the moment a broken wing short butterfly or depending on the choices of the legs even a broken wing short condor.

Depending on your outlook for tomorrow: If bullish you would keep the position as it is ( broken wing short butterfly) and if bearish you could take the profit you made on the short 5700 put and roll it down again to a short 5600 put. You then would have again a broken wing short condor.

Get it or is this to much? If so, I told that I am going to watch the idea until it expires and then I any way will not confuse you more as I may already do. But that is pure option strategy trading and nothing else. And that are even normal strategies which not include any synthetic positions. I normally trade only synthetics, but that is stuff I not will teach on any forum. If you are interested in a synthetic strategy then you keep an eye on the following thread which is from an Indian trader and at the moment the idea is in profit. http://www.traderji.com/advanced-trading-strategies/76421-nifty-future-hedge-trading.html#post741664

Back to this thread: The rolling up to the short 5700 put gave a better return today compare to be short the whole day in the 5600 put. If you bought back the 5700 put even around the high today, you would have made around 25 to 30 Rs, which is not a bad profit for the idea in just one day. The short 5600 put had a smaller profit as it is not so much atm/itm like the short 5700 put.

But such plays also depend on how much you have to pay on commissions to your broker and how accurate your trading is. If very low commissions and watching the screen the whole day, you can do it and if very high commission and you not like to watch the screen all day long, you better not play such little games.

Good trading

DanPickUp

Dear DanPickUp,
I have learned a lot from this thread. Since I had written short strangle with 5900C and 5500P, I did not make any adjustments to the trade. However, i now have a good idea about the risk management of short strangle. I intend writing short stangle for Dec series. Just mulling over suitable strike levels for call and put options.
Thanks and regards,
gmt 900

 

[DanPickUp]

Hi

Tomorrow it may would be best to buy back in the morning the short 5700 call as market could really go up strongly. Why do I think like that? The Dow made quit a move up and the possibility is given that Nifty also makes a jump up. As we not need the short 5700 call, it is no problem when we trade with the left three legs. We still can short it again in case market turns down in a later stage.

Good trading

DanPickUp

 

[DanPickUp]

Hi

I watched your market punctual today and the short Nov 5700 call was never in big danger as time decay worked again for us over the weekend.

So we could have kept the leg with out selling it.

Now what about tomorrow?

Dow should have reached today its upper level in the down trend and moves down again as expected. This also is good for the trade as market will stay in the range and time decay will further work in our way. Means: Also Nifty should come back a bit tomorrow and that;s fine.

So no further update on the strategy. We just would let it stay as it is with three or even four legs.

Good trading

DanPickUp

 

[DanPickUp]

Hi

http://i49.tinypic.com/mr7cw1.png

Under the given market conditions I would square off both short legs. Option expiry weeks are always explosive and one rule is to take out the risk two or three days before expiry.

The profit made today with the short Nov 5700 put is around 50 Rs and the loss made with the short Nov 5700 call, if you still would have it is around 20 Rs if not bought it back until now. If you bought it back yesterday or this morning, you would be with even less or no loss on that shorted call.

As we now made a profit of nearly 100% on the Nov 5900 call (43 Rs), a profit of around 14 Rs on the Nov 5600 put, a profit of around 75 Rs on the 5700 put, we have Rs 132 profit minus the loss of around 22 Rs from the long legs and depending on the behavior with the long Nov 5700 call a loss of 10 Rs = Around 90 - 110 Rs profit on that strategy. Still a winner and a prove that pure option strategy trading in India can be profitable. The strategy can be fine tuned by using proper Nifty charts, what I never was doing all the times here. I always had a look at the Dow and then compared it with some Nifty moves and out of that I made a market direction prediction which sometimes worked and other times not so well worked.

Timepass: My job is done here, as I told I will watch the trade until end and today we would close it or if you still want to hold the long Nov 6000 call and the long Nov 5500 put, which both have no value and only could get in profit if market suddenly makes any huge jump again in any direction, that's it. We then would have started with the short strangle and we let it expire with a long strangle.

Good trading

DanPickUp

Edit: Maybe the thread owner would like to say some thing after all and never hearing from him.