Advanced Nifty Option Strategies

[mangup]

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.

Hi,

I don't know much about the gamut of various Option strategy in various situations. Can u pl suggest a strategy on my below expectation/situation?

1. I want to take positions in Positional Nifty Options only.
2. I don't want to take a directional call (No bias).
3. I want to take position in "sell option" to avoid any depletion in time value appreciation becoz of sideways mvt.
4. I don't want any appreciation in basic price mvt.
5. My intention is to capture only time value appreciation.

Can anybody pl suggest an option strategy and also the approximate %ROI p.m.?

 

[singlap]

Short strangle is a best strategy for you. It fulfills all your requirements. Advisable to short Dec. strangle only after expiry on thursday, may be on friday once the market settles. If things go well , returns of 5 to 15% are achievable but .... yes risk is unlimited unless you do some adjustments.

 

[DanPickUp]

Hi

Just a little very important update to why I mentioned to close short legs a few day before expiry if trading the threads idea which is a hedge idea

http://i50.tinypic.com/xd6l3.png

If you analyze the above matrix from today, you see that the shorts if not bought back enough early would have lost heavy. The 5700 call which was sold for around 8 Rs is now at 121 Rs and that is quit a loss in which nobody is interested when trading such short strangle ideas. Keep that example here in mind when doing it with real money.

Good trading

DanPickUp

 

[raknahs]

Dear Friends,

I apologize for falling out of your planet, I had some issues and was not able to access my blog, finally today I got it sorted.
I was pleasantly surprised to see so many people joining here and thanking me.Thanks to everyone who got here.
I did not have time to check all the questions of the past as there were so many,so let me start afresh and answer anyone who has new questions.
I will also go through some of the questions and answer them in my next post or to individuals seperatly.
Kindly remember that I am also learning and do not have answers for all your questions and thats the main reason I am here which is to learn from you all too.
my next post will have answers on the brokerage,margin requirement and some tips to negotiate with your broker
happy trading....
Hi DanPickUp, you seem to be very experienced in selling options and the greeks,nice to meet you here..i will respond to your threads soon.thanks.

 

[vssoma]

dear,
check this one....may be it suits you.

http://www.facebook.com/NFOStressfreeTrading

Hi,

I don't know much about the gamut of various Option strategy in various situations. Can u pl suggest a strategy on my below expectation/situation?

1. I want to take positions in Positional Nifty Options only.
2. I don't want to take a directional call (No bias).
3. I want to take position in "sell option" to avoid any depletion in time value appreciation becoz of sideways mvt.
4. I don't want any appreciation in basic price mvt.
5. My intention is to capture only time value appreciation.

Can anybody pl suggest an option strategy and also the approximate %ROI p.m.?

 

[option writer]

dear,
check this one....may be it suits you.

http://www.facebook.com/NFOStressfreeTrading

what is their in site, i checked , nothing...like any article, strategy, reading materiel or something...

why ji...

 

[vssoma]

what is their in site, i checked , nothing...like any article, strategy, reading materiel or something...

why ji...

i was just referring abt strategy only....
by the way aap ko aur kya chahiye OW bhai

 

[mangup]

dear,
check this one....may be it suits you.

http://www.facebook.com/NFOStressfreeTrading

Hi vssoma,

Thanks for suggesting the strgty. Can u pl explain it with some examples? May be a backtested results over a considerable period will suffice?

 

[shahsagar]

so wads d position.......wad one should do nw in delta ..

 

[singlap]

Strategy given in the link is collar with slight modification. Collar is used when one is conservatively bullish.
Lower level put is purchased in order to prevent loss from downside. But as suggested in the modified strategy , if you are buying two puts , you are going to incur more money and in case market moves up , it has potential of making small loss.

Net net it may not give great ROI which any option trader is looking for.

I 'll give live example with calculation if somebody is interested.