Best Option Strategy

[lemondew]

Thanks gemat,

This I think is good for index like nifty. Not stocks. Some stocks stay locked and stuck in a range for one full expiry and eat of all the premiums.

one hedging strategy that worked for me. but the profit is very less. when you have 20-30 days to expiry and when market is less volatile, buy slightly OTM PE and CE at the same price. exit both when you achieve your targets. buy on a Monday and hold on to it till Friday. don't hold it over the weekends. theta decay and other factors reduces the premium. this method is challenging during high volatile months premium increases and premium decreases considerably when volatility cools off.

 

[lemondew]

thats the prob dan. You havent given any specific statements which say something works better than the other. Or something which says something works better than the other in a scenario over a long term.

Many strategies cause confusions. One strategy which has a best chance to succeed after 100 trades sounds a good statement.

after 2 years I realise there is no fun in winning a trade. There is fun only after there is money made after a series of trades and there is net income despite the losses.

I say but with my limited experience with certainty.
1. Delta may or maynot work in your favour.
2. Vega may or may not work in your favour.
3. But theta always favours option sellers and it always works against buyers.

So if one bullish and the stock does move after 1 week. The kind of hit theta would give one wouldnt be holding naked buy CE options anyway. So non movement and upside movement both help put sellers as opposed to downside movement which harms it. 2:1

The probability of win for put sellers is higher than call buyers here. And offcourse you pay a higher price for higher probability trades. . The worst case can be handled with a SL which knows the max you can loose.

Did I do this statement with any clear words?

NO, as I just mentioned one other way of many possible other ways to trade an expected up move.


Now selling naked puts?

Do you have enough margins to do this in quantity, as profit is limited and loss in the worst case could harm any portfolio. Personal choice and if you have a big account, your decission.​

 

[gemat]

if my view on nifty is bullish

1) i sold apr 7700 call and i brought may 7900 call
or
2) i sold apr 7700 call and i brought 2 apr 7900 call
or
3) i sold apr 7800 call and i brought may 7600 call

Which strategy makes more money?

if your view is bullish 1 and 2 will end up in a loss. nifty spot is 7716. buy INM call option and sell OTM call option, then it will be the 3rd one. bull call spread .

 

[gemat]

Thanks gemat,

This I think is good for index like nifty. Not stocks. Some stocks stay locked and stuck in a range for one full expiry and eat of all the premiums.

yes you are right.:thumb::thumb:

 

[lemondew]

deleted post

 

[Somatung]

i

f my view on nifty is bullish

1) i sold apr 7700 call and i brought may 7900 call = Diagonal Spread with Calls
or
2) i sold apr 7700 call and i brought 2 apr 7900 call = Call Calendar Backspread. Here a Back Spread with Calls
or
3) i sold apr 7800 call and i brought may 7600 call = Same options strategie as in the first example

Which strategy makes more money?​

You have to understand the risk profiles beside the profit potential. Your question: Which strategy makes more money has to be changed to: Which strategy has the biggest profit potential? Answer to this will be choice number two when you are really bullish. If you are less bullish, maybe even side way, then choice one and three can do the job. Still: At the end it is how you manage the trade and this will make the different between each of those ideas.​

 

[Somatung]

@Lemondew

Now if you ask for: Which is best over an amount of trades? It all depends on how you manage those trades and how you choosed them. What does it help to say this and that is best when the one who takes it for granted will make wrong decissions, even if the one who told him this makes good money with it.

If you think you need some kind of guidance about this topic, you should follow this: In general and even by trading options on futures, you will do good with spreads, as you not will run all the time with full risk. So you will do call and put credit spreads in any way if you have less time, and you will do short strategies and leg in strategies when you have full time and take a bit more risk. If you really understand what you do, and you understand it really in dept and have the real education on it with a systematic approach, learned from a mentor which is a master on it, want to trade option strategies and not only nakeds, we then trade synthetic positions in an advanced way like market makers do. Such stuff you will not get for free in any forum nor over the net.

If you favor selling over period and if you own the share, your solution is simply Covered Call to start with. Acccording to market moves, you convert it into a Covered Call Collar.

Guess you have now enough understanding from where you will catch up and move on.​

 

[Striker]

@Lemondew

Now if you ask for: Which is best over an amount of trades? It all depends on how you manage those trades and how you choosed them. What does it help to say this and that is best when the one who takes it for granted will make wrong decissions, even if the one who told him this makes good money with it.

If you think you need some kind of guidance about this topic, you should follow this: In general and even by trading options on futures, you will do good with spreads, as you not will run all the time with full risk. So you will do call and put credit spreads in any way if you have less time, and you will do short strategies and leg in strategies when you have full time and take a bit more risk. If you really understand what you do, and you understand it really in dept and have the real education on it with a systematic approach, learned from a mentor which is a master on it, want to trade option strategies and not only nakeds, we then trade synthetic positions in an advanced way like market makers do. Such stuff you will not get for free in any forum nor over the net.

If you favor selling over period and if you own the share, your solution is simply Covered Call to start with. Acccording to market moves, you convert it into a Covered Call Collar.

Guess you have now enough understanding from where you will catch up and move on.​

Generally speaking if you have a strategy in place would you scale in and out of it several times during the month to extract more returns? Of course it depends on each trade and all that.. But just Generally asking.

 

[Somatung]

Generally speaking if you have a strategy in place would you scale in and out of it several times during the month to extract more returns? Of course it depends on each trade and all that.. But just Generally asking​

Yep, that's exactely how it is done. Thats how we trade option strategies when full time when managing an idea over a longer period and not only for a few minutes or just intra day. Takes a lot of time and experience to find your master plan to trade this way.
​

 

[Striker]

Yep, that's exactely how it is done. Thats how we trade option strategies when full time when managing an idea over a longer period and not only for a few minutes or just intra day. Takes a lot of time and experience to find your master plan to trade this way.
​

Hmm.. Thanks for ur your answer.