Earning 25% per month using Option strangle strategy

[pro369]

"3. Wait for 4-6 trading sessions from the beginning of every month(calender beginning, not the contract beginning)."

Can I please get to know the logic behind this strategy..

 

[coolbull]

Hi Frnds,

Just wanted to share my options trading strategy which has the potential to earn 25% per month. I am personally doing this for past 4 months only, got consistently 25% every month. However still my testing timeframe is small, i would like to share with you people and get ur feedback on this.

Please give ur suggestion/improvement after your review.
Investment required will be higher as we wont get much profit with 1-2 lots.

This trading strategy is completely based on LUCK.
So Old people/Heart patients and particularly 'PPL who dont want to take risk to get reward', stay away from this thread :lol:

Now coming to this strategy:
1. This strategy works well only when NIFTY is trading above 5200(jus my view). So when you see Nifty below 5200, dont try this strategy. (however if nifty is going to go up up up... the profit potential of this strategy will also go up up up).

2. This is based on option strangles. Means, we are going to buy one CALL option and also one PUT option at the same time.

3. Wait for 4-6 trading sessions from the beginning of every month(calender beginning, not the contract beginning).

4. Now see the nifty level.
-> check the price of CALL options for the strike above(and near) to the current NIFTY value.
-> check the price of PUT options for the strike below(and near) to the current NIFTY value.
For example, if nifty is at 5980, check 6000 call and 5900 put.

5. Add both the prices and ENTER the trade for the total of <=150 points.

6. Wait for 6 to 7 days of trading session for a bigger movement on either side on nifty. Once your total nifty points raise to 190 range, exit the trade and you get 25% profit on investment. :clapping:

Now we will discuss the most important points of this trading method, which for most of the traders is the NEGATIVES:
1. What happens if Nifty was in range-bound for those 6-7 days after you enter the trade and you sell your options?
Simple. You will loose money upto 25% of ur investment.
My view: This happens very very rarely in our market. Atleast not every month. To see for yourself, check the past data. Because for 40 points raise in option(call/put), you will need 150 point movement in 1 direction in nifty which most likely wil happen OR in otherwords, this wont happen every month :thumb:

2. What happens if Nifty was in range-bound for those 6-7 days after you enter the trade and you DONT sell your options?
You are taking more risk and naturally the reward will be much more than 25% ....even 80-100% sometimes. This is because nifty is in rangebound for more than 6-7 days and bulls-bears are fighting hard to pull. When one of them succeed, you will see a big movement in nifty.

3. Why is that this strategy wont work well when nifty was trading in < 5200 range?
Because, the movement of 150 points when nifty around 6000 is 2.5%(approx) ... whereas the same 150 points movement in nifty when it is @4500(say) can be acheived only by 3.3% which is significant when compared to 2.5% (approx 30% more movement expected). And if nifty is trading @ 10000, with just 1-1.5% movement we can get profit.

Note: This discussion purely for sharing ideas and not recommending anyone to do trade based on this.

please reopen this thread.....and post some recent findings.......thank you