Experiment in Trading Options

[XRAY27]

-----------Deleted-----------

 

[DSM]

Update :

Current Position

Nifty CE 8600 @ 90 MTM Nil
BankNifty CE 18800 @ 365 MTM 60

MTM

4 Lots Nifty =(25*4*-2) = Nil
2 Lots BankNifty = (25*2*80) = 4,000
Net MTM 4,000

Note : Am away on a holiday for about a week, and am keeping the position open - without SL. Will update once back

***

Long 4 lots Nifty CE 8600 @ 94.55 + (30*4 Brokerage) = 9,575.00
Long 2 BankNifty CE 18800 @ 285.00+30 + (30*2 Brokerage) = 14,310.00
Total Capital Employed = 23,885.00

 

[DSM]

Update Dec-10th

Just back today, choosing to be cut from the market/net. The position is marked down greatly to wipe off the capital - almost. Will update the strategy/thinking later, and holding the position, as is.


Nifty CE 8600 Currently @ 14 MTM (Cost 90-14) = -76
BankNifty CE 18800 Currently @ 115 MTM (Cost365-115) =-250

MTM
4 Lots Nifty =(25*4*-76) = -7,600
2 Lots BankNifty = (25*2*-250) = -12,500
Net MTM -20,100

 

[bunti_k23]

Dsm , dont know on what basis ru choosing the strikes to trade.but for buying 2strikes itm is good from cmp of underlying, reason good delta value (appreciation for a single rupee move in underlying) .second reason less theta value (if u consider to keep it more than 1day) .

For shorting , atm strikes are best close to cmp. Reason good delta value as well as hightest theta value (favouring our short position).atm strikes have only time value associated with it.
Pls correct me if im mistaken

Thank you
Amit.

 

[DSM]

Hi Bunti,

The day the options were bought, they were one strike away. With my views being bullish, EXPECTED the calls to be ITM soon.

Thanks for your views - appreciated.

Dsm , dont know on what basis ru choosing the strikes to trade.but for buying 2strikes itm is good from cmp of underlying, reason good delta value (appreciation for a single rupee move in underlying) .second reason less theta value (if u consider to keep it more than 1day) .

For shorting , atm strikes are best close to cmp. Reason good delta value as well as hightest theta value (favouring our short position).atm strikes have only time value associated with it.
Pls correct me if im mistaken

Thank you
Amit.

 

[DSM]

Update : Firstly, learning :

1. Did expect the options to hold value with a max drawdown of 1/3rd the from cost. So should have placed a SL with max drawdown of 40% in which case, the position should have been closed when at a loss of 10,000/- This will be the rule for the next time.

2. The long trade has been done with a view that in a Bull market, the market closes near/at the highest level for the month of Dec. I have checked the previous market closing data for the previous 7 of 10 years the market has been bullish (since 2003) and in 100% of the cases, for the month of Dec. the market closed at/near peak for the month. (It is possible that this may not happen this time and Dec-14 can be an exception), but I still hold the view based on the past data, that Nifty will close beyond 8,700+ and that BankNifty should close beyond 18,900+ While I agree that as traders we should not hold on to rigid beliefs, and should trade what we see, I am going by conviction of the trade. We will see what happens.

3. As stated at the outset - that this thread will be for learning. No matter what happens at the end of the month - i.e the market does what it has in the past, or it does not, we learn only when we expose ourself. The learning is that - anything can happen, and will happen. Parliment stalling over a ministers remark and China data will be negative are unforseen situations - and similar situations can occur again. So the rule 1 regards to SL will be handy.

4. The strategy was supposed to be conservative. However, I did go all out. This was also posted out TraderKS, and I did give rational for the trade. However, conservative strategy should have left room for error and not have been traded with full capital. Also, assumption regards SL should have been stated and trades closed at levels the SL was triggered. This is a BIG takeaway and will be implemented for the next capital mobilised.

5. Will not add any capital for now, and just follow up on this trade.

***


Nifty CE 8600 Currently @ 14 MTM (Cost 90-14) = -76
BankNifty CE 18800 Currently @ 115 MTM (Cost365-115) =-250

MTM
4 Lots Nifty =(25*4*-76) = -7,600
2 Lots BankNifty = (25*2*-250) = -12,500
Net MTM -20,100

 

[stock72]

Any update review ?

Update : Firstly, learning :

1. Did expect the options to hold value with a max drawdown of 1/3rd the from cost. So should have placed a SL with max drawdown of 40% in which case, the position should have been closed when at a loss of 10,000/- This will be the rule for the next time.

2. The long trade has been done with a view that in a Bull market, the market closes near/at the highest level for the month of Dec. I have checked the previous market closing data for the previous 7 of 10 years the market has been bullish (since 2003) and in 100% of the cases, for the month of Dec. the market closed at/near peak for the month. (It is possible that this may not happen this time and Dec-14 can be an exception), but I still hold the view based on the past data, that Nifty will close beyond 8,700+ and that BankNifty should close beyond 18,900+ While I agree that as traders we should not hold on to rigid beliefs, and should trade what we see, I am going by conviction of the trade. We will see what happens.

3. As stated at the outset - that this thread will be for learning. No matter what happens at the end of the month - i.e the market does what it has in the past, or it does not, we learn only when we expose ourself. The learning is that - anything can happen, and will happen. Parliment stalling over a ministers remark and China data will be negative are unforseen situations - and similar situations can occur again. So the rule 1 regards to SL will be handy.

4. The strategy was supposed to be conservative. However, I did go all out. This was also posted out TraderKS, and I did give rational for the trade. However, conservative strategy should have left room for error and not have been traded with full capital. Also, assumption regards SL should have been stated and trades closed at levels the SL was triggered. This is a BIG takeaway and will be implemented for the next capital mobilised.

5. Will not add any capital for now, and just follow up on this trade.

***


Nifty CE 8600 Currently @ 14 MTM (Cost 90-14) = -76
BankNifty CE 18800 Currently @ 115 MTM (Cost365-115) =-250

MTM
4 Lots Nifty =(25*4*-76) = -7,600
2 Lots BankNifty = (25*2*-250) = -12,500
Net MTM -20,100

 

[DSM]

Personally, have reversed. But as far as the thread is concerned, will consider the positions are held. (In my view, there is a possibility for the market to reverse, and get all the shorts to cover. I see BankNifty to cross 19,000 and Nifty to cross 8,450. Need to check how the value of options reflect the anticipated price swing)

Having said the above, this option experiment reinforces that timing is everything. The index values may well be achieved, but due to time decay, may not recover the capital. So that is the learning here.

Will look to see the optimal time when next 25K can be deployed.

Additional learnings :

Trade only 1 lot each of Nifty and BankNifty and not go all-in, irrespective of view for the 25K capital - unless absolutely clear of the trade.

Trade objectively as per system/trend.

Take profits/losses and close position when not able to check the charts.

Adhere to SL's. As 20-25% of drawdown is possible, will keep 35% SL for options, max 40%.

Any update review ?

 

[Somatung]

Personally, have reversed. But as far as the thread is concerned, will consider the positions are held. (In my view, there is a possibility for the market to reverse, and get all the shorts to cover. I see BankNifty to cross 19,000 and Nifty to cross 8,450. Need to check how the value of options reflect the anticipated price swing)

Having said the above, this option experiment reinforces that timing is everything. The index values may well be achieved, but due to time decay, may not recover the capital. So that is the learning here.

Will look to see the optimal time when next 25K can be deployed.

Additional learnings :

Trade only 1 lot each of Nifty and BankNifty and not go all-in, irrespective of view for the 25K capital - unless absolutely clear of the trade.

Trade objectively as per system/trend.

Take profits/losses and close position when not able to check the charts.

Adhere to SL's. As 20-25% of drawdown is possible, will keep 35% SL for options, max 40%.

Now the thread starts to get into the right direction. :thumb:

 

[XRAY27]

@DSM

You are trading in options on positional basis so..answer your self 3 questions

1. Are able to find trend change in fastest possible time ??

2. Is your time scale of trading options suits for positional idea ??

3. With in trend change are you able to spot pause in the move ??

Time to notice trend direction is vital in trading options.what i want to say is ..we should have a separate system for options addressing all this points