Gamma based range & trade

Discussion in 'Options' started by umash2000, Feb 27, 2014.

  1. umash2000

    umash2000 Active Member

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    The above is the gamma based broad range for March Series.Lower end is 5910 & Upper end is 6700.Both these points are not expected to be breached in March series..

    Critical Positivity point is 6305.This depicts the mood or the sentiment.

    Last series sentiment point was 6140 & nifty scaled it & macd became positive.The question is whether nifty would scale 6305 also in the same speed.If it is not able to cross,thats the indication that macd is once again going to become negative.

    Thus,the 200 point move we had been suggesting is either 6305-6108 on the lower side or 6305-6503..on the upper side.This the minimum point.If more bearish or bullish,nifty could move further..

    The upcoming negativity or positivity could be determined through the positioning of critical parameters in the Range sheet.
    20ema reversal point beyond L4 is positive.Thus,strong support at 6130-6150 region(20ema point)
    5ema reversal point nearing L2 is time to be cautious.But,still some more space is there for a move towards 6305.
    (5ema reversal & 20ema reversal point is calculated to determine the possibility of breaking of 5ema/20ema respectively)

    With the information and ranges mentioned above how would you trade?

    Expect option traders to give their option strategies.
     

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  2. Somatung

    Somatung Banned

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    @Umash2000

    Regarding your comment: Expect option traders to give their option strategies.

    If you want to trade the ranges/levels you posted, there are various strategies you can play through leg in or by implementing them at once. Put and credit spreads on support and resistance, long and short Condors by placing the legs at or around the levels you feel is best, long and short Butterflies the same way like the Condors, Iron condors and iron Butterflies, Diagonal debit and put spreads, Calendar spreads by placing the short leg in this month series or vice versa, Circuits with put and calls and what ever you like. Endless variations with different out comes. Good luck and see you around.
     
  3. umash2000

    umash2000 Active Member

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    @Somatung

    Thanks for your response and admired your options knowledge in the other thread.Expect your regular feedback to trade better in options.

    Was amazed to see the range for last series.Thought how one could trade better with ranges known using options other than naked option which becomes very risky..

    Pls read March series as February series in the attachment..
     

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    Last edited: Feb 27, 2014
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  4. umash2000

    umash2000 Active Member

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    Let me now bring in concept of Average value of Options.It is noticed that when 5ema cross 20ema(in case of options) & Daily macd div.tick is positive,calls tend to move away from their average value.When Daily macd.div.tick is negative,calls tend to move towards their value.If 5ema cross 20ema breaks on the downside,calls tend to break their value and move down.

    Reverse is seen in puts.Further,it might change based on ATM/ITM/OTM calls or puts.

    Thus, at this point we know the broad range.We know the critical point(6305) and likely targets on upside(6503) or downside(6108).

    Average value of 6000 call is 242 & 6100 call is 153 & 6200 call is 105.
    Calls seen quoting above their values.

    Daily macd.div.tick is the MACD divergence histogram.Its at 6230 for the day.
    Weakness for calls only below 6230..

    With above info how best we can trade?
     
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  5. umash2000

    umash2000 Active Member

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    The trades quoted would be for educational purpose only and not for trading..

    The first trade based on the info would be get into long legin..:thumb:

    ATM call is chosen for this purpose.6200 call at 133 with stoploss at 116.

    To hedge for the likely loss in the above trade, selling 6000 put at 20.

    Present position:
    Buy 6200 call at 133 with stoploss 116
    Sell 6000 put at 20

    Closing position as at 28-Feb-14

    Buy 6200 call at 133:+5
    Sell 6000 put at 20:+2
     
    Last edited: Feb 28, 2014
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  6. umash2000

    umash2000 Active Member

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    March series broad range would remain the same.Critical Parameters for Monday is as follows:-

    1.5ema reversal point:6115

    2.20ema reversal point:5666

    3.MACD zeo cross:5990

    5ema reversal point moving within critical L2 alerts one to be careful & thus would prefer to close the calls on any move upside around 6305..(Critical point).

    20ema reversal point away from the range indicates that 20ema(6149) would not be broken now..

    Note that Daily macd.div.tick(Histogram) has moved upto 6281 for Monday.

    Calls seen more than their average price.On break of 6281,call prices would tend to move towards their average price.

    Average price:

    6000 call:242

    6100 call:154

    6200 call:105

    Thus,the range to be watched would be 6206/6256/6305 for now..
     
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  7. timepass

    timepass Moderator

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    Good going, Umesh.

    For posting images, please upload them on an external website like imgur.com or tinypic.com and paste the link here. Using "manage attachments" you will run out of attachment space soon.

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  8. umash2000

    umash2000 Active Member

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    Am taking another 6200 call at 119 today.Stoploss would be 95.Previous trade stoploss also stands changed to 95 from 116.

    Further.sell 6200 put at 69.

    Position as of now:

    6200 call at 133
    6200 call at 119
    stoploss at 95

    Sell 6000 put 20
    Sell 6200 put 69

    Bullishness arise from the fact that 20ema to cross 50ema today.Weekly & Daily swing is positive and would become negative below 6067.Weekly MACD divergence cross is at 6385.

    Note that when nifty cracked D.macd div.tick at 6281,calls tended to move towards their Average values.Similarly puts would tend to move toward their average values..
     
    Last edited: Mar 3, 2014
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  9. umash2000

    umash2000 Active Member

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    Critical Parameters for Tuesday is as follows:-

    1.5ema reversal point:6156

    2.20ema reversal point:5661

    3.MACD zeo cross:5953

    5ema reversal point is now between L1 & L2.Pressure was there on the downside as expected but did not move up as expected.Thus,calls still not closed..

    20ema reversal point away from the range indicates that 20ema(6156) would not be broken now..

    Nifty below Daily macd.div.tick(Histogram) today.Has to move above 6261 for further positivity tomorrow.

    On break of Daily macd div.tick 6281 today,Calls prices moved towards their average price.

    Average price:

    6000 call:240

    6100 call:154

    6200 call:105

    Thus,the range to be watched would be 6206/6256/6305 for now..

    Position as of now:

    6200 call at 133:-24
    6200 call at 119:-10
    stoploss at 95

    Sell 6000 put 20:-4
    Sell 6200 put 69:-3
     
  10. umash2000

    umash2000 Active Member

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    Closing Buy 6200 call 1 lot at 147
    Closing Sell 6200 put 1 lot at 45

    Open position:
    Buy 6200 call at 126
    Sell 6200 put at 20
     

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