Nifty Options Vertical Spread Trading

ananths

Well-Known Member
#1
Dear All,
I'm starting this thread to track the performance of vertical spread trading in Nifty options. This strategy involves buying and selling options. There are two types - Credit spread and Debit spread. I think this type of strategy suits beginners and low risk options traders.

There is nothing new in this strategy. Basic idea is lifted from the topics discussed in below two threads -

By AW10 -
http://www.traderji.com/options/30597-low-risk-options-trading-strategy-option-spreads.html

By Dan -
http://www.traderji.com/options/66266-option-trading-danpickup.html

Setup:- If the spread is in the direction of the market we will be benefited. So its advantage if we know the market direction. This is a low risk strategy..hence even if we are wrong we will not lose much.However cutting our loss would be always good. So we need to and identify the support and resistance levels of Nifty.

Debit Spread -
Buy 1 lot ATM option and sell 1 lot OTM option.

Credit Spread -
Sell 1 lot of ATM option and Buy 1 lot OTM option

(Note - this can be ITM option and ATM option also)

All comments and suggestions are welcome.:thumb:

Thanks,
Ananth.
 
Last edited:

ananths

Well-Known Member
#3
Today market seems to be recovering and a bounce can be expected but overall trend is down...hence need to be careful.
If at all im trading today it will be bearish...(I'm following short term trend)

Buy 5800PE and Sell 5700PE one lot each. SL 5850(Spot).

Will be holding this for few days, if SL is not hit..:thumb:

Disclaimer:- Please dont trade based on my calls here...its just for tracking purpose and to see if the returns are consistent.
 

ananths

Well-Known Member
#4
I entered the trade at around spot nifty 5798 levels.
Buy 5800PE @ 98
Sell 5700PE @ 64
Net debit = 34.

As long as Nifty remains below 5800 I should be safe (at least for next 1-2 days). Market seems to be very choppy...need to watch closing.
Want to add 1 more lot if market goes to 5750 level.
 

ananths

Well-Known Member
#8
Covered the position,
5800PE @ 155
5700PE @ 108
Net spread value - 47.
Total profit = 13 points per lot.:clapping:
I think i exited too early. Now the profit would have been 18 points:D
But never mind its just another trade. Will learn from it and wait for next opportunity.
 

abcpankaj

Active Member
#9
don't you think you would have made more money with naked puts instead of spread (with no. of lots adjusted to make same capital at risk).

Regards
 

Similar threads

Trade in Rs 20, No more % brokerage

Name:Phone:
Email:City:
State:
Are you a day trader?