Non-directional Option Strategies for Stocks and Indexes

[toughard]

If you go into the details of the payoff, you will notice that most of the payoff will come in the later half of the series. Even if the market remains in this range, max payoff is 5000 (not likely though, 2500 considering average payoff). The margin required for this spread is around 80000 (I am holding a single butterfly and the margin requirement is 41000). So, while the profit range is large, the ROC is not great. In my view, it is a safe, but not a great spread to hold at the start of the series.

you are 100% right:thumb:

but still these kind of low risk strategies are my favorites as its got its own pros and cons-

cons-
1. we can not leave our job and trade these kind of setups as trading for living depending on these is not possible
2. needs big funds to achieve the above
3. its conservative and act as capital appreciation method
4. there are similar ROI business are around which one can do

pros-
1. capital is saved most of the times
2. certainty of profits is high
3. capital appreciation method combining with the concept of compound % is killing
4. supporting to above point at stock market your investment can be highly scaled

the list is end less...

1. as you said let you make 2500 for 80000 - like JUST ONE TRADE a month
2. you have been good only 10 times in a year
3. as you can scale it up in markets you reinvested - lets take the basic as its compounded yearly

you know what you make at the end of 10 years

Rs. 11,02,867

assume you are playing this strategy with 200000 capital and going for job or along with running your own business ( all you can do as it will NOT demand lot of time from you- just one trade!!!!)

your total in trading account would be Rs, 27,57,000
now dont worry about short term capital gain tax as you are reinvesting :thumb:

all these are for 1 trade but during 10 long years dont you rise your number of trades to 200???? then what is your ending capital??????

http://postimg.org/image/w8ltk2j8h/

I believe in these kind of progressive policies & its executions
now you see why i answered "i am profitable on quarterly basis as well as yearly basis"

 

[Somatung]

If you go into the details of the payoff, you will notice that most of the payoff will come in the later half of the series. Even if the market remains in this range, max payoff is 5000 (not likely though, 2500 considering average payoff). The margin required for this spread is around 80000 (I am holding a single butterfly and the margin requirement is 41000). So, while the profit range is large, the ROC is not great. In my view, it is a safe, but not a great spread to hold at the start of the series.

Munde has an agreement with his broker, which offered him to bring less margin as he accepted what he does. Just to ad this information in case some body really can show his broker in India what he is doing and can prove it with past performance.

 

[Somatung]

@Gmt

Hope you do not get blended by a Milk diary calculation. Take care

 

[Options_Trader]

you are 100% right:thumb:

but still these kind of low risk strategies are my favorites as its got its own pros and cons-

cons-
1. we can not leave our job and trade these kind of setups as trading for living depending on these is not possible
2. needs big funds to achieve the above
3. its conservative and act as capital appreciation method
4. there are similar ROI business are around which one can do

pros-
1. capital is saved most of the times
2. certainty of profits is high
3. capital appreciation method combining with the concept of compound % is killing
4. supporting to above point at stock market your investment can be highly scaled

the list is end less...

1. as you said let you make 2500 for 80000 - like JUST ONE TRADE a month
2. you have been good only 10 times in a year
3. as you can scale it up in markets you reinvested - lets take the basic as its compounded yearly

you know what you make at the end of 10 years

Rs. 11,02,867

assume you are playing this strategy with 200000 capital and going for job or along with running your own business ( all you can do as it will NOT demand lot of time from you- just one trade!!!!)

your total in trading account would be Rs, 27,57,000
now dont worry about short term capital gain tax as you are reinvesting :thumb:

all these are for 1 trade but during 10 long years dont you rise your number of trades to 200???? then what is your ending capital??????

http://postimg.org/image/w8ltk2j8h/

I believe in these kind of progressive policies & its executions
now you see why i answered "i am profitable on quarterly basis as well as yearly basis"

Ok, will back test this strategy for past 5 years.

 

[Options_Trader]

you are 100% right:thumb:

but still these kind of low risk strategies are my favorites as its got its own pros and cons-

cons-
1. we can not leave our job and trade these kind of setups as trading for living depending on these is not possible
2. needs big funds to achieve the above
3. its conservative and act as capital appreciation method
4. there are similar ROI business are around which one can do

pros-
1. capital is saved most of the times
2. certainty of profits is high
3. capital appreciation method combining with the concept of compound % is killing
4. supporting to above point at stock market your investment can be highly scaled

the list is end less...

1. as you said let you make 2500 for 80000 - like JUST ONE TRADE a month
2. you have been good only 10 times in a year
3. as you can scale it up in markets you reinvested - lets take the basic as its compounded yearly

you know what you make at the end of 10 years

Rs. 11,02,867

assume you are playing this strategy with 200000 capital and going for job or along with running your own business ( all you can do as it will NOT demand lot of time from you- just one trade!!!!)

your total in trading account would be Rs, 27,57,000
now dont worry about short term capital gain tax as you are reinvesting :thumb:

all these are for 1 trade but during 10 long years dont you rise your number of trades to 200???? then what is your ending capital??????

http://postimg.org/image/w8ltk2j8h/

I believe in these kind of progressive policies & its executions
now you see why i answered "i am profitable on quarterly basis as well as yearly basis"

If somebody is trading full time, these strategies will block capital. This is more suitable for part time traders.

 

[Options_Trader]

If you go into the details of the payoff, you will notice that most of the payoff will come in the later half of the series. Even if the market remains in this range, max payoff is 5000 (not likely though, 2500 considering average payoff). The margin required for this spread is around 80000 (I am holding a single butterfly and the margin requirement is 41000). So, while the profit range is large, the ROC is not great. In my view, it is a safe, but not a great spread to hold at the start of the series.

This is not a double butterfly as mentioned by Munde_77 in his post. I had assumed a double butterfly for payoff figures. Max payoff is 8000, however, the max draw down is also 7000. Average payoff will be around 3500.

You can also consider this:

http://i57.tinypic.com/b3tmwo.png

Gives a similar output, with less legs.

I have created a back testing framework, should not take more than 15 min to back test. Give me your strike prices and we can check the viability. If you want option repair, it will be difficult to incorporate in back testing.

 

[gmt900]

@Gmt

Hope you do not get blended by a Milk diary calculation. Take care

You mean you hope I don't get blinded by "Milk Dairy" calculation ?

I don't understand the phrase " Milk Dairy Calculation".

But, to answer your comment, my head is firmly screwed on my shoulders.

As I get more and more experience, my MM skills are improving

 

[toughard]

If somebody is trading full time, these strategies will block capital. This is more suitable for part time traders.

If you are ok with the return it is giving then the capital is not blocked its employed :thumb:

 

[toughard]

This is not a double butterfly as mentioned by Munde_77 in his post. I had assumed a double butterfly for payoff figures. Max payoff is 8000, however, the max draw down is also 7000. Average payoff will be around 3500.

You can also consider this:

http://i57.tinypic.com/b3tmwo.png

Gives a similar output, with less legs.

I have created a back testing framework, should not take more than 15 min to back test. Give me your strike prices and we can check the viability. If you want option repair, it will be difficult to incorporate in back testing.

ya it's not DB its little modified as it kept the mid dip above the zero line... it can be constructed more effectively after some fine tuning as i said in the first post...

your pic is of short straddle? what are legs and it values that have been used?

no question of option repair in static strategies

BTW when you say back testing framework does it have option data for last five years with all the strike prices? can you explain in length so that we know where we are heading.

thanks

 

[Options_Trader]

Did you also go into the thread of AW10, or do you really only miss the directional knowledge part in your trading? Just a question, as you seem to have a good knowledge about options by it self. I would not be worried to see you trading options live.

If you think you have a gap in TA, then be careful now by what you start. Careful about the time you can lose searching for the perfect TA indicator. Are there any specific indicators you may look for? or are you just at the begin of your journey about TA? Take care

Appreciate if you can point out anything else I should learn.