Option strategy quarterly

[doonyadav]

I have to discuss an option strategy which may be traded for regular earning(Paper Trading Stage).
Being a learner i request the experts on TJ to rectify the mistakes.

Strategy (theory) :
Buy 3 months expiry deep ITM pe and sell current expiry ATM pe.
after expiry sell next month expiry ATM pe keep the buy intact.
after expiry sell next month expiry ATM pe keep the buy intact.
After 3 month repeat the strategy.

Example :
Buy sep 10000 pe at INR 500 and sell Jul 9500 pe at INR 102

Trade Management:
Scenario 1: Market Bullish
whenever next strike crossed sell next ATM pe
Scenario 2 : Market bearish
Enjoy 100+ points
Scenario 3 : Market sideways
The premium received by selling ATM will help

We can have good sleep at nights as it is a hedge position.

 

[doonyadav]

Adjustment may be made tomorrow if closing above 9600. as mentioned.

 

[mazher]

Hello GE
please update ur adjustment when ever you do any thanks.

 

[doonyadav]

Being passive trader i am very slow in making adjustments. But most of the times it favours. So don't worry, keep shorting the OTM puts at every strike crossed decisively. By the way i am not trading this strategy as it is in testing mode. Only paper trading.

 

[doonyadav]

Deleted as not relevant

 

[Subhadip]

Good job....

 

[doonyadav]

Sep 10000 pe BUY is around 200 making loss = 300 approx
Whereas Jul 9500 pe SELL is 9 in profit = 90 approx
Jul 9600 pe SELL is 13 in profit =90 approx
Jul 9700 pe SELL is 21 in profit =80
Jul 9800 pe SELL is 36 in profit = 70
Notional profit = 30 points
Booked all short pe's and Shorted 1 lot 9900 pe
Position now is :
1. Sep 10000 pe Long at 170(after adjusting loss by jul pe shorted 9500,9600,9700,9800)
2. Jul 9900 pe Short at 65.

 

[mdabrar]

HAVE U APPLIED THIS STRATEGY ON BANKNIFTY WEEKLY EXPIRY

 

[doonyadav]

I fancy to do that but banknifty is more volatile. I will backtest in future this definitely.

 

[doonyadav]

Though it is paper trade only, but i have to give reason behind the adjustment made above.
1. 9500pe, 9600pe, 9700pe, 9800 pe short are 4 lots using total margin 2 lacs approx and premium left = 80 approx. so booked all 4 and shorted 9900pe with premium 65 instead.
2. Market is near a very crucial milestone i.e. 10000 mark it may give reversal/correction so 1 lot jul pe short is safe against 1 lot sept pe buy.
3. managing 1 lot is much easy.
4. Will replace Jul pe short with Aug ATM pe before/at expiry.