Options spread with future hedge - a bit of newtons's strat :)

#1
hi all,

I have been paper trading shorting options and the cover with the future as hedge on either side.. This will be diary for the same along with suggestions from all seniors and people.
It is similar to what newton had done but instead of atm call and put this will be a bit far wide .. As no time for intraday management of position.

So the first trade was done few days back:

nifty at 11008
nifty oct fut = 11061
trade 1 : 11200 call at 108
plan: if nf crosses 11200 buy nf

trade 2: sell 10800 put at 95
plan: nf crosses 10800 sell nf
trade 3: sold nf at 10780
trade 4: covered trade 1 earned 103 points:

trade 5: covered trade 2 today at 505
trade 6: covered trade 3 today at 10304 earned 65 point:


another trade which is open today as well:
t1: sold 10100 put at 130
t2: sold 10500 call at 99


BNF was scary one but still holding one :
24800 call sold at 373
will buy bnf if it crosses 24800

the risk in above is gap against position ...
 
#3
no change in above trades..
bnf was about to square off but first 15 mins low was not broken so...


THis one still holding..
t1: sold 10100 put at 130
t2: sold 10500 call at 99
 
#4
Hi,
Will you please explain the trades and also a bit of theory (if it is there) please.. An example will help, like today right now Nifty Futures is at 10315. 9900 pe is at 15 and 10600 ce is at 12. How will you tackle this issue??
Regards
 
#5
no change in above trades..
bnf was about to square off but first 15 mins low was not broken so...


THis one still holding..
t1: sold 10100 put at 130
t2: sold 10500 call at 99
aah.. missed to update this here...
covered the bnf at cost ..
24800 put still open..

nf:
was long at nf for 10515 .. covered at 10550.. trailing sl..
both the options are still open ..

no new trade in this month expiry
 
#6
Hi,
Will you please explain the trades and also a bit of theory (if it is there) please.. An example will help, like today right now Nifty Futures is at 10315. 9900 pe is at 15 and 10600 ce is at 12. How will you tackle this issue??
Regards
the theory is simple ... for example nf at 10300 -- sell 10000 pe and - 10600 ce.. buy or sell if nf moves below or above this values.. Here the main aim is to retain the premium .. the risk here is gap up/down at the border.. like nf closes at 10550 and next day it opens at 10650.. so u missed that 50 pointss..

i am still trying to improve upon or moving the strike price in or out.. for example - nf moved to 10500.. then cover the 10000 pe and sell 10200 pe.. keep the other leg open.. but this is still under development ..

in your example the premium are too low to play around with.. looking at volatile nifty i would avoid as the RR is not good ..
but you can go for the next months selling ..

bnf is like bull.. the moves can kill in either direction so that is paper trading from now on.. :)
 

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