Path to Consistency

[Subhadip]

Unlike Delta where you can just buy/short the opposite delta, which have UL move relation, which methods do you employ for controlling Vega?

Almost same way,


Like say ur Vega is now -11000.

And that means, if Volatility increase by 1%, u will loose 11K.

Now to adjust buy some next month option...vega will be adjusted,

But u will loose Theta also by doing this.

So balancing this is important..

 

[Smart_trade]

Expecting this thread to start with basics and 1-2 simple methods on this weekend.

Smart_trade

 

[aja]

Off Topic Query-Is it not possible to make money without knowing Option Greeks?
Like Scalping for 5-6points?

 

[Subhadip]

Off Topic Query-Is it not possible to make money without knowing Option Greeks?
Like Scalping for 5-6points?

Yes very much possible..

but it is capital intensive..

U can earn 2-3% return per month without knowing anything.....

 

[Subhadip]

Expecting this thread to start with basics and 1-2 simple methods on this weekend.

Smart_trade

Ok sir..sure.....one tonight only...

 

[Tuna]

Deleted . Off topic

 

[Subhadip]

It is one of the easiest method of Option selling- direction neutral..

2 to 4% return per month for sure...if using only span margin broker.


Now the method:

Say market at 6550- NF.....say on 20th Jan 2020.. (All hypothetical data).

So Jan future NF- 6550:

Feb NF 6600.


Sell NIFTY Jan 6550 CE- 1050 quantity.

Sell NIFTY Jan 6550 PE- 1050 quantity.

Buy NIFTY Feb 6600 CE- 1050 quantity.

Buy NIFTY Feb 6600 PE- 1050 quantity.


That is all..... cover all on Feb expiry day..

It is direction neutral... all theta u will earn...

in the middle of month if there is movement of 300 points, u can earn even more...by adjustment.

No knowledge of greek required..

 

[Tuna]

But Shubha Bro, the option premiums are not always FV. is there any precautions like check if the deviation from Fair Value is not much etc ?


Sent from my iPhone using Tapatalk

 

[Subhadip]

But Shubha Bro, the option premiums are not always FV. is there any precautions like check if the deviation from Fair Value is not much etc ?


Sent from my iPhone using Tapatalk

If VIX is high, go for selling, if VIX low u can buy...

 

[Smart_trade]

It is one of the easiest method of Option selling- direction neutral..

2 to 4% return per month for sure...if using only span margin broker.


Now the method:

Say market at 6550- NF.....say on 20th Jan 2020.. (All hypothetical data).

So Jan future NF- 6550:

Feb NF 6600.


Sell NIFTY Jan 6550 CE- 1050 quantity.

Sell NIFTY Jan 6550 PE- 1050 quantity.

Buy NIFTY Feb 6600 CE- 1050 quantity.

Buy NIFTY Feb 6600 PE- 1050 quantity.


That is all..... cover all on Feb expiry day..

It is direction neutral... all theta u will earn...

in the middle of month if there is movement of 300 points, u can earn even more...by adjustment.

No knowledge of greek required..

Thanks,Subhdip.

So this trade combination to be done after 20th of the month so that one can pocket the time value decay difference in 7-10 days,is that right ?

If the market makes a 300 points move, then close the trade and open another trade with 300 points away strikes ?Any other adjustment required ?

Any reason for 1050 quantity or any equal qty will be ok ?

Who is a good span margin broker ? Zerodha charges more margin I guess.

Smart_trade