Premium Eating Strategy - BankNifty Weekly Options

[mycall]

@mycall,
Referring to booking of loss (highlighted above), I presume, this loss would have an off-setting profit in the other leg, am I right?
Regards
Govind

No... If S/L is not hit for this new strike it will not have any effect on the other leg outcome.

 

[govindheg]

No... If S/L is not hit for this new strike it will not have any effect on the other leg outcome.

Thanks. However, my confusion is still there.
To begin with let us say when BN spot at 26800, we shorted 26400 PE & 27200 CE at 35 & 48 respectively.
Now the Market moves to 26500 and PE leg commands premium of 55 i.e. loss of 20 points.
Do you shift PE leg now further downwards by booking loss 20 points? In that case the CE leg would have gained, no?
This is my confusion.
Regards

 

[mycall]

Thanks. However, my confusion is still there.
To begin with let us say when BN spot at 26800, we shorted 26400 PE & 27200 CE at 35 & 48 respectively.
Now the Market moves to 26500 and PE leg commands premium of 55 i.e. loss of 20 points.
Do you shift PE leg now further downwards by booking loss 20 points? In that case the CE leg would have gained, no?
This is my confusion.
Regards

Hi @govindheg

Your PE needs adjustment... means CE is gaining... isn't it?

But in your situation SL is hit already... no need to shift PE... it's time to pack up and go.

It seems you have some misconception about the strategy... please go through it again and take a note of the the strikes suggested.

 

[jetking]

Suppose I shorted PE @20... on Thursday for Friday morning.... say 800 distance from spot... if price same day moves 250-300+ in the morning hours... it will hit 40... giving me a loss of 20 on this PE... now what I can do is book this and short an option of value 20... which will be at least another 300 distance from my original PE... buy this I maintained my original distance from the spot... at the same time neutralizing my loss in the PE...

now what happened is that BN already moved 300 pts this series... and my short strike is 800strike further... so BN needs to move 1000pts this series to hit my S/L... which happens very very rarely...

If it doesn't hit by Friday closing... this 20 will become at least 14-15... on Monday closing it will become 10-11... giving you 50% profit on this PE

Nicely explained bro......
If and when, time permits kindly do the same with CS
Means, give some example of stress management of CS.
No hurry, take your time and have a very good night

 

[govindheg]

Hi @govindheg

Your PE needs adjustment... means CE is gaining... isn't it?

But in your situation SL is hit already... no need to shift PE... it's time to pack up and go.

It seems you have some misconception about the strategy... please go through it again and take a note of the the strikes suggested.

Ok. Shall do that.
Thanks

 

[mycall]

CS taken at 27400CE/27500CE 24.05/14.15

 

[mycall]

Exited from CS at 27400CE/27500CE @ 9.50/5.55

Taken CS at 26300CE/26400CE @ 23.20/11.40

Profit booked 5.95pts.

 

[mycall]

WoooW... what a pull up at the fag end... sure have surprised many... caught many on the wrong foot... very very rare on an expiry day...

something cooking for sure... NF was kicking high... BNF was not following... today its showed its colour and proved many of us wrong...

I was lucky to get out with I guess a minor hit... lucky because I was planning to enter next trade and for that I needed margin... so I had to exit... it turned out to be hell of a lucky exit

 

[mycall]

Exited CS 26300CS/26400CE @ 15.45/2.35

Loss booked: 1.3pts

Cumulative Profit: 4.65 (5.95-1.3)

Placed order to take new position... Main options (Aug) shorts @27400 and current (2nd) buy 26600PE and 28100CE... Seen the trade book that PE got through but CE got hung up in the tangle...

So tomorrow I have to see if I am able to short 27400CE in the morning

 

[govindheg]

WoooW... what a pull up at the fag end... sure have surprised many... caught many on the wrong foot... very very rare on an expiry day...

something cooking for sure... NF was kicking high... BNF was not following... today its showed its colour and proved many of us wrong...

I was lucky to get out with I guess a minor hit... lucky because I was planning to enter next trade and for that I needed margin... so I had to exit... it turned out to be hell of a lucky exit

Yes. Mind boggling movement in the end.
Lucky that you could exit without much harm.
Regards