Zero Loss Strategy

Dear all,

Is there anyone willing to suggest NIFTY options strategy with ZERO LOSS ?

Your faith in fellow trader is touching. But unfortunately there is no such strategy.

and even if someone know the strategy dont expect he/she will divulge it to you....

I suppose this thread was started for fun, so will give a jovial answer, dont take it seriously please. Here is a strategy that is unlikely to give a loss for the next six months at least:

Enter long when Nifty crosses 9000 and short when Nifty falls below 1000

How is this?
Always sell option of next month. Ideal time to sell is first & 3rd week of contract month.
Sell Call of about 100-150 points below the current nifty level and Sell Put of about 100-150 points above the current nifty level.
Check-out the nearest support/resistance levels and decide the levels to go long or short. The difference between short and long level should not be more than 100 points.

Let us take a hypothetical scene.
Nifty is now trading between 5500- 5550. Immediate support was 5500 and resistance 5550. We sell 5400 call and 5600 put of September series.
During the next 2-3 weeks nifty either remain between 5500-5550, or go above 5550 or go below 5500 (any number of points) i.e. 3 probabilities are there, either nifty go down or go up or remain in the range.

1. If nifty goes above 5550 - go long in nifty and hold till it comes below 5550. Because if nifty goes above, premium of call of 5400 will start increasing but we will get more points from Nifty Future and premium of 5600 Put will erode fastly and that will be our profit.
2. If nifty goes below 5500 - go short at 5500 and hold till it comes above 5500. Because if nifty goes below, premium of put of 5600 will start increasing but we will get more points from Nifty short and premium of 5400 call will erode fastly and that will be our profit.
3. If nifty comes or remains between 5500-5550 after 2 weeks the premium of both the put and call will erode. Premium of both will keep on eroding day-by-day if nifty remains at current levels. At the time of expiry if nifty closes below 5500 and above 5550, we will have to give premium of about 300 points (difference between strike price of Put and Call sold, hypothetical) and even then, we will get profit of more than 180 points
Note : Read the call very carefully which means :

Go short in Nifty Future at 5500 and hold it for as many time or days as it remains below 5500. If it again comes at 5500, exit at this level. Under such situation, you won't gain even a single point in future, but you will get so many points in premium erosion.
Go long in Nifty Future at 5550 level and hold it for as many time or days as it remains above 5550 (whatever is the entry point). If it again comes at 5550, exit at this level. Under such situation, you won't gain even a single point in future, but you will get so many points in premium erosion.
Future Points level

These levels are neither support nor resistance levels. These are the points 20-25 away from the nifty spot level at the time of making position.

Rules: -

1 Work better for offline trade account
2 Do not enter before 9:30 and after 14:50 but Can exit any time
3 If Nifty open above the long point position (in case of gap up) then take the position and square off the position at same level. (similar rule for short)
4 If there are many whipsaws, then brokerage can be covered with the trade of 2 lot of Nifty. And one lot can be squared off after gaining profit.
5 Dont wait for the expiry, square off your all position when target is achieved.

Now how to manage gap up/down opening? As per current position, we have to short below 5500 or buy above 5550 (let us say). What should we do if tomorrow it opens gap up at 5570?

Under such instances you have to generally enter at around 9:05 and 9:15 hours in the next trading day according to the movement. Let's suppose, if monday Nifty opens at 5570 and at 9:05 and9:10, it reaches 5560. Go long at 5560 and hold till it comes down to 5560 either same day or in future. It means you have to short nifty at 5500 and Long at 5570 (instead of 5550). In such situation you won't having any position between 5500 and 5570. But if on some other day Nifty comes between 5500 and 5550, you again stick to earlier rule i.e. go long above 5550 and go short at 5500. Under such situation, our profit may be few points less, but we will never go in loss.

What happens if Nifty goes back and forth between 5540 and 5560 many times?
How will anybody tackle margin calls even if market goes one way?

Flock!
Yes, brokerage loss is a point to be considered.
No system is perfect. The levels for nf buy/sell can be fine tuned to nearest support resistance level. But the diff should not be more than 100 pts between buy/sell. one can buy/sell 2 lots in that case and the 2nd lot can be booked at 8 /10 points so that the brokerage for 1st lot can be covered.
.........>

Intraday players sitting in front of screen may buy call in case of a intraday runup and sell at higher level thereby locking in more profit in there sale of call. Likewise in case of a intra-correction, buy the put to sell at a higher price. I also think one may buy a deep out of money put and keep till his position is open to take care of deep -ve opening of market the next day. For the case referred, one may consider buying 5100/5200 Put, which will eat away some profit, but will save form lower circuit opening!

Point 2 of your question regarding margin call: In fact if the market is moving in one direction, say down... your call will shred some premium and put will add to its price, the difference will be the M2M margin, but the future position will give more points to take care of this.

Its not just brokerage loss, we cant buy and have the SL at the same price, so if we buy at 5555 and sell at 5545, there is a risk of loss + brokerage, one lot or two lots. No way we can guarantee that price will move x points from our buy point, etc. So risk only increases with multiple lots.

Frankly I appreciate the idea, and it may be good also, but the zero-loss strategy is holy grail, which I am afraid does not exist. If someone knows and is willing to share I will be the happiest guy.

Rgds.

A few points..
ITM options have very less time value so if they expire within this rangeu don,t get very much.
If u go long at 5560 the market can keep going down and not go back up , similar situation can occur at lower end of range.
Slippage can be fantastic when trading NF for covering the options. You can loose money just as the NF move from premium to discount . lol

Have u tried trading this in reality friend. No such thing as no loss.

hi
Is it not the same strategy posted by gr8 linkon7 in this traderji itself last year.
The pros and cons are analysed threadbare. Only diff he used a stradle and profitably too !!!



http://www.traderji.com/options/28235-good-profit-hedged-nifty-positions-straddle.html