Earning Minimum 4% on your capital per month

#1
Believe it or not but i m earning minimum 4%return on my capital per month by trading in options with guaranteed no loss. There is my own way of trading in options, mostly nifty options. I have invested only 60 thousand and my minimum earning in a month is 2750 till now, you might think that i would be new to share market, but i am trading in stock market since 2004. Not even trading on daily basis, hardly taking positions one or two times but with safety and hedging. If you too want trade like me, keep reading my updates and take decisions of your own.
 
#2
My strategies: Take an example of market situation where Nifty spot is being traded at 5258 with 5200PE of sep. expiry priced at 58. Nifty has already fallen from around 5430 approximately 180-190 points from its current peak in 5-6 trading days, now we are expecting a slight upmove, may be up to 5320. So, I will initiate a naked short postion by selling 5200PE, suppose tommorrow if nifty gives some upmove of around 30-40 points, then in option we will get some around 13-15 points gain or if nifty takes 2-3 trading sessions to move 30-40 points upwards , there too will be the same gain of around 15-20 points and from there afterwards its depends upon trader to book little profit or keep holdinh his position keeping in view of the market condition. Now what if market does not behave my way i.e., nifty moves downwards, then wait til market falls to 5140, at that time 5200PE would be priced at approx.92-97, means we wil be in loss of approx. 30 points, again to cover our loss take one more position by buying 5400PE or 5300PE of the same series(considering prevailing market condition) that would have been trading with merely 3-6 points premium. Here onwards you will be protected from any loss from further downside. Now what if markert moves positively , then cut your position near to nifty spot 5200,. But this would hardly happen and mosstly time decay will also come into effect. Its already a tested strategy and in this series also I am holding sep 5200PE short position initiated on 58, currently priced at 59.55 as on 04 sep02012. Morever one can take risk of rs.500 for earning 2000. How is that please comment
 
#3
What will your strategy will be if the market opens 500 points down ??? Naked shorts has made many people naked without shorts. Pls fully understand all the risks that you are taking....
 

Reggie

Well-Known Member
#6
I second Ashish. It's easy to think that one can earn money by selling naked options, and moreso deep OTM options. If you are not hedged, over time you are toast.

Victor Niederhoffer was one of the most successful money managers in the US who consistently made money over the years. However it took only one crisis for him not only to loose all the money he had made over a decade, but he had to pay off his creditor by mortgaging his house. There is a good article titled 'Education of a Trader' which is a good read.

I had previously posted on TJ, a comeback by Mark Cook, who also got bankrupted selling options, but later made all the money he lost. His learning :
Don't sell naked options.

Check the story here : http://www.traderji.com/general-trading-investing-chat/70607-amazing-comeback.html


Monalisa, There is nothing to disbelieve you :) :) :) But, I would have expected much more return in this strategy by taking these risks. My suggestion - Let your run strategy run for few years and then you will know the risk associated with it.
Quoting Naseem Taleb - " "Option sellers, it is said, eat like chickens and go to the bathroom like elephants". So, you can enjoy counting your pennies, before that eventual going to the bathroom happens (market goes in a circuit).
 
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