15% Guaranteed Returns - Buy both Call & Put options Strategy

[trader_ks]

I think If somebody trade in deep ITM, then there are below advantages.
a) Deep ITM works almost like futures(delta 1) while option(delta 0.8~.85) at position and once moves in profit, delta approaches towards 1.
b) Loss in sudden crash is limited to what you paid.

Research shows that futures always fetch more profit then option , but in case there is any unexpected movement, 1 day is enough to erode all profit earned in 1 year with whatever strategy and rule you follow.

So in my view , If ITM options are played systematically, they can be good bet for wealth increase in long run.
But at the same time ,OTM options are key to loose all hard earned money

I follow SH 315 stratagy using deep ITM. Although I get difficulty in last week, when I switch current month option to next month options but I cannot take risk of holding futures overnight. Sometime I miss rally which happens in last week.

 

[toughard]

I think If somebody trade in deep ITM, then there are below advantages.
a) Deep ITM works almost like futures(delta 1) while option(delta 0.8~.85) at position and once moves in profit, delta approaches towards 1.
b) Loss in sudden crash is limited to what you paid.

Research shows that futures always fetch more profit then option , but in case there is any unexpected movement, 1 day is enough to erode all profit earned in 1 year with whatever strategy and rule you follow.

So in my view , If ITM options are played systematically, they can be good bet for wealth increase in long run.
But at the same time ,OTM options are key to loose all hard earned money

I follow SH 315 stratagy using deep ITM. Although I get difficulty in last week, when I switch current month option to next month options but I cannot take risk of holding futures overnight. Sometime I miss rally which happens in last week.

its a very obvious scenario that you mentioned...
Choosing between Futures and ITM options depend up on the situation/anticipation...

OTM options work well in some high beta stocks... need little MM and idea on momentum...

SH 315 you follow on what time frame?

 

[trader_ks]

its a very obvious scenario that you mentioned...
Choosing between Futures and ITM options depend up on the situation/anticipation...

Yes you are right. But I prefer ITM better than future for swing trading.
I trade with futures also for day trading(Strictly no carry forward of future position).

OTM options work well in some high beta stocks... need little MM and idea on momentum...

Yes correct momentum idea gives good return while wrong erodes option value fast.

SH 315 you follow on what time frame?

I follow it on daily time frame.
I am swing trader and my position do not last for more then a week.
Most of the time I gain very much from momentum in ITM compared to time depreciation. At the same time I sleep well in night, because whatever happen I cannot loose more than invested. :lol:

 

[jamit_05]

Cubt,

What is the exit plan if price does NOT breakout. It remains within the band till 20th.

 

[toughard]

Yes you are right. But I prefer ITM better than future for swing trading.
I trade with futures also for day trading(Strictly no carry forward of future position).


Yes correct momentum idea gives good return while wrong erodes option value fast.



I follow it on daily time frame.
I am swing trader and my position do not last for more then a week.
Most of the time I gain very much from momentum in ITM compared to time depreciation. At the same time I sleep well in night, because whatever happen I cannot loose more than invested. :lol:

thanks....
Daily time frame using 315 strategy may not be giving much signals for a weekly swing trading!! how you manage?

 

[trader_ks]

thanks....
Daily time frame using 315 strategy may not be giving much signals for a weekly swing trading!! how you manage?

Why you use bold font? It seems you are shouting.

I have certain entry exit rules extracted from SH thread.
To be specific on your question. I never get out of stock completely for long time(may be out for few hours or 1-2 days). I just avoid holding a single strike for more than 1 week. Then try to switch to strike closer to price(with less extrinsic value). My 1st entry target(as soon as see signal) is to recover as much as premium so that next entry should not be costly.

In this approach
a) sometime I miss big rallies also .
b) I gain less than future
But my winning rates are more than 60-70% .
It is very difficult to use this approach using futures.:thumb:

Anyway my main point is that learning each and every details of option is good if you want to trade using OTM or ATM or stratagy.
But in case of naked deep ITM, option greeks do not hurt very much(other then positions taken on last week).

Don't know if experts agree with me

 

[prakash.thakor]

Hi Cubt,

Thanks for the nice tip.

Is this stratagy is for interday or delivery ( till expiry date)

 

[niceman]

Hi,

I have back tested this strategy & it worked perfectly. I have been trying out this strategy for couple of weeks. It�s been giving consistent returns of around 15 to 20%, but am curious to know if any of the members have already tried this.


Strategy:

Investment needed: Rs.10,000
Suitable Trading days: 1st to 20th of every month (Better to avoid last week of expiry)

This strategy will give best returns when you expect Nifty or any stock to move either ways with big move.

Example: Nifty Spot (5700)
Trade: Buy Nifty Call 5800 & Nifty Put 5600.

Say Nifty CE 5800 is 50Rs. & Nifty PE 5600 50Rs. (Just a rough figure)

Buy 2 lots of Put & Call options, so total investment = 50*100+50*100=10,000Rs.

If Nifty breaks resistance and keeps moving higher, Nifty CE 5800 value (Rs.50) will increase.
If Nifty breaks support and keeps moving lower Nifty PE 5600 value (Rs.50) will decrease.

Say if Nifty SPOT is 5500 now, then your investment value will be Nifty CE 5800==Rs.9 & Nifty PE 5600 ==Rs.120

Total value = 9*100+120*100=Rs.12900

Total Profit=Rs.10,000-12,900= Rs.2,900.

Your Returns is 29%.

I tried this with high volatile stocks like DLF & Nifty, it worked fine.

Please do let me know if anyone already tried this strategy?

This looks interesting. Thanks!

 

[kvsanto]

Hi,

I have back tested this strategy & it worked perfectly. I have been trying out this strategy for couple of weeks. It�s been giving consistent returns of around 15 to 20%, but am curious to know if any of the members have already tried this.


Strategy:

Investment needed: Rs.10,000
Suitable Trading days: 1st to 20th of every month (Better to avoid last week of expiry)

This strategy will give best returns when you expect Nifty or any stock to move either ways with big move.

Example: Nifty Spot (5700)
Trade: Buy Nifty Call 5800 & Nifty Put 5600.

Say Nifty CE 5800 is 50Rs. & Nifty PE 5600 50Rs. (Just a rough figure)

Buy 2 lots of Put & Call options, so total investment = 50*100+50*100=10,000Rs.

If Nifty breaks resistance and keeps moving higher, Nifty CE 5800 value (Rs.50) will increase.
If Nifty breaks support and keeps moving lower Nifty PE 5600 value (Rs.50) will decrease.

Say if Nifty SPOT is 5500 now, then your investment value will be Nifty CE 5800==Rs.9 & Nifty PE 5600 ==Rs.120

Total value = 9*100+120*100=Rs.12900

Total Profit=Rs.10,000-12,900= Rs.2,900.

Your Returns is 29%.

I tried this with high volatile stocks like DLF & Nifty, it worked fine.

Please do let me know if anyone already tried this strategy?

Hey,

Say if Nifty SPOT is 5500 now, then your investment value will be Nifty CE 5800==Rs.9
How did you come at the value as 9

what was the formula used for the same, as am quite ew now since my trading stopped some 5-8yrs.

Regards

kvsanto

 

[niceman]

I think If somebody trade in deep ITM, then there are below advantages.
a) Deep ITM works almost like futures(delta 1) while option(delta 0.8~.85) at position and once moves in profit, delta approaches towards 1.
b) Loss in sudden crash is limited to what you paid.

Research shows that futures always fetch more profit then option , but in case there is any unexpected movement, 1 day is enough to erode all profit earned in 1 year with whatever strategy and rule you follow.

So in my view , If ITM options are played systematically, they can be good bet for wealth increase in long run.
But at the same time ,OTM options are key to loose all hard earned money

I follow SH 315 stratagy using deep ITM. Although I get difficulty in last week, when I switch current month option to next month options but I cannot take risk of holding futures overnight. Sometime I miss rally which happens in last week.

Thanks for your post. Does this apply to Nifty options, especially the part where you mention that OTM options could be fatal; if I understood it right.
Of course, I my physical age in 65 but trading age is just a couple of months.
So pardon if I have erred.