GOOD PROFIT: Hedged nifty positions with straddle...

[linkon7]

Exited all the positions for a net profit of 9 K. Dont like the idea of nifty trading above 4500 and then jumping around this level. We dont expect a major move up..nor a major move down. So holding the short straddle did make sense. But when in doubt, get out... and i got out...!

 

[Xaero]

Exited all the positions for a net profit of 9 K. Dont like the idea of nifty trading above 4500 and then jumping around this level. We dont expect a major move up..nor a major move down. So holding the short straddle did make sense. But when in doubt, get out... and i got out...!

Can you post the stats like you used to..

I think you got out just in time. Dow breaks above 9000. Expecting gap up tomorrow.

 

[heeemz]

Heemz,
I think all the modifications has got you very confused. Think of it this way. I sold 4500 call aug and 4500 put put aug for a total premuim of 395 Rs. Now i leave it the way it is, and concentrate only on nifty futures only. The only decision that i have to make is to sell nifty below 4500 and hold on to it. and if nifty futures trades above 4500 then i have to buy it.

buy nifty above 4500 and sell below 4500. Nothing more.

If everything goes smooth, end of the August series, you should have 395 points in your pocket.

Paper trade this for a month and then we can take note of the progress.

Linkon: Thanks for the guidance. Yes I am kind of confused with how to play with NF and specially how does it not result in to losses while markets are behaving erratic.

I think the best would be to paper trade it for a month, I guess that should help overcoming doubts and help learning it better.

Cheers,

Heems

 

[Xaero]

I trade intraday futures and have to close the position by eod. Many times I have noticed that if I make 50pts during the 5hr trading I could make another 50pt by just holding it till opening next day. However I don't want to take the risk.

I was thinking about carrying overnight options instead so that way the loss is limited but the move is not the same a futures. It moves a smaller amount. So I would need to buy more lots which is alright. I am not going to selll any because I don't want the risk.

Basically if I am bullish instead of holding 1 NF lot overnight I can buy 2 CE of the nearest OTM strike. Do think this is a good idea? are there any drawbacks or anything i need to be aware of?

Thanks in advance.

 

[linkon7]

I think you got out just in time. Dow breaks above 9000. Expecting gap up tomorrow.

You see, if market takes a direction, then i get to achieve the target within 2 weeks of initiation. but if market remains stagnant and just moves around in a tight range, then i'll just have to wait it out to achieve target. That spells, waiting for 5 weeks to get 400 points. No point blocking the capital for so long.

dow breaking 9000 wont ensure a gap up. its no surprise and was bound to happen. RIL and 7 sensex stock's results can have a bearing on tomorrow's direction.

In my view, the upside is capped and so is the downside. Volatality has to die down before we make a break for higher grounds. till then, we will see up days followed by down days. lack of major shorts in the system is the main culprit. index is at 19.8 PE. so hot money wont be chasing valuations anymore. Action will shift to midcaps and small caps . expect a slow drift in the coming weeks.

 

[linkon7]

I trade intraday futures and have to close the position by eod. Many times I have noticed that if I make 50pts during the 5hr trading I could make another 50pt by just holding it till opening next day. However I don't want to take the risk.

I was thinking about carrying overnight options instead so that way the loss is limited but the move is not the same a futures. It moves a smaller amount. So I would need to buy more lots which is alright. I am not going to selll any because I don't want the risk.

Basically if I am bullish instead of holding 1 NF lot overnight I can buy 2 CE of the nearest OTM strike. Do think this is a good idea? are there any drawbacks or anything i need to be aware of?

Thanks in advance.

Carry positions only if you are in profit. Never carry a losing trade. If say, you are making 50 point in NF and you want to carry it for the next day, preferably do so by hedging with options. I'll give you an example,

yesterday, i had initiated a short at 4528 and carried it forward for the next day. the net profit was about 100 point plus. As a hedge, i bought 4400 call july for 88. Today, market gapped up to 4460 levels, i waited for 5 min and when the low of the day, 4455 didnt break, i exited the short. My 100 point gain was reduced to 50 points. I held on to the call and finally sold it at 148... covering my losses due to the gap up.

Say the market broke 4400 and went down instead of gapping up, then the loss on call would be more than compensated by NF...

But if i would carry naked positions (NF or 2 options having the same beta, as in your case) then incase the market moved against me, i wouldnt get a a chance to recover...

 

[linkon7]

Linkon: Thanks for the guidance. Yes I am kind of confused with how to play with NF and specially how does it not result in to losses while markets are behaving erratic.

I think the best would be to paper trade it for a month, I guess that should help overcoming doubts and help learning it better.

Cheers,

Heems

If i just ask you to short nifty at 4502 and as soon as it gets triggered, place a reverse order for 4498 and vice versa...

Thats all you have to do... paper trade it for a few months. you'll get the idea...

 

[pasha]

Exited all the positions for a net profit of 9 K. Dont like the idea of nifty trading above 4500 and then jumping around this level. We dont expect a major move up..nor a major move down. So holding the short straddle did make sense. But when in doubt, get out... and i got out...!

You could have hedged with a long July strangle.
I have sold an Aug strangle today when NF was at 4558 for 342.
Hedged with OTM July strangle for 21.
Max loss on 500 point move either way is 30

 

[linkon7]

You could have hedged with a long July strangle.
I have sold an Aug strangle today when NF was at 4558 for 342.
Hedged with OTM July strangle for 21.
Max loss on 500 point move either way is 30

I could carry the positions. Just need the cash, so sold out. I always hedge the NF at the end of the day..so there was minimal damage buy gap ups and down... risk-reward ratio was very favourable.

Aprt from that, there is hardly anything wrong that can happen.

 

[MurAtt]

You could have hedged with a long July strangle.
I have sold an Aug strangle today when NF was at 4558 for 342.
Hedged with OTM July strangle for 21.
Max loss on 500 point move either way is 30

But july strangle will not give u any leeway as such - 4 days left.

Haan, if u r just selling and trying to gain on some premium devaluation over expiry, then ok I suppose.