Great Options Strategy for Zerodha and similar only

GuluGulu

Well-Known Member
#1
Hello,

I am back here after a very long period of time - almost an year or more. I stopped playing the market last year after a huge loss - and moreover, my little daughter was seriously ill last whole year from a rare Autoimmune disease - a blood disorder - called ITP - which allopathy has no cure. This made my world upside down all on a sudden - everything became meaningless at the blip.

Then, by God's Grace, I found a Great Homeopathic Doctor in Mumbai - I took my daughter to him and after a long homeopahic treatment - by God's Grace, she is now cured.

Only SavanGarde can remember me - perhaps he knows the story of my daughter - I told him sometimes.

Anyway, forgive me for taking your time to tell you my personal story. Again, I have started venturing the market - still learing every day.

Now here is the main object of this thread.
===================================

As you all know, ZERODHA has a flat brokerage service of 20/- per order - so we can immediately devise many additional strategy that will otherwise incur losses after you add the traditional brokerage.

For example, if you buy 20 lots of nifty CE or PE and just sell them at 2/- profit - all at once with just two orders, you will still earn some profit after Zerodha deducts brokerage and additional govt. taxes. But this is not true with conventional broker who chages brokerage on a per lot basis. Govt. taxes extra.

Here in TJ Forum, we have many experianced and professional bright traders. I belive, some kind of neutral options strategy can definitely be formed for intraday basis execution, that will surely give some profit.

For example, When Nifty FUT is exactly at a strike point or middle of strike point, say 5550 or 5600, we enter a strategy which will give some sure return if Nifty moves, say 30 points up or down in the same day, say 5630 or 5570 (say, we initiated the trade at Nifty FUT 5600) - 1 lot of strategy give a very miniscul profit - but profit, say Rs. 200/- or so. So, with 10 lots, it will give 2000/- profit. We close the strategy at, say, 30 point profit in any direction - and wait for Nifty to move next midpoint (say 5550 or 5650 etc) to initiate another strategy.

My point is, this 2000/- could have been wiped out with traditional brokerage system - but with Zerodha, we can have some sure profit at the day end - no matter where Nifty moves. If we can initiate at least 1 or 2 trades a day and multiplying this day by day, it will give a very good return.

The above is true for other broker also like Zerodha who may have flat brokerage. I would like to tell that I am not promoting Zerodha - I only have opened an account with them - and seeing their little brokerage - I started thinking if any such strategy could be built.

What do you think? Think seriously for all our benifit and please do not put harsh comment. Please make this thread dedicated to this technicals only.

Warm Regards,
GuluGulu

=========================================

Consider the following Long Strangle Strategy:

We buy just OTM call and put, equal amount when NF travels between 50th points and 100th points. We shall offload our previous position every 50th point and take a new position with appropriate just OTM options at that level.

All positions should be closed on intraday basis. No position should be overnight.

50th points mean 5450, 5550, 5650, 5750 etc.
100th points mean 5400, 5500, 5600, 5700 etc.

Take this real example.

NF is now at around 5550, a 50th point.

At this point, we buy just OTM call and put 1 lot each.

May 5600CE is 70.2/-
May 5500PE is 74.1/-

Total debit is roughly 7215/- per lot.

According to OptionOracle, When Nifty will reach north 5600 intraday, Profit will be 195/- or 2.7%
Or when Nifty reach south 5500 intraday, Profit will be 132/- or 1.8%

We now close the trade and open another trade with related just OTM options at that level, i.e 5500 or 5600 level.

Actually, the position will start gaining above 5570 or below 5522. It will only loose if Nifty remains between 5522 and 5570 whole day. In this case, the maximum loss also would be at the 50th point or 5500, and that is around 43/- per lot.

Don’t you think, most of the day, even at a very stagnant day, Nifty will not swing at least 30-40 points up or down before closing?

The beauty is, you gain both way – when market goes up or goes down.

All senior traders are aware of this strategy. But it is designed to hold the trade till expiry.

My slight modification is, just to do it intraday and take new positions every 50th point as explained above. Don’t hold the trade overnight, especially on friday – slight time decay would be there next day and more for Friday. Of course, you can hold the trade overnight if you think that next day Nifty will move wildly and offset any time decay loss.

Now, consider the above case – your minimum gain is 1.8% per day. If you start with 5 lots or 10 lots, your capital requirement would be 40,000 to 80,000. More according to your need.

Large lots order placed at a time will effectively reduce the brokerage to negligible value from brokers like Zerodha

Now deducting all negatives, such as loss in stagnant days, brokerage etc, miquote in putting order at the terminal etc – just think your net gain is 0.5% per day. Just see how much I have reduced.

So, from 25 trading days a month, your net monthly gain is 12.5%, that is 150% per annum.

Again I deduct a whopping 50% for anything critics will say. A net gain of 100% per annum.

Money doubled in a year.

Now consider the power of compounding. Just think, at this rate, your starting capital of just 1 lakh can give 128 lakh in 7 years. And that too with no market risk at all. At the end of each trading day, your money will be with you as you don’t hold overnight position.

Seniors – please criticize or suggest improvements.

May God Bless all of us,

GuluGulu
 
Last edited:

comm4300

Well-Known Member
#2
nice to know that your daughter is well and your are back in the markets.

there is another post titled 'is this scalping' which too is on similar lines of taking 1/2 rupees in nifty option.

Zerodha's flat b'age system is opening up many new possibilities to earn money.

And of course, AW10 strategy of spread is always a lifesaver when one wants to minimize risk.


i'm sure many seniors will contribute to this thread.
 

sumosanammain

Well-Known Member
#3
:) No where in your post have you discussed where you would get out if things go wrong :)

As for your daughter, I am so very happy dear. Children mean the world to us....... I am sure you must have done something good in your life, which God has considered, and made your daughter better. I hope she never relapses. Amen to that. But be sure that you explain to her as she grows up, about how she has had a second chance, and she should make the most of it.
 

GuluGulu

Well-Known Member
#4
:) No where in your post have you discussed where you would get out if things go wrong :)

As for your daughter, I am so very happy dear. Children mean the world to us....... I am sure you must have done something good in your life, which God has considered, and made your daughter better. I hope she never relapses. Amen to that. But be sure that you explain to her as she grows up, about how she has had a second chance, and she should make the most of it.
Thank You Sumosanammain for your nice wish. Actually yes, God has cured her - I believe this from my heart.

Anyway, about the 'Option scalping strategy'...I have read it. But that kind of thing is not desirable as far as I undrstand. What if the market goes in the opposite direction suddenly?

What I mean is to find a very good hedging strategy - that will give that 1 or 2 bucks in any market condition. You know, this hedging is really different from the blind single direction position.

I am not a master - that is why I request all great people here to devise such strategy - if possible.

May God Bless all of us.

GG
 
#5
Hi,

Why zerodha ? Why not RK Global ?

Isn't it cheaper?
 

columbus

Well-Known Member
#7
#8
Come on dev, you still trading 2 lots and below? :) :confused:

Beyond 5 lots, Zerodha is cheaper.......
But still, its very difficult to execute order in a single trade more than two lots, other than nifty.

Order can be one but trade execution can be different for stock futures. Each trade execution means multiple brokerage charges.
 

sumosanammain

Well-Known Member
#9
But still, its very difficult to execute order in a single trade more than two lots, other than nifty.

Order can be one but trade execution can be different for stock futures. Each trade execution means multiple brokerage charges.
You can have an order for 500 lots, traded over a range of prices, and still be charged 20 rs as the bkg for the entire 500 lots. Plus taxes of course

I routinely trade upto 10 lots of the most active stock futures, and have never faced a problem with execution.......barring the odd sudden movement rarely.... And I have friends who trade 10 times larger than me. They have a maximum of a rupee or so difference on a 500 rs scrip in execution. I am amazed at how you are not able to execute more than 2 lots at a price. Maybe you trade the very less active stock futures

Maybe you are going by the buyers and sellers in the best 5 box... Those are false :) There is something called disclosed quantity in the order field. You have to use that for bigger orders
 
#10
You can have an order for 500 lots, traded over a range of prices, and still be charged 20 rs as the bkg for the entire 500 lots. Plus taxes of course
I dont have a zerodha account and thus I am not aware of it. If that's the case then it is cheaper for sure.

I routinely trade upto 10 lots of the most active stock futures, and have never faced a problem with execution.......barring the odd sudden movement rarely.... And I have friends who trade 10 times larger than me. They have a maximum of a rupee or so difference on a 500 rs scrip in execution. I am amazed at how you are not able to execute more than 2 lots at a price. Maybe you trade the very less active stock futures

Maybe you are going by the buyers and sellers in the best 5 box... Those are false :) There is something called disclosed quantity in the order field. You have to use that for bigger orders
I dont want to argue with u Ratan, but Monday just try this for some stocks like National Aluminium or even ACC.
 

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