High Profit EOD based option Strategy for Advanced Traders

pannalal

Well-Known Member
#1
Transaction to be done on 05.11.2013 for Base Index at 6317.35:
Buy 6600 CE at Price 24.40
Sell 6400 CE at Price 87.25
Sell 6500 CE at Price 49.50
Net Points Received: 112.35

Very Important:
Either do not enter into trade, if enter, be sure to make all the three trades at one go. If you do two trades and miss one trade, then this strategy might result into huge losses. So, this is not for novice but only for Advanced Traders.

Profit / Loss in points (To convert to rupees, multiply it with 50):
Profit if Index is less than and equal to 6400 on 28.11.2013 is 112.35
Profit for Index equal to 6500 on 28.11.2013 is 12.35
:clap:
Loss for Index equal to 6600 on 28.11.2013 is -187.65
Loss for Index equal to 6700 on 28.11.2013 is -287.65

Summary:
(1) If Nifty remains within 6,400 on 28.11.2013 there is profit of 112.35 points minus commission and STT. Nothing to do.

(2) If Nifty goes above 6,500, it may result into loss. You may argue that Nifty never crossed 6,400 till date, so it will not cross 6,500 now also. There may be less probability but it is not impossible. So, there has to be exit strategies in case of Nifty crosses above 6,500.

There are three possible exit strategy depending upon the timings of the market and the person's mood and funding:

(1) If Nifty crosses 6,500 marks near 28th November (say 26th or 27th), do nothing and pray that it comes below 6,500. In stock market, there is no free lunch. Losses are part of life. Successful traders bank on probability and do more winning trades than losing trades. There is no trade with 100% success rate.

(2) If Nifty crosses 6,500 marks by 20th or 21st, you can go long 2 Nifty at 6,500. But, you have to avoid whipsaw and put stop loss. The advanced traders know how to manage this.

(3) If Nifty crosses 6,500 marks by 10th or 11th and you have sufficient funds, you can create new position in such a way that if Nifty remains 6200 and above, you will gain 100+ points. That means, it is possible to take new position such that you will gain 100+ points provided Nifty remains 6,200 and above by 28th November. If it comes below 6200, you may incur heavy losses. Here, probability plays major role. First of all, the probability of crossing 6,500 marks by 10th or 11th is very less. If it crosses beyond 6,500 marks, it is sill less likely that Nifty goes below 6,200 by 28th November 2013. However, nothing is impossible and you should be mentally ready to take losses.

Disclaimer: I shall not be responsible if anybody does any trade based on the above guidance. The above strategy is only for advanced traders (and not for novice). I neither share your profit so not ready to share the loss.:)

Panna Lal Patodia
 

pannalal

Well-Known Member
#2
I can give one more strategy that looks better on paper but those who have traded in options will vouch, it is not better.

Transaction to be done on 05.11.2013 for Base Index at 6317.35:
Buy 6600 PE at Price 265
Sell 6400 PE at Price 138.60
Sell 6450 CE at Price 67
Net Paid: -59.40

Very Important:
Either do not enter into trade, if enter, be sure to make all the three trades at one go. If you do two trades and miss one trade, then this strategy might result into huge losses. So, this is not for novice but only for Advanced Traders.


Profit / Loss in points (To convert to rupees, multiply it with 50):
Profit if Index is less than and equal to 6400 on 28.11.2013 is 140.60
Loss for Index equal to 6500 on 28.11.2013 is -9.40
Loss for Index equal to 6600 on 28.11.2013 is -209.40
Loss for Index equal to 6700 on 28.11.2013 is -309.40

Why it looks better on paper
Profit if Index is less than and equal to 6400 on 28.11.2013 was 112.35 points in previous strategy whereas in this strategy it is 140.60.

What is the problem? Why it is not better?
If you carefully notice, the premium amount is much larger in this strategy:
Buy 6600 PE at Price 265
Sell 6400 PE at Price 138.60
Sell 6450 CE at Price 67

When premium is larger, the difference between bid and ask price also will be big. So, if you try to implement this strategy, you might land up paying much more than 59.40. However, if you can really manage it within 60 points, then, it is much better strategy. Rest everything remains almost same as previous strategy.

Disclaimer: I shall not be responsible if anybody does any trade based on the above guidance. The above strategy is only for advanced traders (and not for novice). I do not share your profit so not ready to share the loss.
 
Last edited:

pannalal

Well-Known Member
#3
Below, I give two strategies for tomorrow:

Strategy No 1

Transaction to be done on 06 Nov 2013 for Base Index at 6245.45
Buy 6650 PE at Price 344.60
Sell 6300 PE at Price 111.70
Sell 6450 CE at Price 44.65
Net Points Paid: -188.25

Profit if Index is less than and equal to on 28 Nov 20136350 is 161.75
Profit for Index equal to 6450 on 28 Nov 2013 is 11.75
Loss for Index equal to 6550 on 28 Nov 2013 is -188.25
Loss for Index equal to 6650 on 28 Nov 2013 is -388.25

So, if you take 10 lots of each, you can earn around Rs. 80,875 - Brokerage and STT etc.:clap:

Strategy 2

Transaction to be done on 06 Nov 2013 for Base Index at 6245.45
Buy 6700 CE at Price 5.70
Sell 6300 CE at Price 106
Sell 6450 CE at Price 44.65
Net Points Received: 144.95

Profit if Index is less than and equal to on 28 Nov 20136350 is 144.95
Loss for Index equal to 6450 on 28 Nov 2013 is -5.05
Loss for Index equal to 6550 on 28 Nov 2013 is -205.05
Loss for Index equal to 6650 on 28 Nov 2013 is -405.05

Exit strategy same as given in first post.

Very Important:
Either do not enter into trade, if enter, be sure to make all the three trades at one go. If you do two trades and miss one trade, then this strategy might result into huge losses. So, this is not for novice but only for Advanced Traders.

Disclaimer: I shall not be responsible if anybody does any trade based on the above guidance. The above strategy is only for advanced traders (and not for novice). I do not share your profit so not ready to share the loss.
 

ananths

Well-Known Member
#4
Transaction to be done on 05.11.2013 for Base Index at 6317.35:
Buy 6600 CE at Price 24.40
Sell 6400 CE at Price 87.25
Sell 6500 CE at Price 49.50
Net Points Received: 112.35

Very Important:
Either do not enter into trade, if enter, be sure to make all the three trades at one go. If you do two trades and miss one trade, then this strategy might result into huge losses. So, this is not for novice but only for Advanced Traders.

Profit / Loss in points (To convert to rupees, multiply it with 50):
Profit if Index is less than and equal to 6400 on 28.11.2013 is 112.35
Profit for Index equal to 6500 on 28.11.2013 is 12.35
:clap:
Loss for Index equal to 6600 on 28.11.2013 is -187.65
Loss for Index equal to 6700 on 28.11.2013 is -287.65

Summary:
(1) If Nifty remains within 6,400 on 28.11.2013 there is profit of 112.35 points minus commission and STT. Nothing to do.

(2) If Nifty goes above 6,500, it may result into loss. You may argue that Nifty never crossed 6,400 till date, so it will not cross 6,500 now also. There may be less probability but it is not impossible. So, there has to be exit strategies in case of Nifty crosses above 6,500.
If you can predict market, why would you do we need these strategies?

There are three possible exit strategy depending upon the timings of the market and the person's mood and funding:

(1) If Nifty crosses 6,500 marks near 28th November (say 26th or 27th), do nothing and pray that it comes below 6,500. In stock market, there is no free lunch. Losses are part of life. Successful traders bank on probability and do more winning trades than losing trades. There is no trade with 100% success rate.
There is no trade with 100% success..but this strategy can erase your entire capital..then why to take so much risk?

(2) If Nifty crosses 6,500 marks by 20th or 21st, you can go long 2 Nifty at 6,500. But, you have to avoid whipsaw and put stop loss. The advanced traders know how to manage this.
What if you lose in this trade?

(3) If Nifty crosses 6,500 marks by 10th or 11th and you have sufficient funds, you can create new position in such a way that if Nifty remains 6200 and above, you will gain 100+ points. That means, it is possible to take new position such that you will gain 100+ points provided Nifty remains 6,200 and above by 28th November. If it comes below 6200, you may incur heavy losses. Here, probability plays major role. First of all, the probability of crossing 6,500 marks by 10th or 11th is very less. If it crosses beyond 6,500 marks, it is sill less likely that Nifty goes below 6,200 by 28th November 2013. However, nothing is impossible and you should be mentally ready to take losses.

Disclaimer: I shall not be responsible if anybody does any trade based on the above guidance. The above strategy is only for advanced traders (and not for novice). I neither share your profit so not ready to share the loss.:)

Panna Lal Patodia
Dear Pannalal,

You can see the RR for this strategy below






Sorry pannalal but i see a big issue in this strategy...this is not something new. Most of us know this..that if market doesn't reach the short strike price will earn entire premium..if you are thinking market wont reach 6500, just sell that option why you want sell 6400 and buy 6600?
RR is very bad in this strategy and one losing trade will take away your capital..
If you have already traded this and continuing please share your experience with live trades here.
Wish you all the best!:thumb:
 

pannalal

Well-Known Member
#5
Dear Pannalal,

You can see the RR for this strategy below






Sorry pannalal but i see a big issue in this strategy...this is not something new. Most of us know this..that if market doesn't reach the short strike price will earn entire premium..if you are thinking market wont reach 6500, just sell that option why you want sell 6400 and buy 6600?
RR is very bad in this strategy and one losing trade will take away your capital..
If you have already traded this and continuing please share your experience with live trades here.
Wish you all the best!:thumb:
Ananthsji,

My Commnet: If Nifty crosses 6,500 marks near 28th November (say 26th or 27th), do nothing and pray that it comes below 6,500. In stock market, there is no free lunch. Losses are part of life. Successful traders bank on probability and do more winning trades than losing trades. There is no trade with 100% success rate.

Your Comment: There is no trade with 100% success..but this strategy can erase your entire capital..then why to take so much risk?

My Reply:
If Nifty touches 6500 on 26th November, what stops you to reverse the transaction. The various premium prices will be as follows on 26th November:

6600 CE: 5.00
6400 CE: 107.70
6500 CE: 34.60

You lose 137.3 points and you have already got 112.35 points. So, at max you are losing 25 points. If every month, you earn 110 points and once in a while (say 1 out of 10 months), you lose 25 points, what is the problem?

If Nifty touches 6500 on 27th November, you lose around 126 points. As you have already got 112 points, you lose 14 points only.

Now, can you explain how do you lose your entire capital?:thumb:
 

ananths

Well-Known Member
#6
Dear pannalal ji,

These all looks fine in paper trade..but it will be a roller coaster ride if you trade it live.
Did you trade like this? or are you doing this now?
If earning is so simple why people are not doing it?

I simply wont do it because i dont want to take so much risk. If I debit spread and hold it for entire month i will have 1:4 RR.

I'm not looking for maximum profit..im looking for low risk and decent returns and play consistantly for longer term.
 

pannalal

Well-Known Member
#7
Dear pannalal ji,

These all looks fine in paper trade..but it will be a roller coaster ride if you trade it live.
Did you trade like this? or are you doing this now?
If earning is so simple why people are not doing it?

I simply wont do it because i dont want to take so much risk. If I debit spread and hold it for entire month i will have 1:4 RR.

I'm not looking for maximum profit..im looking for low risk and decent returns and play consistantly for longer term.
Dear Ananthsji,

It is not paper trade. You read the entire post with a positive mind set. If you feel there is problem, do not trade like this. I do not want you to do any risky trade and loss the money. I just wanted to help genuinely.

However, above figures are not cooked up by me. These are from a very sophisticated software that can do thousands of computations in less than one second and can tell you the best strategy at any point of time.

To reduce your risk, suppose as soon as Nifty touches 6,400, you want to come out of the trade. The result of the various dates and net loss / profit is given below:

16 Nov 2013: -4.22
17 Nov 2013: 1.30
18 Nov 2013: 7.10
19 Nov 2013: 13.23
20 Nov 2013: 19.73
21 Nov 2013: 26.69
22 Nov 2013: 34.22
23 Nov 2013: 42.46
24 Nov 2013: 51.60
25 Nov 2013: 61.92
26 Nov 2013: 73.79
27 Nov 2013: 87.63

All the above figures are from the software. What I have given is realistic picture. It is your choice, you want to believe or you do not want to believe.:)
 

ananths

Well-Known Member
#8
Dear Ananthsji,

It is not paper trade. You read the entire post with a positive mind set. If you feel there is problem, do not trade like this. I do not want you to do any risky trade and loss the money. I just wanted to help genuinely.

However, above figures are not cooked up by me. These are from a very sophisticated software that can do thousands of computations in less than one second and can tell you the best strategy at any point of time.

To reduce your risk, suppose as soon as Nifty touches 6,400, you want to come out of the trade. The result of the various dates and net loss / profit is given below:

16 Nov 2013: -4.22
17 Nov 2013: 1.30
18 Nov 2013: 7.10
19 Nov 2013: 13.23
20 Nov 2013: 19.73
21 Nov 2013: 26.69
22 Nov 2013: 34.22
23 Nov 2013: 42.46
24 Nov 2013: 51.60
25 Nov 2013: 61.92
26 Nov 2013: 73.79
27 Nov 2013: 87.63

All the above figures are from the software. What I have given is realistic picture. It is your choice, you want to believe or you do not want to believe.:)
Dear Pannalal ji,

Thanks for the concern..I appreciate that.
My view and thinking is very different from yours. You are cocentrating on "high probability" and i'm concentrating on "low risk".

Its obvious that high risk trades will give you high returns and low risk trades will give you low returns.

There is nothing against your method. At times it will give highest return and you may be able to do this consistantly. :thumb:
 

pannalal

Well-Known Member
#9
Dear Pannalal ji,

Thanks for the concern..I appreciate that.
My view and thinking is very different from yours. You are cocentrating on "high probability" and i'm concentrating on "low risk".

Its obvious that high risk trades will give you high returns and low risk trades will give you low returns.

There is nothing against your method. At times it will give highest return and you may be able to do this consistantly. :thumb:
Dear Ananthji,

I perfectly agree with you. Everybody should do trade according to his style and choice. As far as my trade is concerned, I do not decide anything. It is the software that decides and guides at every step. So, I am able to manage it. The only problem is I cannot launch it for next two years.

So, I can help people with strategy given by it but not the software itself.
 

gmt900

Well-Known Member
#10
Hi Pannalal,

1. Can one enter strategy on any day based on EOD spot nifty level?
2.How are the strike prices selected based on EOD spot price of the previous day?
3. Does VIX play role in the outcome ?
4. All orders should be filled, which should not be difficult for nifty.
5. You have indicated probable P/L in case nifty crosses certain level using a software. How will traders using this strategy be able to assess risk ?
6. Is it possible to modify the strategy by reducing the profit potential while reducing the potntial max risk?
7. Should one go for near month options only?
As Ananth has pointed out the strategy is based more on high probability, which is fine, but if the max risk one has to take is known upfront it will help.
Thanks and regards,
gmt
 

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