High Profit EOD based option Strategy for Advanced Traders
- Thread starter pannalal
- Start date
- Tags advanced strategy eod nifty options
Below, I give strategy for tomorrow 07 Nov 2013:
As Ananthji wanted strategy for least risk, this is the strategy given by the software where the risk is minimum:
Transaction to be done on 07 Nov 2013 for Base Index at 6245.45
Buy 6550 PE at Price 281.05 - 2 lots
Sell 6450 PE at Price 223.00 - 1 lot
Sell 6600 PE at Price 342.85 - 1 lot
Net Points Received: 3.75
Profit if Index is less than and equal to 6450 on 28 Nov 2013 is 53.75:thumb:
Break Even Points: 6503.75 and less than 6596.25
Note: There will be loss between these two points
Loss if Index is equal to 6550 on 28 Nov 2013 is -46.25
Profit if Index is more than or equal to 6600 on 28 Nov 2013 is 3.75
1. Can one enter strategy on any day based on EOD spot nifty level?
Generally first week is suitable. However, I am giving the best possible strategy from the software every day. I shall continue for some more days.
2.How are the strike prices selected based on EOD spot price of the previous day?
Yes
3. Does VIX play role in the outcome ?
Yes
4. All orders should be filled, which should not be difficult for nifty.
But, the profit depends upon the premium price got / paid by you.
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 ?
This is a very difficult question to answer.
6. Is it possible to modify the strategy by reducing the profit potential while reducing the potntial max risk?
Yes, I have given strategy according to this only.
7. Should one go for near month options only?
Yes.
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.
As Ananthji wanted strategy for least risk, this is the strategy given by the software where the risk is minimum:
Transaction to be done on 07 Nov 2013 for Base Index at 6245.45
Buy 6550 PE at Price 281.05 - 2 lots
Sell 6450 PE at Price 223.00 - 1 lot
Sell 6600 PE at Price 342.85 - 1 lot
Net Points Received: 3.75
Profit if Index is less than and equal to 6450 on 28 Nov 2013 is 53.75:thumb:
Break Even Points: 6503.75 and less than 6596.25
Note: There will be loss between these two points
Loss if Index is equal to 6550 on 28 Nov 2013 is -46.25
Profit if Index is more than or equal to 6600 on 28 Nov 2013 is 3.75
1. Can one enter strategy on any day based on EOD spot nifty level?
Generally first week is suitable. However, I am giving the best possible strategy from the software every day. I shall continue for some more days.
2.How are the strike prices selected based on EOD spot price of the previous day?
Yes
3. Does VIX play role in the outcome ?
Yes
4. All orders should be filled, which should not be difficult for nifty.
But, the profit depends upon the premium price got / paid by you.
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 ?
This is a very difficult question to answer.
6. Is it possible to modify the strategy by reducing the profit potential while reducing the potntial max risk?
Yes, I have given strategy according to this only.
7. Should one go for near month options only?
Yes.
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.
Last edited:
Dear Pannalalji,
It looks like you have a super computer which calculates all these stuff in options. Does it trade and manage the strategy also without human intervention? :clapping:
From your quote,
Profit if Index is less than and equal to 6450 on 28 Nov 2013 is 53.75Break Even Points: 6503.75 and 6642.50
Note: There will be loss between these two points
Loss if Index is equal to 6550 on 28 Nov 2013 is -46.25
Highlighted the RR, its almost 1:1 right? but you can say very high probablity because Index closing between 6500 & 6650 ...thats too far from current market.
One more question is, you said these strategy is provided by your computer, then why cant a novice trade this? why one needs experience? (please ignore if you feel these questions are not relevant) :thumb:
It looks like you have a super computer which calculates all these stuff in options. Does it trade and manage the strategy also without human intervention? :clapping:
From your quote,
Profit if Index is less than and equal to 6450 on 28 Nov 2013 is 53.75Break Even Points: 6503.75 and 6642.50
Note: There will be loss between these two points
Loss if Index is equal to 6550 on 28 Nov 2013 is -46.25
Highlighted the RR, its almost 1:1 right? but you can say very high probablity because Index closing between 6500 & 6650 ...thats too far from current market.
One more question is, you said these strategy is provided by your computer, then why cant a novice trade this? why one needs experience? (please ignore if you feel these questions are not relevant) :thumb:
@Gmt900
A few points from my side on your question. As I see now, it is a cross over, as Pannalal has answered your questions. Still, I let my answer be here, so you have two views about it. I guess Pannalal does not mind about that.
1. You can. But the point is to make the profit on time decay. So if you have less time decay left in your options, your profit will be smaller and vice versa when you take options which are more out of the month, you will have more time decay left. But then the probability calculation will show up with other numbers, which are even more far out of the money.
2. As he told: It is build on probability (Bell Curve). Here we have Standard deviations. In the example shown by Pannalal, the long leg is on Stdv one and the short legs are under it, split to the 100 point strike levels given in Nifty.
3. VIX is an important number for the probability calculation. The whole strategy by itself should not be much affected by vola as long as you do not change or play with the different legs under certain circumstances.
4. Answer given by your self. If you want you also can leg in. Your choice.
5. Watch the market moves and watch the prices of the options which are involved in that trade. So you always know where your risk moves too. If you have shorts only on one side, you any way should understand the risk when doing so, other wise do not trade such ways.
6. Well, just do the credit spread with the long 6600 C and sell the 6500 C. Less risk and less profit. Or you go more far out of the money with the whole strategy or you add one more long leg by buying two 6600 C. You also can take out one leg during the trade to reduce risk or go more far out of the month and so on. Many ways.
7. Answer given in point one.
Finally: High probability not necessary means high risk. Why? How does this sound: A high probability to not be touched by the market
= Lower risk.
Take care / DanPickUp
A few points from my side on your question. As I see now, it is a cross over, as Pannalal has answered your questions. Still, I let my answer be here, so you have two views about it. I guess Pannalal does not mind about that.
1. You can. But the point is to make the profit on time decay. So if you have less time decay left in your options, your profit will be smaller and vice versa when you take options which are more out of the month, you will have more time decay left. But then the probability calculation will show up with other numbers, which are even more far out of the money.
2. As he told: It is build on probability (Bell Curve). Here we have Standard deviations. In the example shown by Pannalal, the long leg is on Stdv one and the short legs are under it, split to the 100 point strike levels given in Nifty.
3. VIX is an important number for the probability calculation. The whole strategy by itself should not be much affected by vola as long as you do not change or play with the different legs under certain circumstances.
4. Answer given by your self. If you want you also can leg in. Your choice.
5. Watch the market moves and watch the prices of the options which are involved in that trade. So you always know where your risk moves too. If you have shorts only on one side, you any way should understand the risk when doing so, other wise do not trade such ways.
6. Well, just do the credit spread with the long 6600 C and sell the 6500 C. Less risk and less profit. Or you go more far out of the money with the whole strategy or you add one more long leg by buying two 6600 C. You also can take out one leg during the trade to reduce risk or go more far out of the month and so on. Many ways.
7. Answer given in point one.
Finally: High probability not necessary means high risk. Why? How does this sound: A high probability to not be touched by the market
= Lower risk.Take care / DanPickUp
I have given the above strategy as provided by the software. However, I myself have certain questions about the above strategy:
(1) The actual profit will depend upon the actual premium paid / received (not on the last price given by NSE).
(2) To purchase 2 lots at price 281.05, you require margin around Rs. 28,100. For selling, two lots, you require margin of Rs. 43,000 to Rs. 60,000 depending upon the broker. So, the net margin required is Rs. 71,000 to Rs. 88,000. Is this profit sufficient for investment of such an amount.
(3) If Nifty closes between 6503.75 and 6596.25 on 28th Nov 2013, there is still chance of loss. The maximum loss being -46.25 points. However, the break even points and maximum loss depends upon the premium paid or received.
(4) You still need to pay brokerage, STT etc.
(5) I feel that we need to use strategy of high profit with proper exit strategy. I know that you do not have software to guide you but I feel the members have lot of experience and that experience will be better than the software. I am novice, so I require software. After all, software is written by human being and experienced persons are smarter than the software.
(1) The actual profit will depend upon the actual premium paid / received (not on the last price given by NSE).
(2) To purchase 2 lots at price 281.05, you require margin around Rs. 28,100. For selling, two lots, you require margin of Rs. 43,000 to Rs. 60,000 depending upon the broker. So, the net margin required is Rs. 71,000 to Rs. 88,000. Is this profit sufficient for investment of such an amount.
(3) If Nifty closes between 6503.75 and 6596.25 on 28th Nov 2013, there is still chance of loss. The maximum loss being -46.25 points. However, the break even points and maximum loss depends upon the premium paid or received.
(4) You still need to pay brokerage, STT etc.
(5) I feel that we need to use strategy of high profit with proper exit strategy. I know that you do not have software to guide you but I feel the members have lot of experience and that experience will be better than the software. I am novice, so I require software. After all, software is written by human being and experienced persons are smarter than the software.
The computer is not super computer, the program is excellent.
Breakeven points are 6503.75 and 6596.25. My copy paste mistake, not program's. However, these depend upon the actual premium paid and received by you. I do not know much about risk, reward ratio. So, I request other members to comment upon that.
Your Question: One more question is, you said these strategy is provided by your computer, then why cant a novice trade this? why one needs experience?
My Answer: Experience is required for two reasons:
(1) While doing trade, there will be lot of gap between ask and bid, so you require experience to sell at as high as possible and to buy at as less as possible.
(2) There will be loss between break even points. You require experience to avoid or to minimize the loss. For example, an experience trader might close the transaction if Nifty is approaching 6,450 and take as little profit as possible. It is also possible to create a new strategy wherein you can create new trade such that there will be profit between 6200 and 6800 but loss on either side. For this, you require experience or the software. As I am novice, I use software. Those who are experience can find better strategies than the software.
Breakeven points are 6503.75 and 6596.25. My copy paste mistake, not program's. However, these depend upon the actual premium paid and received by you. I do not know much about risk, reward ratio. So, I request other members to comment upon that.
Your Question: One more question is, you said these strategy is provided by your computer, then why cant a novice trade this? why one needs experience?
My Answer: Experience is required for two reasons:
(1) While doing trade, there will be lot of gap between ask and bid, so you require experience to sell at as high as possible and to buy at as less as possible.
(2) There will be loss between break even points. You require experience to avoid or to minimize the loss. For example, an experience trader might close the transaction if Nifty is approaching 6,450 and take as little profit as possible. It is also possible to create a new strategy wherein you can create new trade such that there will be profit between 6200 and 6800 but loss on either side. For this, you require experience or the software. As I am novice, I use software. Those who are experience can find better strategies than the software.
@Gmt900
A few points from my side on your question. As I see now, it is a cross over, as Pannalal has answered your questions. Still, I let my answer be here, so you have two views about it. I guess Pannalal does not mind about that.
1. You can. But the point is to make the profit on time decay. So if you have less time decay left in your options, your profit will be smaller and vice versa when you take options which are more out of the month, you will have more time decay left. But then the probability calculation will show up with other numbers, which are even more far out of the money.
2. As he told: It is build on probability (Bell Curve). Here we have Standard deviations. In the example shown by Pannalal, the long leg is on Stdv one and the short legs are under it, split to the 100 point strike levels given in Nifty.
3. VIX is an important number for the probability calculation. The whole strategy by itself should not be much affected by vola as long as you do not change or play with the different legs under certain circumstances.
4. Answer given by your self. If you want you also can leg in. Your choice.
5. Watch the market moves and watch the prices of the options which are involved in that trade. So you always know where your risk moves too. If you have shorts only on one side, you any way should understand the risk when doing so, other wise do not trade such ways.
6. Well, just do the credit spread with the long 6600 C and sell the 6500 C. Less risk and less profit. Or you go more far out of the money with the whole strategy or you add one more long leg by buying two 6600 C. You also can take out one leg during the trade to reduce risk or go more far out of the month and so on. Many ways.
7. Answer given in point one.
Finally: High probability not necessary means high risk. Why? How does this sound: A high probability to not be touched by the market = Lower risk.
Take care / DanPickUp
A few points from my side on your question. As I see now, it is a cross over, as Pannalal has answered your questions. Still, I let my answer be here, so you have two views about it. I guess Pannalal does not mind about that.
1. You can. But the point is to make the profit on time decay. So if you have less time decay left in your options, your profit will be smaller and vice versa when you take options which are more out of the month, you will have more time decay left. But then the probability calculation will show up with other numbers, which are even more far out of the money.
2. As he told: It is build on probability (Bell Curve). Here we have Standard deviations. In the example shown by Pannalal, the long leg is on Stdv one and the short legs are under it, split to the 100 point strike levels given in Nifty.
3. VIX is an important number for the probability calculation. The whole strategy by itself should not be much affected by vola as long as you do not change or play with the different legs under certain circumstances.
4. Answer given by your self. If you want you also can leg in. Your choice.
5. Watch the market moves and watch the prices of the options which are involved in that trade. So you always know where your risk moves too. If you have shorts only on one side, you any way should understand the risk when doing so, other wise do not trade such ways.
6. Well, just do the credit spread with the long 6600 C and sell the 6500 C. Less risk and less profit. Or you go more far out of the money with the whole strategy or you add one more long leg by buying two 6600 C. You also can take out one leg during the trade to reduce risk or go more far out of the month and so on. Many ways.
7. Answer given in point one.
Finally: High probability not necessary means high risk. Why? How does this sound: A high probability to not be touched by the market
= Lower risk.Take care / DanPickUp
Anupji,
First thing, I am also a novice. However, I genuinely want to help people.
If you want to deal in options, the minimum capital required is Rs. 1 lakh. Sometime, you need to hedge based on the market movement, then you may require more money. So, it is better to have 1.5 lakh. Anybody, less than this, should not touch options.
You can tell me range where you expect the Nifty to be by 28th Nov 2013 and I shall give you strategy from my software.
There are many members here who are highly knowledgeable. You ask them to design a strategy in option such that it works within 30K.
First thing, I am also a novice. However, I genuinely want to help people.
If you want to deal in options, the minimum capital required is Rs. 1 lakh. Sometime, you need to hedge based on the market movement, then you may require more money. So, it is better to have 1.5 lakh. Anybody, less than this, should not touch options.
You can tell me range where you expect the Nifty to be by 28th Nov 2013 and I shall give you strategy from my software.
There are many members here who are highly knowledgeable. You ask them to design a strategy in option such that it works within 30K.
Your answers are far better than mine. I wish I also had the kind of knowledge you have.
Well, think about it the following way: As you programed that software, then your knowledge about that is far better then mine.
That is why big companies develop there option trading software in teams which include real option traders and real software developer. I think as a team we would be fine. :clapping:Take care / DanPickUp
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