Intraday strategy by buying Put and Call option of same rate

[DanPickUp]

Am just talking about 7 lots to 10 lots of nifty at premium price. (margin required of about 50k - 60k)

i will not place limit orders i will just sell at the market price.

can you please explain where i am wrong?

Fine, and just show your entry filled and executed filled when you left the market next time you do what you explain.

No need of showing it at the moment you do it. Your trade.

Just prove it with the filled of entry and exit with exactly the amount you talk and with some kind of similar prices.

As soon as we see that, I will talk more.

Until then: Good learning and good trading as always

DanPickUp

 

[robingangawane]

Fine, and just show your entry filled and executed filled when you left the market next time you do what you explain.

No need of showing it at the moment you do it. Your trade.

Just prove it with the filled of entry and exit with exactly the amount you talk and with some kind of similar prices.

As soon as we see that, I will talk more.

Until then: Good learning and good trading as always

DanPickUp

Buying at 10 lots @ 45 and Buying 5 lots @ 90
and making profits by selling the same after 20 points movement of nifty.

The different in the profit and loss is the actual profit what I am talking about.

Currently I am doing paper trades and showed 90% profitable strategy and I am thinking to enter the options market soon with this strategy.

Please explain the drawbacks of this strategy. Please correct if I am wrong.

 

[nac]

I don't know much about options.

Up to my knowledge, if the underlying is not highly volatile you will lose your premium. And you can't expect the underlying highly volatile, daily.

 

[DanPickUp]

Buying at 10 lots @ 45 and Buying 5 lots @ 90
and making profits by selling the same after 20 points movement of nifty.

The different in the profit and loss is the actual profit what I am talking about.

Currently I am doing paper trades and showed 90% profitable strategy and I am thinking to enter the options market soon with this strategy.

Please explain the drawbacks of this strategy. Please correct if I am wrong.

The confusion may lays here: For me 10 lots are 1000 option as one lot are 100 options and 5 lots are 500 options. So in this case we talk about 1500 options you will buy for what you plan. That is why I told: Show the filled buy and sell orders for such amount of options.

Goldman Sachs is one of the biggest player in the world and if they buy 2000 atm options at the time at the CME(Chicago Mercantile Exchange) in any market, every body knows that some thing is going to happen.

You now talk about 1000 atm options on one side, which only on person buys. I do not know any thing about you, but to me 1000 options to buy on one leg is out of question. Even 1500 for a hedge is out of question.

Out of question for what you plan, as such profits can be reached by far less option quantities with other ways of trading and out of question, as the money which would be spent for what you plan would be only a certain % of my capital.

Your choice and good luck

DanPickUp

 

[ford7k]

hi

Here is the first point.

options move much more and faster than stocks.
The kind of stoploss you use in stocks is not suitable in option trading.
you need to measure the volatility and use a dynamic stoploss based on volatility.

The second point

It is seen more often that Nifty index moves up but corresponding call option cannot move up much.
Or nifty index falls,but the ITM put you bought will not rise. you wait and wait. nothing happens.

why? becoz it is not allowed by your great FII & other uncles to move.
the moment it begins rising they sell 50000 calls at one shot.
the call wont move that DAY and even next day .
Are you ready for such a manipulation move?
think

 

[robingangawane]

The confusion may lays here: For me 10 lots are 1000 option as one lot are 100 options and 5 lots are 500 options. So in this case we talk about 1500 options you will buy for what you plan. That is why I told: Show the filled buy and sell orders for such amount of options.

Goldman Sachs is one of the biggest player in the world and if they buy 2000 atm options at the time at the CME(Chicago Mercantile Exchange) in any market, every body knows that some thing is going to happen.

You now talk about 1000 atm options on one side, which only on person buys. I do not know any thing about you, but to me 1000 options to buy on one leg is out of question. Even 1500 for a hedge is out of question.

Out of question for what you plan, as such profits can be reached by far less option quantities with other ways of trading and out of question, as the money which would be spent for what you plan would be only a certain % of my capital.

Your choice and good luck

DanPickUp

I am talking about 500*45=22500 and 250*90=22500
Total investment of 45000.

 

[DanPickUp]

I am talking about 500*45=22500 and 250*90=22500
Total investment of 45000.

Dear Robingangawane

A little comparison: CME, which is the Chicaco Mercantile Exchange, compared with the NSE from India. Options and there prices at the CME, the place where I do my option trades and options at the NSE in India.

Ok, let me explain a bit from my side, so that you see why my reaction to what you told was the way it was and is.

Lets take the S&P500 at the CME as an example:

S&P500 spot at the moment the post was written: 1545.80

Atm April 1545.00 call at the 20.Mar 2013, was priced at USD 20.60.

This number of USD 20.60 has to be multiplied with the contract multiplier of USD 100.00 (20.60 x 100) = USD 2060.00.

USD 2060.00 is the money you have to pay to own this atm call. That means you spend USD 2060.00 for owning ONE atm S&P500 April call. And here you may start to realize why I reacted the way I did and do. Let me move on with numbers to make it very clear:

USD 2060.00 are INR 111`702.00

Now you talk about 500 options in your calculation and that would be in USD: (500 x 2060.00) = 1030000.00 or in INR: (500 x 111702.00) = 55851000.00

Now you see why I found your idea just ridiculous, as I go for options on the S&P500 at the CME and you see how much more they cost compare to what you show. You also now will understand why Goldman Sachs is a big player, as they give some times orders of 2000 options at the time and you can calculate by your self how much money this is.

Moving on with the post: As a friend of my from India now informed me that some of normal workers in India do not earn more as INR 4000 - 6000 and others, like middle class people, 30000 - 50000 per month, it gives me an other look at what you show and post and think of.

In one case, it is a monthly salary which is on risk and in the other case we talk about savings of a few years.

As we only use a certain amount of our money for what ever trade, this amount should not be more than 2-3% for day trades or in max 5-10% for certain other trades like highly save hedge strategies.

To relative the one month salary, which is in fact much more as a one month salary, as you need a few months to save that amount of money, because of the living standard most get when are used to that salary.

Moving forward with that: If INR 45000.00 are in the hardest case 10% of what you saved, then you would need at least INR 450000,00 in your saving account.

If you want to risk those 10% of your savings for one single trading shot or even your full savings for that kind of trading, that is your choice and your decision. No comment from my side on that.

As I told: I do not know any thing about you. I only can tell you: Just bring all the stones in the puzzle to the right corner and you will be able to evaluate by your self how good or how less valuable is what you plan to do.

The critics and thoughts above have nothing to do with the idea of plain vanilla price delta neutral trading, which is a good way of trading if done the realistic way.

All the best and good luck

DanPickUp

 

[awachat]

You can use option oracle software to test your strategy I hope this will help.

 

[nac]

^ Are you using it?

 

[shemz]

Try to ensure that your strangle is close to delta neutral, gamma is good, the options are cheap wrt your calculations and hence the market should be calm when you enter a strangle trade. Like others said, Nifty is not showing high volatility these days, but there is still some profit from intraday spikes if you time your entry right. But of course, on calm days, there might be some loss and closer you are to the expiry, theta will hurt more. Look also at OI before taking a position.