Low Risk Low Returns- Target 50 NF per month per NF Lot

[jamit_05]

Sold 20June 11900 CE @ 89 CMP 0
Bought 20June12000 CE @ 20 CMP 0
Sold 27June 11950CE 67 CMP 0

Squared off @ Sold 20June 11900 PE @ 78 CMP 110

Pending-> Sold 20June 11700 CE @ 45 CMP 110

Total collections is 214+45-110 = 149

To Pay: 110

 

[jamit_05]

Sold 20June 11900 CE @ 89 CMP 0
Bought 20June12000 CE @ 20 CMP 0
Sold 27June 11950CE 67 CMP 0

Squared off @ Sold 20June 11900 PE @ 78 CMP 110
Squared off @ Sold 20June 11700 CE @ 45 CMP 88

Total collections is 214+45-110 = 149
To Pay: 88
Profit: 238-88 = 50

Net Profit from 20June set is 50 points. Not impressive, due to tacky management, but I am getting there.

 

[jamit_05]

Squared off --- Sold 27June 11800CE@89 CMP 55
Profit: 34

Sqaured off --- Bought 27June 11600PE@32 CMP 49
Profit: 17

 

[against_tides]

Fresh Set:

Sold 27June 11800CE@89 CMP 78
Pending: Purchase of 27June 11900CE

In this set, I will play with wings. The profit will obviously be less, but the volatility too will be less, which will help in future to punch in more lots.

naked shorts??
how are you putting SLs?

 

[jamit_05]

naked shorts??
how are you putting SLs?

I am usually online, so I tend to watch the price. But, yes, naked shorts kind of trader won't be successful in the long run. Therefore, this time around I am doing covered shorts on both sides. Profit will be much less, and so will the volatility.

I have noticed that in some few weeks, price as much as 600 points, making it capital intensive to manage naked shorts.

 

[jamit_05]

Fresh Set, the format is of a calendar spread, to take advantage of the following fact:

In the same period of time, time decay in Current week is more than in forward week.


This is much better than selling naked ATMs.

So,

Sold
27June 11700 CE+PE 98+90 = 188 CMP 72+104 = 176

Bought
4July 11800 Ce 68
4July 11600 Pe 90
-----------------
158

 

[jamit_05]

Sold
27June 11700 CE+PE 98+90 = 188 CMP 95+77=172

Bought
4July 11800 Ce +11600 Pe 68+90 = 158 CMP 87+67 = 154

As you see, in a single day, 27June fell 16 points, whereas 4July fell 4 points. This means, we have strong theta in our favour, and the delta too is clearly manageable.

 

[jamit_05]

Couple of noteworthy observations, leading to an interesting conclusion:

I am a novice trader. However, I can gauge the price direction to some degree and have a keen sense of money management. With this set of skills I was able to manage the last few trades successfully, with profit ranging from 50 to 100 points per week. And most importantly, not a single week was a losing week. Meaning, I am onto something of value.

Lets hang on to it, and see where this leads. I feel if I am able to get 5% monthly on my blocked capital, with palatable volatility then we are in business.

 

[jamit_05]

Concept behind the Trade.

Part 1:
Sold
27June 11700 CE+PE 98+90 = 188 CMP 85+90=175

Bought
4July 11800 Ce +11600 Pe 68+90 = 158 CMP 76+76=154

Ok, so what power does this spread have? Lets see:

27June options will completely be worthless, so I get 175. Furthermore, I assume, 40% of value of 4July options will be left over at 27June expiry; that is decay of 90 points and 10 points expense.

Therefore, if 27June expires at 11700 dot, then a total of 175-90-10 = 75 points will be my net profit in the best case scenario.

Now, the challenge is to leverage this profit to ensure that no matter what happens, we end up retaining a good portion of these 75 points.

Part 2:

If price breaks out of 11800, I will BUY a Bull Call spread.
Else if price breaks 11600, I will buy a Bear Put Spread.

Hence, ensuring that I either get profit from Part 1 or Part 2.

In past few weeks, the core approach has not changed, where we create win-win situations, while we are trying to do away with the unpleasant bits, which are High Volatility and High capital requirement.

 

[jamit_05]

Sold -A
27June 11700 CE+PE 98+90 = 188 CMP 170+36= 206

Bought -B
4July 11800 Ce +11600 Pe 68+90 = 158 CMP 137+38= 175

Current Loss, after a wild 140 point move in a day is Rs.131 only. If tomorrow looks like an upday, will do the following:

-C
Buy 11850 CE 27June
Sell 11950 CE 27June
Cost 45 points