Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strategy)

[Happy_Singh]

Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

This is just my 2nd month of this but I closed last month 2 days prior to expiry and I aim to do the same this month.

I do not adjust the strike price of the straddle, I adjust the strike price of my intra-day PE/CE buying. As I said I also keep the NF leg forever now until it hits SL or we get to expiry. This is accompanied by an OTM hedge of ce/pe. The money made intraday on CE/PE is used at EOD to buy the hedge.

So my goals are these.

1. Generate enough points intra-day over 20 days to pay for the OTM hedge on NF so taht I can hold it overnight forever or till SL hits or even if market gaps down or up against me.

2. Use the NF to just cover the losing leg - NF will give some profit as delta of NF is 1 always but delta of ITM will not be more than 0.5 to start with.

Thanks for all your answers with patience

Keeping everything the same (Short Straddle + Wings to hedge)
You can also use a simple SAR Swing System for Nifty future part of the trade


All the Best :thumb:

Happy

 

[TraderJunkie]

Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

@Happy yes - A SAR system can be used to trade the NF - This might generate more returns than using the straddle strike as pivot !

 

[Happy_Singh]

Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

@Happy yes - A SAR system can be used to trade the NF - This might generate more returns than using the straddle strike as pivot !

Nope, what I meant was use

Leg 1) Short Straddle
Leg 2) Position on NF using SAR system (Long/Short based on current trend)
Leg 3) Around close of day use wings (out of money options) to hedge NF

Now this way most of the thinking / strategizing will be limited only to leg 3

Happy

 

[TraderJunkie]

Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

Nope, what I meant was use

Leg 1) Short Straddle
Leg 2) Position on NF using SAR system (Long/Short based on current trend)
Leg 3) Around close of day use wings (out of money options) to hedge NF

Now this way most of the thinking / strategizing will be limited only to leg 3

Happy

That is exactly what I meant

"Better returns to use SAR as a system to trade the NF than using the straddle strike as a pivot" - i.e better to go long or short when SAR triggers than just going long or short using straddle strike as pivot

We are anyway only managing leg 3 of the strategy , nothing else ! Can use SAR as a strategy for better returns !

 

[TraderJunkie]

Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

I took this trade on 29th Aug - details of the trade in the attached file.

 

[yoursonlyvinu]

Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

I took this trade on 29th Aug - details of the trade in the attached file.

In this trade one doubt ..why did u take 8700ce two lots and nifty buy also.. because either one is only required??

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[TraderJunkie]

Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

In this trade one doubt ..why did u take 8700ce two lots and nifty buy also.. because either one is only required??

Sent from my Lenovo A2010-a using Tapatalk

That is true, I just too a little more risk. The margin requirement actually went down further, so for a combined margin of 1 lac 30k I was able to do this.

I've exited the CE today actually and only holding the NF leg.

 

[akza]

Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

thanks Its great to have different ideas especially trading in options, but we need to back test over years.

have you tested this strategy

 

[TraderJunkie]

Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

thanks Its great to have different ideas especially trading in options, but we need to back test over years.

have you tested this strategy

So, let us understand the strategy 1st and what parts are well obvious and what parts might need backtesting !

1. Writing a straddle and the premium you receive is straight forward right ! My general rule is to write a pair that gives around 300 points in premium. That does not really need any backtesting.

2. The hedge of NF - will NF always have delta 1 ? Will the straddle PE/CE always have delta < 1 ? Very clear that whatever be the case NF will out-gun the losing leg of the straddle.

3. Now what if Nifty jumps around the straddle strike with the trader needing to cover both legs in intra-day and eventually be on the right side ? That is the execution risk and need. In you are backtesting you are going to assume that you went long above the strike and short below, right ?

Now tell me - which part would you want to backtest for the hypothesis ?

I wish I could attach my strategy document and the guidelines here, but in short

1. Write the straddle when VIX is relatively higher (i.e > 15) so that one is protected against sudden rises in VIX, but even than if you have NF to cover, never will the NF delta be < than the delta of an option.

2. I also cover the intra-day situation with an intra-day option as a risk cover for sudden rise in VIX - that way the bought option also rises.

Backtesting this over years is possible yes, I will need all intra-day options data for all the years along with the greeks and VIX !

Now where can I do that ?

I'm willing to take the risks that come along with this strategy because its a hedged one, so you wont lose much. Now tell me everyone who trades naked options - what is their backtesting if there is a war , or a world event that causes a gap-down circuit or gap-up circuit !

Hedged strategies are just that - they are protected.

 

[yoursonlyvinu]

Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

Sir in order to learning I am asking this ...Sir I am still not understanding how is straddle hedged with the nifty future can u throw some detail...

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