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

VJAY

Well-Known Member
#53
Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

Sure -

For september write this strangle

Write 9000 CE - CMP 75 (so you will get approx 70-75 premium lets say tomm)
Write 8800 PE - CPM 47 (so you will get approx 40-45 premium lets say tomm)

Combined premium received = 70+40 =110 points
Margin needed to write this strangle = 89,923 (lets say 90,000)

Now how do you manage this trade ?

Rules

1. So long as NF is between 8800 and 9000 you do nothing.
2. If NF goes below 8800 you short one NF
3. If NF goes above 9000 you go long on NF

Lets assume worst case that you actually do need to use this NF trade, then margin requirement is 1,10,078 (lets say 1,11,000).

So on max total margin of 1,11,000 you will stand to make 80-110 points. (110 points if you hold till expiry , I do not recommend that).

Your 6% target is achieved when you get 88-90 points out of the maximum possible 110 points.
Dear traderjunkie,
I think its same method which Linken shared here....as for above example all looks good...but practically there are many hurdles....how you manage it?
for example @EOD if we holding this strangle and 1nifty fut short below 8800 next day gap up and moving on .....worst case happens when we hold long future and gap down.....most of times when this happens it wipes many months profits......
 
#54
Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

Dear traderjunkie,
I think its same method which Linken shared here....as for above example all looks good...but practically there are many hurdles....how you manage it?
for example @EOD if we holding this strangle and 1nifty fut short below 8800 next day gap up and moving on .....worst case happens when we hold long future and gap down.....most of times when this happens it wipes many months profits......
You didn't read the full strategy :) and no a big move does not wipe out "months of profits" because there are not 3 but 4 legs.

Making money by writing options is all about management and that is the name of the game. This is way better than trading naked.

Please understand what the 4th leg is for.
 

vijayanscbe

Well-Known Member
#55
Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

Thanks for your thread.
Usually I use options only to hedge the futures. Inspired by your's thread and Linkon's thread I tried a straddle. On sep7 when nifty signals for sideways, I shorted the 8900ce/pe for 327(215+117). Next day I sold nifty fut at 8890. Booked Nifty fut for 150 (14/9). Now I had buffer of 150+327 =477. After 4weeks now the straddle price is 239. Total profit 150+92 = 242 rs. From here what will you do, just manage till expiry ??.

I do notice taking the next month straddle/strangle one week before current month's expiry, may give extra profit. Taking position (short-straddle) on high movement days or gap opening days, may give some extra premium profit. Whats your experience ?


.
 
#56
Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

Thanks for your thread.
Usually I use options only to hedge the futures. Inspired by your's thread and Linkon's thread I tried a straddle. On sep7 when nifty signals for sideways, I shorted the 8900ce/pe for 327(215+117). Next day I sold nifty fut at 8890. Booked Nifty fut for 150 (14/9). Now I had buffer of 150+327 =477. After 4weeks now the straddle price is 239. Total profit 150+92 = 242 rs. From here what will you do, just manage till expiry ??.

I do notice taking the next month straddle/strangle one week before current month's expiry, may give extra profit. Taking position (short-straddle) on high movement days or gap opening days, may give some extra premium profit. Whats your experience ?


.
Now you are in the driver's seat as you have good range. Just mange till expiry as you still have 239 point to win. that is a big % profit still on the table. Don't wait till last day of expiry, close when you see another 200 points gained. leave 39 points and close one day before expiry.

Once market moves like this, you are in a much better situation as you can yourself see :) Good job.

Yes, next month is better, but sometimes current month straddle or strangle can give 10% within 2 weeks as well
 

VJAY

Well-Known Member
#57
Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

You didn't read the full strategy :) and no a big move does not wipe out "months of profits" because there are not 3 but 4 legs.

Making money by writing options is all about management and that is the name of the game. This is way better than trading naked.

Please understand what the 4th leg is for.
Sorry mj my bad :(
I looked only that particular post. ...yes you are clearly explained it how to manage it. ....
BTW what's this weekly expiry! !!!is it you take position for only next week?
Also want to know if taking strangle how much combined premium you eying to entry?
 
#58
Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

Sorry mj my bad :(
I looked only that particular post. ...yes you are clearly explained it how to manage it. ....
BTW what's this weekly expiry! !!!is it you take position for only next week?
Also want to know if taking strangle how much combined premium you eying to entry?
BankNifty has introduced options that expiry weekly as opposed to just monthly. What this means is you can deploy this strategy 4 times a month to extract better returns.

You can aim for 7% a week, given all other adjustments and safety, I aim for 5% a week. Combined premium that BN gives is around 180-190 points for one week. Lot size if 40 and overall premium locked for writing a strangle , one BN future and hedge on BN future is around 1.30 lac. Straddle will give you 250-280 points for the same margin.

So 180*40 = 7200 on margin of 1.3 lac = 5.5% returns
 

VJAY

Well-Known Member
#59
Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

BankNifty has introduced options that expiry weekly as opposed to just monthly. What this means is you can deploy this strategy 4 times a month to extract better returns.

You can aim for 7% a week, given all other adjustments and safety, I aim for 5% a week. Combined premium that BN gives is around 180-190 points for one week. Lot size if 40 and overall premium locked for writing a strangle , one BN future and hedge on BN future is around 1.30 lac. Straddle will give you 250-280 points for the same margin.

So 180*40 = 7200 on margin of 1.3 lac = 5.5% returns
Oh am not aware about this weekly expiry. ...Thanks for sharing this information. ...so which day this expiry took place?
 
#60
Re: Modified Strategy to earn 15%-20% a month (Strategy inspired by Linkon7's strateg

Oh am not aware about this weekly expiry. ...Thanks for sharing this information. ...so which day this expiry took place?
This expiry is scheduled to take place on the 13th of oct :) - Expiry is every thursday.

So you would write a strangle/straddle on friday and exit by wed/thu and collect 5%
 

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