My Bank Nifty Options trading diary

bunti_k23

Well-Known Member
#11
Hi,

I started to trade Options this month with Kotak Securities.

Capital: Rs 30,000

you havent mentioned the drawdown of ur trading system,most of the best traders backtest their trading system thoroughly and know theirs pros and cons so clearly u dont know how much capital to use and how much to keep aside to cope up with drawdowns/losing streaks...

System: Vertical Spread based on Break out of underlying on Weekly Timeframe.
Instrument: Bank Nifty and any other that fits within the Capital
Previous experience: Currency and Commodity
Note: Reason to trade Option is I can wait for that one trade in a month to earn 100-200 points

you know how much u want to earn but you havent defined ur stoploss what was the RR ratio?


:)dear pannet i have some questions arising in my mind pls dont take it as a criticism instead take it in a positive way,now forget the blunder made lets analyse what you have done or trying to do...
 

bunti_k23

Well-Known Member
#12
Trade 2

After the experience with ITC, I realised that my capital is not enough to trade many Stock Options. So i decided to stick with Bank Nifty until and unless I grow my capital. The important lesson learned here is not to trade when it gaps below or above the trigger price.

under capitalisation ,you know you dont have enough capital to trade that system/strategy still u want to trade it


Bank Nifty 29-OCT expiry Bearish Credit Spreads

The weekly chart was about to made a bearish breakout late in the afternoon trading session

28-Sep


I wanted to short 17000 CE @ lower strike that's when I realised I did not have enough margin. The market was closing and I did not have enough time to fund my trading account with another Rs 15,000.

So I scrambled for the funds during the night of 28-Sep and then transfered funds from Kotak Securities website from the Bank.

29-Sep (50 point RBI rate cut day)
The next day Bank Nifty gaped down below my intended Sell strike price of 17000 at 16800. So I decided to short 16800 strike price instead of the 17000. This is then I realised Kotak securities did not take into account he money transfer i did the previous day automatically and needs a manual intervention WTF.

Its inevitable that I need to enter into damage control. :annoyed:



This when the price climbed backed to the previous day close. So I made the following trades.



30-Sep

price made a short up move till the high of the previous day and started to climb down
undercapitalisation .......
 

bunti_k23

Well-Known Member
#13
little conclusion,

you havent studied the strategy/system completely,if you had done the study you would not pick this strategy.so the system selection was wrong .

pls correct me if im not right ,my concern for this is because im also going to start wit almost same trading capital and im trying to define some money management on it according to my system i have this e.g infront of me so taking lesson from that ....lets make some constructive studies studies where we all will b benefited..best luck:thumb:
 

pannet1

Well-Known Member
#14
Hi,

I am back. Mobilized about 90K by getting a loan from LIC policy. Looking at conservative strategy to win as little as 3% per month by Trading Bank Nifty.

The initial plan is only to trade Ratio Back Spreads. This is the first trade.

14/JUN BN 30JUN 17500CE (30) x Rs. 346.05
14/JUN BN 30JUN 18000CE +60 x Rs. 136.65
24/Jun Current Value of the Spread: (1244.50)

Since I have got a bearish outlook at least for short time, I am going to cover BN 30JUN 18000CE to gain. If the underlying closes below 17500 at the expiry then I can keep all the premium.

Tomorrow if BN breaks below 17500 then I cover as per the above plan. If it again climbs up 17500 after breaking, I can very well buy the 18000CE later.

Pros!. Sounds like a plan?.

 
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pannet1

Well-Known Member
#15
little conclusion,

you havent studied the strategy/system completely,if you had done the study you would not pick this strategy.so the system selection was wrong .

pls correct me if im not right ,my concern for this is because im also going to start wit almost same trading capital and im trying to define some money management on it according to my system i have this e.g infront of me so taking lesson from that ....lets make some constructive studies studies where we all will b benefited..best luck:thumb:
hi bunti,

extremely sorry. I did not see your replies. What happened to your trading plan.
 

tradedatrend

Well-Known Member
#16
Mobilized about 90K by getting a loan from LIC policy.
Trading on borrowed money increases mental pressure.

Beside it, if you are still using Kotak as your broker - CHANGE it immediately to any discount broker, these so called full service broker will eat away youu big chunk of capital in the form of brokerage.
 

pannet1

Well-Known Member
#17
Trading on borrowed money increases mental pressure.

Beside it, if you are still using Kotak as your broker - CHANGE it immediately to any discount broker, these so called full service broker will eat away youu big chunk of capital in the form of brokerage.
Thanks bro. I did change to Zerodha. :)
 

pannet1

Well-Known Member
#18
Dude paper trade first..!!! You are doing some random experiments on loan amount. Instead of this, get backdata fill from any data vendor, Study your approach for last 2-3 years data atleast and see how it works.

You are trying to earn money from experiments by trading real money. Just have some solid plan and then start putting real money on it. Will save you a lot.
Hi,

This is the beauty of a forum where people are really concerned about you. They say backtests are not reliable. Besides is there a way to backtest even options?.

I strongly believe that technical analysis is my edge. If one could clearly see if the market had changed from uptrend to downtrend and vice versa in the given timeframe, then we only make the positions delta neutral.

LIC loan on policy is 10% interest per annum payable biannual. I am sure one can atleast earn a little over that. I will slowly reveal the strategy later (just because who will listen to a looser's strategy). If I am winner then people will listen.
 

pannet1

Well-Known Member
#19
Hi denzo,

I visually backtested on the chart. It gave me immense confidence. I did paper trade for few months. The results were positive.

Downtrend triggered on 13th Jun 4HR chart (attache). All we are seeing now is retracement untill 18052 is broken from below. In this week there is another cheaper SL formed at 17841.

The initial idea is enter Credit Back Spread CALL or PUT doesn't matter because either way (upward or downward) quick move will end up in profit.

The only fear is at expiry the underlying should not close between 17750 and 18000 (approximately 250 Point range). Meanwhile I had 20 days to perform the adjustment (buying and selling) the Out of Money Calls.


Yes backtests are not 'that' reliable but atleast you will get little idea if your strategy is not horribly wrong.! Just think as this, - You made this strategy few months or years ago and thought of applying in real markets and applied with real money. Now instead of checking outcome with real money you have got a chance to see it now how it would have worked for those previous months or years.

So basically even though backtesting is not reliable, Almost all professionals do it before going live with money.

Yes options can be backtested if you have data for the same and have coded the strategy well. If you are focusing on visual cues then also you can sit for few days and check manually how your strategy would have applied by seeing historical option prices. This is slow process but better than going blindy.

Strategies wont work across people. You can also adopt few strategies from successful people from net and see if it makes profit for you or not.
 

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