# NIFTY Options Trading by RAJ

## How do you use OAT tool?

• ### Understanding of Options has improved with OAT

• Total voters
154
• Poll closed .

#### mvkarthik

##### Well-Known Member
what about non trending days, will pair still be like 3:1

thanks
for non trending days (i normally sell MAXOI pair) its good to sell MAXOI pair

see today

time-9.30

8700 54.30
8500 34.75
pair price-89.05
------------
now
8700 48.40
8500 35.90
pair price-84.30

#### healthraj

##### Well-Known Member
Dear Raj,
You said yday for pair selling @least need 200 diference in strikes?
If we watch today/yday we not got any strikes (200 dif) which is also have the magic no of 120 (90+30)...so in this scenerio how can we enter as market in strong trend...?
Yes I think 200 points minimum is required. Ideally it would be good to have 500 points, which you normally get in the beginning of the Series.

120 points is good in the beginning of the month.

This month is also Long with more or less 5 weeks of trading.
So Let us say that in this month we had 25 trading days.

So for 120 points to Expire to Zero it will take 25 days. So in a day due to Time value (theta), the Option will loose ~4.8 points. In a week it would be 5 * 4.8 = 24 points (for a normal month with 20 trading days - the weekly target would be 30 points)

So for JUL-15 with 5 weeks of Trading.

First week, Find a Pair with 120 points and make sure the ratio is either 50:50 if neutral or 75:25 if biased or Trending.
Second Week - 120-24 = 96 points
Third week - 96-24 = 72 points.
Fourth week - 72-24 = 48 points.

The above is for Positional or Weekly trading. Daily we can expect some 4.8 points and not 10 points or 20 points.

So we are more less at the end of third week, find a pair with 48 points with one strike at 36 and other strike at 12. Go for 8500PE-8850CE Pair @ 49

#### rnmathur4965

##### Member
Summary of the key posts

NIFTY Options Trading with RAJ
1 INTRODUCTION
BULLs have LONG Positions in the market. So to protect their LONGs they take the Opposite positions in the Options market by selling the PUTS (PE) to hedge their positions, so that if the market goes in the opposite direction of their Longs they can make money using Options. [/B][/SIZE]
Raj Ji, May I raise my small doubt. If bulls sell puts to hedge their long position, will they not incur loss if market falls. Their longs will have lower values as well as as sold puts appreciate in value. Regards

#### VJAY

##### Well-Known Member
Yes I think 200 points minimum is required. Ideally it would be good to have 500 points, which you normally get in the beginning of the Series.

120 points is good in the beginning of the month.

This month is also Long with more or less 5 weeks of trading.
So Let us say that in this month we had 25 trading days.

So for 120 points to Expire to Zero it will take 25 days. So in a day due to Time value (theta), the Option will loose ~4.8 points. In a week it would be 5 * 4.8 = 24 points (for a normal month with 20 trading days - the weekly target would be 30 points)

So for JUL-15 with 5 weeks of Trading.

First week, Find a Pair with 120 points and make sure the ratio is either 50:50 if neutral or 75:25 if biased or Trending.
Second Week - 120-24 = 96 points
Third week - 96-24 = 72 points.
Fourth week - 72-24 = 48 points.

The above is for Positional or Weekly trading. Daily we can expect some 4.8 points and not 10 points or 20 points.

So we are more less at the end of third week, find a pair with 48 points with one strike at 36 and other strike at 12. Go for 8500PE-8850CE Pair @ 49
Nice way of thinking :clapping:..
Thanks raj for sharing selflessly your thoughts with us.....

#### healthraj

##### Well-Known Member
Raj Ji, May I raise my small doubt. If bulls sell puts to hedge their long position, will they not incur loss if market falls. Their longs will have lower values as well as as sold puts appreciate in value. Regards
NIFTY Range as per MAX OI is at 8500-8700. So let us say the Bulls want minimum to protect 8500. The Bears want to Protect 8700.

My view is If the Bulls Want to Protect 8500, they will Keep Selling 8500 Puts. It is like building a Wall. They Will Sell 8500 Puts When the NIFTY is around 8500. And not when the market is around 8700. Of course if the market breaks 8500 they will loose. Market makers are also like us.

So please tell me How the Bulls and Bears will protect 8500 and 8700 respectively using Options Chain ?

Last edited:

#### Profittaker

##### Well-Known Member

Today I was doing paper trade only.

I had entered all trade @ 11 a.m. Spot @ 8612.

First two trades for Trend Buy.[First Trade Strike Price Different only 100 and Second Trade S.P different 200]

Third and Fourth Trades for Trend Sell.[Third Trade Strike Price different only 100 and Fourth trade S.P. different 200]

#### anilnegi

##### Well-Known Member
Profitaker

u mean to say u are in profit in all trades either buy/sell but maximum profit cam from minimum difference of strike prices, one more thing u did not suggest time of exit, do they all are on same time exit

thanks

#### Profittaker

##### Well-Known Member
Profitaker

u mean to say u are in profit in all trades either buy/sell but maximum profit cam from minimum difference of strike prices, one more thing u did not suggest time of exit, do they all are on same time exit

thanks
No. I didnt try to say that. Today it happened. But Raj sir mentioned earlier post to take minimum Strike Price difference should be 200 points.
Already i mentioned this is paper trade details. I have shown here, After market closed @ 3.30 what happened my all position.
[In Live market time this all position shown more than Profit Rs.3000 and Loss around Rs.500. But End in Profit]

#### healthraj

##### Well-Known Member
No. I didnt try to say that. Today it happened. But Raj sir mentioned earlier post to take minimum Strike Price difference should be 200 points.
Already i mentioned this is paper trade details. I have shown here, After market closed @ 3.30 what happened my all position.
[In Live market time this all position shown more than Profit Rs.3000 and Loss around Rs.500. But End in Profit]
Today Market was FLAT. So 100 points may be worked. But on a TRENDing day 100 points will be easily taken. So if one wants to SELL Pair then please use at least 200 points difference. Ideally it should be the Range in the Hourly or half of Daily range. The hourly range is 250 points. And the Daily range is 600 points.

One more important thing is that when I started this Pair selling it was for Positional trade and not for Intra day trading. Anyways if it works for Intra day it is fine... But as a strategy, Selling of Pairs should be seen as a less Risky and less stressful. The idea is to get some 25-30 points in a week and not daily 10 points.

#### rnmathur4965

##### Member
NIFTY Range as per MAX OI is at 8500-8700. So let us say the Bulls want minimum to protect 8500. The Bears want to Protect 8700.

My view is If the Bulls Want to Protect 8500, they will Keep Selling 8500 Puts. It is like building a Wall. They Will Sell 8500 Puts When the NIFTY is around 8500. And not when the market is around 8700. Of course if the market breaks 8500 they will loose. Market makers are also like us.

So please tell me How the Bulls and Bears will protect 8500 and 8700 respectively using Options Chain ?
I know very little how market makers maintain options positions to safeguard their positions though studied a bit about greeks. My level of learning is not able to answer your question. I am trying to fathom the depths. But it will take time.
Regards :thanx: