nifty straddle : Target :- the whole premium....!
- Thread starter linkon7
- Start date
short is not naked. the purpose of the short is to nullify the loss in put premium when the market goes below 3100. ideally i should have shorted nifty at 3100 but since there was a gap down i lost 40 points and had to innitiate the short at 3060.
say, on expiry the if the market closes at 2600, then my nifty if ideally shorted at 3100 would have a value of 500 points. the straddle too would have a actual value of 500 points. so the money gained in nifty short would nullify the actual value of the stradlde leaving me the premium as profit.
and conversely the same is true on the up side.
Ideally, this strategy should work without any jobbing from my end and that i is what i want to find out at the end of the series.
linkon
say, on expiry the if the market closes at 2600, then my nifty if ideally shorted at 3100 would have a value of 500 points. the straddle too would have a actual value of 500 points. so the money gained in nifty short would nullify the actual value of the stradlde leaving me the premium as profit.
and conversely the same is true on the up side.
Ideally, this strategy should work without any jobbing from my end and that i is what i want to find out at the end of the series.
linkon
my best wishes linkon..:clap::clapping:
the biggest threat for this method should come only from a choppy market [moving see-saw around 3100] ..
at the first glance it seems to me as a good RR ratio .hopefully we can get an answer by the series expiry
further i do have a suggestion....does the 3100 you have chosen has any significance or is it purely because of start of the series.do you think incorporating some pivot levels [like that of saint method ] would help in SAR.
also is there any filter for SAR
:thumb:
thanks
the biggest threat for this method should come only from a choppy market [moving see-saw around 3100] ..
at the first glance it seems to me as a good RR ratio .hopefully we can get an answer by the series expiry
further i do have a suggestion....does the 3100 you have chosen has any significance or is it purely because of start of the series.do you think incorporating some pivot levels [like that of saint method ] would help in SAR.
also is there any filter for SAR
:thumb:
thanks
thats the only fear factor of this trade. thats why i found it safer to innitiate a short on 3100 puts instead of shorting 3000 put on monday. i could have easily kept the profit from nifty short and the 3000-3100 straddle would have a IV of just 5, since NF closed at 2995. As on monday, the IV of the 3100 straddle was 122.
when the market whipsaws around 3100, i'll have to play the nifty well and ensure that i recover the brokerage atleast.
and alternately i need not do anything at all since position in nifty is to counter the actual value of the straddle. at 3110, the actual value would be just 10. the premium would decrease faster if nifty moves around the 3100 mark.
but on a realistic approach, nifty is trading in a range between 2500 to 3150 and with election coming and q4 results, i doubt we will have a higher trading range with 3100 as the pivot. but in this market, anythng is possible. but the odds are sure in my favour.
this is part of my learning curve. The worst case scenario is i'll end up with a loss and that'll be the fees to be paid for learning something first hand.
either ways its win-win for me....!
when the market whipsaws around 3100, i'll have to play the nifty well and ensure that i recover the brokerage atleast.
and alternately i need not do anything at all since position in nifty is to counter the actual value of the straddle. at 3110, the actual value would be just 10. the premium would decrease faster if nifty moves around the 3100 mark.
but on a realistic approach, nifty is trading in a range between 2500 to 3150 and with election coming and q4 results, i doubt we will have a higher trading range with 3100 as the pivot. but in this market, anythng is possible. but the odds are sure in my favour.
this is part of my learning curve. The worst case scenario is i'll end up with a loss and that'll be the fees to be paid for learning something first hand.
either ways its win-win for me....!
i seriously dont know... depends on the time when it'll happen. so many factors can come in. thats why i selected to straddle the upper range of the trading band. also this level 3100 coincides with sensex 10000-10500 range where multiple long term resistance converge. q4 results, elections too many uncertainties for the market to have a shift in trading range with 3100 as the pivot.
just playing the odds....
just playing the odds....
after going long in nifty above 3100 if market comes to 3000 u will exit long and go short say around 3020 or 3050 and again if market moves to 3150 you will again cut your short and go long above 3100.How many times you will be able to do like this without any loss and suceed , it is not easy though it seems and also it is not practical.
I know it wont be easy. No strategy is fool proof. risk-reward ratio is on my side. I am waiting to experience the emotional rollercoaster ride if nifty comes to 3100 and jumps around. i am willing to loose upto 5 K on this experiment. maybe use that as my exit.
cheer up...its my money at stake here. Dont destine something to faliure even before it fails. lets see how it plays out.
cheer up...its my money at stake here. Dont destine something to faliure even before it fails. lets see how it plays out.
How about buying lower puts and higher calls from part of the premium, say 3300 call and 2900 put? It will reduce premium in th bag but if the mkt moves one way, u do not have to worry abt eroding points since u r covered.
Also one point which comes to mind is that this strategy would work best on Pivots, major resis/supp levels etc and not any other points as then there would be huge moves and would defeat our main piurpose of eating the premium ...
Also one point which comes to mind is that this strategy would work best on Pivots, major resis/supp levels etc and not any other points as then there would be huge moves and would defeat our main piurpose of eating the premium ...
outlook today
--Nifty April future premium decreased to 6 points so cost of carry decreased.
--Nifty open interest increased by 16 lacs suggests short addition.
--Nifty call option added 8 lacs and put option added 16 lacs.
--Put-Call Ratio decreased to 1.44.
--3000 puts had open interest of 43 lacs, so it will be important level to watch for.
--India VIX closed at 39.49, decreased by 2% suggests stability.
--US markets closed in green.
--Asian markets trading positive.
action : dont have to act at all... market below 3000 and NF at 2980 against good global cues
--Nifty April future premium decreased to 6 points so cost of carry decreased.
--Nifty open interest increased by 16 lacs suggests short addition.
--Nifty call option added 8 lacs and put option added 16 lacs.
--Put-Call Ratio decreased to 1.44.
--3000 puts had open interest of 43 lacs, so it will be important level to watch for.
--India VIX closed at 39.49, decreased by 2% suggests stability.
--US markets closed in green.
--Asian markets trading positive.
action : dont have to act at all... market below 3000 and NF at 2980 against good global cues
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