#1
Hi,

I am in process of designing options trading strategy useful for people who can watch market around closing and take required action.

Your suggestions will help me to improve on the strategy.

Referring the SBIN table below, when BUY is indicated for the first time, it means buying a CALL and thereafter holding this CALL until the column indicates, similarly when SELL is indicated it means buying a PUT. Whenever there is a switch between BUY and SELL, switch the same with options. Just follow both the columns simultaneously.

You will NEVER SHORT a CALL or PUT.



SBIN Stock analysis is presented in the form of following trend indicators and useful for options trading.

(1) Trend Level :

Is a trailing level indicator based on the daily stock movement. It is generated daily around and after market closing. This level can be used to make trading decision independently on the next day. If the Weighted Average Rate moves above this level , its a BUY and if it goes below, its a SELL.

(2) Quick Trend :

Indicates a BUY if stock closes above the Trend Level and SELL if stock closes below the Trend Level.

(3) Broad Trend :

Keep holding the position ( Call or Put ) until indicated in the Broad Trend.

Thanks
 
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#3
Hello Dipendu,

I am already sharing the latest updates on selected stocks actively traded in options based on this analysis.

I believe the language of the analysis needs to be standard and easy to interpret in any market condition.

I am only testing this form of communication.

One can ignore this thread if I am expected to share this analysis.

The system is intended to be very simple , practical , less time consuming, relatively less stressful and economical.

I am not using any advertisements on my website. No intention to make money thru ads.

Thanks
 

DanPickUp

Well-Known Member
#4
@Tradingforbusyguys

One point I miss in your explanation: Which option series you go for? This month or next month or are you able to diversify between:

quick trend (sell) / broad trend (sell) : ? ....................

quick trend (buy) / broad trend (sell) : ? ....................

or is this question of no value in your system. If so, then why is it out of value, as you also mention to hold a position ( point 3).

Take care and good trading / DanPickUp
 
#5
Thanks for your question DanPickUp,

If you are nearing the end of expiry, it would be best to go for next month series.

To enter into the system, both the trends should preferably be on the same side. Thereafter just follow both the trends. On the last day of the series, your positions will be squared automatically and before closing just buy the option of the next month based on the trend. You will be generally be around in stock during good and bad times.

Quick trend will be the first indicator in any expected change in trend, but broad trend will come to your rescue if the trend reverses back. So, at certain times, you could be holding a deep in the money option based on broad trend and near out of money option based on the quick trend.

During uncertain trend situations, you will be on both the sides of the trend.

Thanks
 
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DanPickUp

Well-Known Member
#6
@Tradingforbusyguys

Thanks for your nice reply. :)

Now you added some nice, good defined points to your system (Love it the way you did :clapping:).

Points you defined:

- To enter into the system, both the trends should be preferably on the same side.

- quick trend (sell) / broad trend (sell) = Buy deep in the money put

- quick trend (buy) / broad trend (sell) = Buy out of the money call

- If we are nearing the end of expiry, it would be best to go for next month series.

- At the end of the month you could roll your winning position into the next months series.

Now let's go on the way you choosed by spotting on some new points:

- Any best moment of time in any series to implement the strategy?

- If you are in the middle of the month, volatility is very low and you got two sell signals, which option would you choose and what series?

Take care and good trading / DanPickUp
 
#7
Hello DanPickUp,

Just to clarify, you don't need to buy deep in money options when both trends are on same side. You can buy near out of money or at the money. After you follow this pattern of trading, you might eventfully experience holding deep in the money option.

Anything is possible in markets, so I like to maintain some distance. I don't really think too much ( best moment / volatility ) as things are not in our control.

The important thing is to be in that stock. There will be certainly times when things will not work, but you will be rewarded for your patience.

Thanks
 

DanPickUp

Well-Known Member
#9
@Tradingforbusyguys

Thanks again for your second reply. :)

As you wrote: I am in process of designing options trading strategy useful for people who can watch market around closing and take required action, I decided to ask you some questions you would come up when doing it in any detail.

As you say in the same statement < I am in a process> , I guess you do not have all the facts you need. A guess build up on what you told. I think you do not have any back testing data with your system. And that you need to have when trying to create a new system. You can believe me in that very strongly.

Why did I ask what I was asking? F.e: Best moment.

As you tend to advocate to take the current months series, expect the following which is just normal (If we are nearing the end of expiry, it would be best to go for next month series), it would make sense to set a specific eye on any signals which would come up at the begin of any months series. Why? As you say by your self: Things are not in our control .

So if we know that things are not in our control, should we not do our best to improve our odds? If we take any of your systems signals at the begin of any series of any month (what your system is), we have a little advantage to time decay. As even two clear sell or two clear buys can be just a one day event, we would be better to have time on our side in case the unexpected happens.

Second question: Middle of the month and low vola. Did you back test this?

Why is it important to be in that stock if other stocks give better opportunities?

Dear Tradingforbusyguys

This is nothing personal. But market will test any of our strategies in any way and as better as we are prepared, as better we fight when coming under pressure. Hope you got that point. :)

Now as always: Good trading / DanPickUp
 
#10
Hello DanPickUp,

I appreciate the time you have taken to respond.

The reason I mentioned that I am in process is to keep an open mind for ideas that could further improve this analysis.

You can visit blog section of my website to understand the level of back testing being done. But I still feel there is always a scope for improvement.

While structuring this analysis, I kept in mind that the time to trade around closing should be just around 5 minutes. This was to keep emotions away from trading. Also I wanted the analysis to be interpreted very promptly, why? so one can handle more scripts in very short time.

It is difficult to analyze which stock will give opportunities and at what time. So, make few selections and be around.

Any thinking process related to selection of strikes and expiry is taken in advance and watchlist is kept ready. Anyone already trading option should be aware about strikes and expiry. Eventually experience will help improve on managing this section.

Thanks
 

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