Paper trading options

AW10 · Jan 11, 2010

My feedback,
- while analysing a strategy and planning a trade, better to focus on Points based calculation and keep aside the converting to Rs. amt.

so reformatted post will be
NIFTY SPOT5252.10
BULL CALL SPREAD
CE5300 @71.40
[email protected]

COST = 71.4 - 33.6 = 37.8
Break Even 5337.80.
MAX Profit = max value of spread - cost = 100-37.8 = 62.2

Factors to look at
- Reward to risk ratio = 62.2 / 37.8 = 1.6.
- Probablity of hitting breakeven or market expiring above this point in next 15 days i.e before expiry
- Probablity of getting max profit. i.e. market expiring above 5400 to get max profit

Based on your assessment of 3 factors, you can decide if this trade makes sense or not. It is personal choice to feel this as tradable trade or just ignore it. If someone is not happy with 1.6 reward ratio. or has a view that mkt will close below 5400 or 5337 then he will bypass this trade. But other person might still select it.

Happy Trading

bajajdipesh · Jan 11, 2010

Update at the closing of 11 Jan 2010

Nifty spot - 5249.40

Strategy 1:

Nifty 5000PE Jan series - 25.0 (1 lot)
Nifty 4700PE Jan series - 5.00 (2 lot)
Nifty 4600PE Jan series - 3.55 (1 lot)

Net position - 50*25.0 - 100*5.00 + 50*3.55 = 927.5
Profit = 927.5 - 4700 = -3772.5 Rs

Strategy 2:

Nifty 5300PE Jan series - 115.00 (1 lot)
Nifty 5000PE Jan series - 25.05 (2 lot)
Nifty 4900PE Jan series - 14.00 (1 lot)

Net position - 50*115.0 - 100*25.05 + 50*14.00 = 3945.00
Profit = 3945.00 - 3795 = 150 Rs

bajajdipesh said:

bajajdipesh · Jan 12, 2010

Update at the closing of 12 Jan 2010

Nifty spot - 5210.40

Strategy 1:

Nifty 5000PE Jan series - 31.55(1 lot)
Nifty 4700PE Jan series - 5.85 (2 lot)
Nifty 4600PE Jan series - 4.25 (1 lot)

Net position - 50*31.55 - 100*5.85 + 50*4.25 = 1205.0
Profit = 1205.0 - 4700 = -3495 Rs

Strategy 2:

Nifty 5300PE Jan series - 141.00 (1 lot)
Nifty 5000PE Jan series - 31.75 (2 lot)
Nifty 4900PE Jan series - 17.80 (1 lot)

Net position - 50*141.0 - 100*31.75 + 50*17.80 = 4765.00
Profit = 4765.00 - 3795 = 970 Rs

bajajdipesh said:

bajajdipesh · Jan 13, 2010

Update at the closing of 13 Jan 2010

Nifty spot - 5233.95

Strategy 1:

Nifty 5000PE Jan series - 19.35(1 lot)
Nifty 4700PE Jan series - 3.50 (2 lot)
Nifty 4600PE Jan series - 2.40 (1 lot)

Net position - 50*19.35 - 100*3.50 + 50*2.40 = 737.5
Profit = 737.5 - 4700 = -3962.5 Rs

Strategy 2:

Nifty 5300PE Jan series - 110.30 (1 lot)
Nifty 5000PE Jan series - 20.00 (2 lot)
Nifty 4900PE Jan series - 10.70 (1 lot)

Net position - 50*110.30 - 100*20.00 + 50*10.70 = 4050.00
Profit = 4050.00 - 3795 = 255 Rs

bajajdipesh said:

bajajdipesh · Jan 14, 2010

Update at the closing of 14 Jan 2010

Nifty spot - 5259.90

Strategy 1:

Nifty 5000PE Jan series - 12.30(1 lot)
Nifty 4700PE Jan series - 2.30 (2 lot)
Nifty 4600PE Jan series - 2.75 (1 lot)

Net position - 50*12.30 - 100*2.30 + 50*2.75 = 522.5
Profit = 522.5 - 4700 = -4177.5 Rs

Strategy 2:

Nifty 5300PE Jan series - 90.50 (1 lot)
Nifty 5000PE Jan series - 12.40 (2 lot)
Nifty 4900PE Jan series - 6.00 (1 lot)

Net position - 50*90.50 - 100*12.40 + 50*6.00 = 3585.00
Profit = 3585.00 - 3795 = -210 Rs

bajajdipesh said:

bajajdipesh · Jan 15, 2010

Update at the closing of 15 Jan 2010

Nifty spot - 5252.20

Strategy 1:

Nifty 5000PE Jan series - 10.50(1 lot)
Nifty 4700PE Jan series - 2.10 (2 lot)
Nifty 4600PE Jan series - 1.85 (1 lot)

Net position - 50*10.50 - 100*2.10 + 50*1.85 = 407.5
Profit = 522.5 - 4700 = -4292.5 Rs

Strategy 2:

Nifty 5300PE Jan series - 89.65 (1 lot)
Nifty 5000PE Jan series - 10.80 (2 lot)
Nifty 4900PE Jan series - 5.35 (1 lot)

Net position - 50*89.65 - 100*10.80 + 50*5.35 = 3670.00
Profit = 3670.00 - 3795 = -125 Rs

bajajdipesh said:

bajajdipesh · Jan 18, 2010

Update at the closing of 18 Jan 2010

Nifty spot - 5274.85

Strategy 1:

Nifty 5000PE Jan series - 7.90(1 lot)
Nifty 4700PE Jan series - 1.80 (2 lot)
Nifty 4600PE Jan series - 1.45 (1 lot)

Net position - 50*7.90 - 100*1.80 + 50*1.45 = 287.5
Profit = 287.5 - 4700 = -4412.5 Rs

Strategy 2:

Nifty 5300PE Jan series - 75.15 (1 lot)
Nifty 5000PE Jan series - 7.95 (2 lot)
Nifty 4900PE Jan series - 3.90 (1 lot)

Net position - 50*75.15 - 100*7.95 + 50*3.90 = 3157.50
Profit = 3157.50 - 3795 = -637.5 Rs

bajajdipesh said:

bajajdipesh · Jan 19, 2010

Update at the closing of 19 Jan 2010

Nifty spot - 5225.65

Strategy 1: (Initiated on 21 Dec 2009)

Nifty 5000PE Jan series - 11.55(1 lot)
Nifty 4700PE Jan series - 2.05 (2 lot)
Nifty 4600PE Jan series - 1.35 (1 lot)

Net position - 50*11.55 - 100*2.05 + 50*1.35 = 440.0
Profit = 440.0 - 4700 = -4260.0 Rs

Strategy 2: (Initiated on 06 Jan 2010)

Nifty 5300PE Jan series - 105.40 (1 lot)
Nifty 5000PE Jan series - 11.65 (2 lot)
Nifty 4900PE Jan series - 4.95 (1 lot)

Net position - 50*105.40 - 100*11.65 + 50*4.95 = 4352.50
Profit = 4352.50 - 3795 = 557.5 Rs

bajajdipesh said:

bajajdipesh · Jan 20, 2010

Update at the closing of 20 Jan 2010

Nifty spot - 5221.70

Strategy 1: (Initiated on 21 Dec 2009)

Nifty 5000PE Jan series - 8.0(1 lot)
Nifty 4700PE Jan series - 1.45 (2 lot)
Nifty 4600PE Jan series - 1.10 (1 lot)

Net position - 50*8.0 - 100*1.45 + 50*1.10 = 310.0
Profit = 310.0 - 4700 = -4390.0 Rs

Strategy 2: (Initiated on 06 Jan 2010)

Nifty 5300PE Jan series - 106.50 (1 lot)
Nifty 5000PE Jan series - 8.15 (2 lot)
Nifty 4900PE Jan series - 3.35 (1 lot)

Net position - 50*106.50 - 100*8.15 + 50*3.35 = 4677.50
Profit = 4677.50 - 3795 = 882.5 Rs

bajajdipesh said:

AW10 · Jan 20, 2010

Dipesh,
Appreciate your commitment to learning.

Now we more or less know the fate of first strategy.. i.e. most probably mkt will close above it BEPoint and it will loose complete money.
Congrats for second strategy - as it had more reasonable BEPoint of 5224. If market closes below this then you are going to make atleast some profit on it.
Max profit point of Nifty at 5000 is still doubtful. So you won't make max profit here.

So what is the learning ? Not sure if you want to wait till Jan expiry or learn from it and move on to next trade.
I have few observations/suggestions on this.. but will wait for you to make your observations.

Paper trading Option strategies needs lots of patience and hence learning thru paper trade is very slow process. Was just wondering if you would like to expedite it.
Hope u checked the link on my prev post here to my option trading related thread. Check out the strategy of Smart_Trade in that thread
http://www.traderji.com/options/305...ng-strategy-option-spreads-22.html#post399577

where he created 5300 - 5100 Put ratio spread with 20 points risk and 200 points reward potential with very high probability of success. That strategy should already be making about 100 points now.

All the best. and happy trading.

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Paper trading options

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