Path to Consistency

[Subhadip]

Thanks subhadip bhai....:clapping:
So if 100 point down
say spot-8900 ,fut-8930
then Cover 9300&9200 CE
short 9000&8950 ...am right ?
so if again 200 point down now we only have these 50 sub strikes ...is it same way we adjust in every 100 point moves?
also which time is good to enter these trades?
Is it okey to use sub50 point strikes?some where I read its not good ...what's your live experience in using these strikes?

No..not like that..i have just said what to do if 100 point up..

but same thing will not do if 100 point down..

Also...200 point down same thing can not be done.

Have to explain much much more..

I am not doing multiple strangle....it is one of the poor R:R strategy..

but return is very good 10 to 18 % per month if one can do it in sideways market..

 

[VJAY]

No..not like that..i have just said what to do if 100 point up..

but same thing will not do if 100 point down..

Also...200 point down same thing can not be done.

Have to explain much much more..

I am not doing multiple strangle....it is one of the poor R:R strategy..

but return is very good 10 to 18 % per month if one can do it in sideways market..

okey will wait for your explanations for down moves...

But it give good result with our prev example which I paper traded ...
though my adjustments done what I expressed in earlier post

 

[Subhadip]

okey will wait for your explanations for down moves...

But it give good result with our prev example which I paper traded ...
though my adjustments done what I expressed in earlier post

Already told that it will give 10 to 18% return per MONTH...

But risk is very high if there is market crash

 

[VJAY]

Thanks...so I think its good strategy in UT and sideways ...Risk is high if market start to go down ..as down moves are always in hurry

 

[travi]

Thanks...so I think its good strategy in UT and sideways ...Risk is high if market start to go down ..as down moves are always in hurry

In options SIDEWAYS need to be re-dfined more clearly

This is two dimensional,
1. Sideways underlying
2. sideways volatility (use VIX or the strike IV itself)

Both indicate that there isn't much fluctuation
so even if point 1 is constant but point 2 jumps up, the short strangle is hurt badly, what Da is pointing to.

In down moves, like normal 100 or even 200 pt NS gaps etc, although underlying moves which is 1-D, you also need to watch for IV rises that buildup few days preceding known event and suddenly due to economic/political tensions etc

Ideally sideways is where both 1&2 are range bound so Theta can overtake vega. (and if needed delta)

Problem with these free online s/w is they focus only on Delta. When you enter positions, make note of each strike IV and VIX in general.

 

[Subhadip]

In options SIDEWAYS need to be re-dfined more clearly

This is two dimensional,
1. Sideways underlying
2. sideways volatility (use VIX or the strike IV itself)

Both indicate that there isn't much fluctuation
so even if point 1 is constant but point 2 jumps up, the short strangle is hurt badly, what Da is pointing to.

In down moves, like normal 100 or even 200 pt NS gaps etc, although underlying moves which is 1-D, you also need to watch for IV rises that buildup few days preceding known event and suddenly due to economic/political tensions etc

Ideally sideways is where both 1&2 are range bound so Theta can overtake vega. (and if needed delta)

Problem with these free online s/w is they focus only on Delta. When you enter positions, make note of each strike IV and VIX in general.

Excellent write up......

Nice ...Thanks a lot..

 

[Subhadip]

I have told many times that do not sell PE when VIX is down.

Now just a small example why I am saying this.

Just on Thursday, market Spot at 9100, but 9200 PE at 84...as NF was at 9130 around.

Hope all are understanding what i am saying.

Nifty spot at 9100 so 9200 PE should be at 100, rather it is following NF which at 9130..so it should be as per NF at 70. But with some premium it is at 84.

So as per NF it is premium of 14 points,

Say u shorted 9200 PE seeing the false premium of 14 points.

But actually it should be 100...so it was in discount if you see the nifty spot.

NF will reduce to NS at expiry..

SO though i have bought Nifty Mar 9200 PE, though I am not loosing any premium, rather i am gaining premium.

There is false Theta value if u see any option software, rather selling PE, here buying is getting theta..

Hope I am communicating what I want to say to all..

 

[mohan.sic]

I have told many times that do not sell PE when VIX is down.

Now just a small example why I am saying this.

Just on Thursday, market Spot at 9100, but 9200 PE at 84...as NF was at 9130 around.

Hope all are understanding what i am saying.

Nifty spot at 9100 so 9200 PE should be at 100, rather it is following NF which at 9130..so it should be as per NF at 70. But with some premium it is at 84.

So as per NF it is premium of 14 points,

Say u shorted 9200 PE seeing the false premium of 14 points.

But actually it should be 100...so it was in discount if you see the nifty spot.

NF will reduce to NS at expiry..

SO though i have bought Nifty Mar 9200 PE, though I am not loosing any premium, rather i am gaining premium.

There is false Theta value if u see any option software, rather selling PE, here buying is getting theta..

Hope I am communicating what I want to say to all..

fyi, option prices are valued based on Futures price. Not spot Nifty.

So 9200 pe trading at 84 means : 70 points intrinsic value ( strike 9200 - future 9130 ) and 14 points time value.

If what you are saying is to be considered, every time when Nifty is trading at premium - All puts will have False premium AND every time when Nifty is trading at discount - All calls are at False premium.

 

[Subhadip]

fyi, option prices are valued based on Futures price. Not spot Nifty.

So 9200 pe trading at 84 means : 70 points intrinsic value ( strike 9200 - future 9130 ) and 14 points time value.

If what you are saying is to be considered, every time when Nifty is trading at premium - All puts will have False premium AND every time when Nifty is trading at discount - All calls are at False premium.

U have to learn a lot my dear friend in option.

 

[monkeybusiness]

fyi, option prices are valued based on Futures price. Not spot Nifty.

So 9200 pe trading at 84 means : 70 points intrinsic value ( strike 9200 - future 9130 ) and 14 points time value.

If what you are saying is to be considered, every time when Nifty is trading at premium - All puts will have False premium AND every time when Nifty is trading at discount - All calls are at False premium.

Correct me if I am wrong, underlying value in nifty options is that of Nifty Spot, not nifty futures.