Picking up nickels in front of steamroller!!

[Capricorn]

I totally agree with JV, He never ask anyone or US to trade like him.
It just a strategy with own risk
If someone follow half strategy then that is trader mistake rather then strategy.
Well to panic/not to panic.. most of the newbies including me try to do half trade and get into some undesirable situations
So to get some experts opinion is always good with some advice for future But certainly if someone give advice with taunts/being rude is not worth..
I found this thread helpful in learing so.. post myt queries to get some opinons..

No intention of being rude in any way...so don't take it that way..

 

[MaxX]

Whoa friend, No need to take it personally. I 've never said the posts belonged to you, however i WILL REITERATE a passive short strangle is not a strategy for all market conditions.

I have nothing against selling options but most sellers only understand theta and do not understand the animal called IV, the option buyers secret weapon.

For your second query 3 out of 4 is possible, look around, if u want a consistent income go for a F.D.

Cheers..

Agreed.. strangle is definitely not a strategy for all market conditions.. I use it only when market is in a monthly range/channel (like we are for the past year).. market tends to trade in a channel most of the time.. sometimes for years together!

Now when it finally breaks the channel.. ones management/reaction to it.. that would differentiate the good traders from the rest!

 

[jvblogger]

Risk management has been discussed in this topic. JV has his own style of risk management.. while I have my own based on the chart. I have been following a similar strategy to jv's from a long time now (before this thread was made) and it has been consistently profitable. If someone does any sort of strategy without risk management, he would blow up eventually.

Could you elaborate your RISK MANAGEMENT which is based on the chart? I may get some additional ideas for risk management.!!

 

[MaxX]

Could you elaborate your RISK MANAGEMENT which is based on the chart? I may get some additional ideas for risk management.!!

Sure.. nothing too complex about it. I use chart levels for SL and not the price of the option.

This is a monthly chart -

From mid 2003 to mid 2006 we were in the same channel that we are in right now. Market after that made a higher channel and eventually went parabolic..

Anyway right now from the past year we are back in the same channel.. so I sell options at or just past the channel boundaries.. If price actually breaches the boundary I would be out and would then take a directional position. Has given me a 100% success rate from when we entered the channel as it has not broken it yet.

Hope it helps!

 

[p81]

Hi Maxx. So for example what calls or puts you have shorted currently. Just want to get an idea of your range. Thanks

 

[rrmhatre72]

Whoa friend, No need to take it personally. I 've never said the posts belonged to you, however i WILL REITERATE a passive short strangle is not a strategy for all market conditions.

I have nothing against selling options but most sellers only understand theta and do not understand the animal called IV, the option buyers secret weapon.

For your second query 3 out of 4 is possible, look around, if u want a consistent income go for a F.D.

Cheers..

Hi Capricorn,

Pls share the FD where we get 2% to 4% return on monthly basis.

Also appreciate if you can share your trading style for last six months like JV has shared. It will be always good to learn new techniqs for us so that we can apply them in various market conditions.
I respect this thread ( Even PT's thread) they actually share their trades with whatever their logic is. This helps in understanding concept in better way than just reading any theory.
I am sure you will have your own system. If you can explain it with live trades then it will help lot for all of us.

 

[jvblogger]

Whoa friend, No need to take it personally. I 've never said the posts belonged to you, however i WILL REITERATE a passive short strangle is not a strategy for all market conditions.

I have nothing against selling options but most sellers only understand theta and do not understand the animal called IV, the option buyers secret weapon.

For your second query 3 out of 4 is possible, look around, if u want a consistent income go for a F.D.

Cheers..

It was needed to take personally when you comment like that!

Again check the threads of this post, and see if IV has been talked about or not!! What do you think how do I select short-strangle ? By tossing coin, or picking up random note!

Do you assume that MOST OPTION SELLERS dont understand !! Does that mean ALL or MOST option buyer know what they are doing?

You haven't seen my trading-profile for sure, as that was not my query , it was circumstances/conditions how I trade. Fulfilling 3,4(?) conditions does not fulfill my trading-profile , what about 1 and 2?

Did I say ANNUAL 3-4 % return? Please read carefully before jumping to conclusion!

 

[Capricorn]

I seem to have touched a raw nerve somewhere.:lol:

There's nothing wrong with a coin toss and you are the one doing all the assuming not me .

Where have I said anything about annual or monthly returns???

Any way this is going nowhere so have a nice week end.

 

[cool_kk]

Guys,

Chill out now !

It went wrong with my one trade question So I would like to take it back .

There is no problem in healthy discussion,good to know future as well as synthetic future also exist if required during head wind direction for options.

So Kudos to all of you for sharing good knowledge.

As capricon said, Have a Nice Weekend So New week new talks

cheers
kaps

 

[Huzzu]

I was in search for scalable, sustainable and unobtrusive trading model and I found Short Strangle strategy, which Im pursuing for last six months, which works well in mildly upward trends. My strategy is very similar to what Jvblogger has mentioned and my return expectation is also 4% per month (net of brokerage).

An adequate risk management can never be overemphasized as option shorting is inherently a risky strategy. What I have done is predictive model for return for the entire position at nifty level of +/- 100 points over rolling 7 days. Based on the VIX data available from NSE site, I have found that VIX change has negative correlation of a factor of 6x versus Nifty change. In other words, for every 1% change in Nifty, VIX normally changes by 6% in other direction. I simulate option pricing, for a various nifty levels in +/- 100, along with expected IV at those levels, to compute my expected returns. The desired curve of the return should be a perfect bell curve implying maximum return at current nifty level and lowest returns (or maximum loss) at extreme levels. If this is not the case then there is need to adjust the position.

Its been a constant learning and threads like these further enhance my understanding. The new addition is to correct the position initially through future position (either short or long) before correcting the option strangle. My new strategy is to fix base Delta for strangle short, which I have decided at -0.12. For e.g. delta for short put (Strike price: 5000, expiry: 30-Sep, premium: Rs. 60) would be +0.18 and delta for short call (strike price: 5700, expiry: 30-Sep, premium: 61) would be -0.30, giving a cumulative delta of -0.12. Now, the idea is to delta-hedge the entire position in by buying or shorting the nifty future if there is a variation to base delta. A good link to understand option greeks is http://en.wikipedia.org/wiki/Greeks_(finance)

My nightmare is huge gap-up or gap-down opening or worst a market circuit. I dont have answer for this. Other than this, I feel the strategy can be followed in the sideways and gradually trending market.