random walk option strategy

#1
I would like to do some paper trading to see if it is possible to put on a butterfly strategy with each legs at different times.

I understand the NF index is a lot volatile.

I will choose 25JAN2012 series.

NF spot is 4779. Strangle to begin:

buy 1 lot JAN 4600PE @ 64/.
buy 1 lot JAN 4800CE @ 135/.

Total net debit 199/.

The goal here is to place a short JAN 4700PE and a JAN 4700CE to see if it is possible to have a strategy above the zerline.

Anyway, the strategy could change depending on the market behavior. So, in the end we could end up with complete different strategy

Hopefully option masters will help me out with this :clapping:
 

DanPickUp

Well-Known Member
#2
Hi

Good idea to open a new thread about butterfly's. :)

What about posting the analyzing picture to your paper trades? or do you plan to show us just some math on paper?

It is ok for me, but I think many would appreciate some thing which shows how the trade looks on an analyzing picture. What is your meaning about that?

DanPickUp
 

DanPickUp

Well-Known Member
#3
I would like to do some paper trading to see if it is possible to put on a butterfly strategy with each legs at different times.

I understand the NF index is a lot volatile.

I will choose 25JAN2012 series.

NF spot is 4779. Strangle to begin:

buy 1 lot JAN 4600PE @ 64/.
buy 1 lot JAN 4800CE @ 135/.

Total net debit 199/.

The goal here is to place a short JAN 4700PE and a JAN 4700CE to see if it is possible to have a strategy above the zerline.

Anyway, the strategy could change depending on the market behavior. So, in the end we could end up with complete different strategy

Hopefully option masters will help me out with this :clapping:
Some questions:

1. Are you assuming that market goes up first as you buy a very expensive call compare to your put? Any chart picture to explain that reason?

2. What do you mean with: The goal is to place? Do you plan to place limit orders with your broker or what do you mean with that?
 

ashwani chadha

Well-Known Member
#4
i would like to do some paper trading to see if it is possible to put on a butterfly strategy with each legs at different times.

I understand the nf index is a lot volatile.

I will choose 25jan2012 series.

Nf spot is 4779. Strangle to begin:

Buy 1 lot jan 4600pe @ 64/.
Buy 1 lot jan 4800ce @ 135/.

Total net debit 199/.

The goal here is to place a short jan 4700pe and a jan 4700ce to see if it is possible to have a strategy above the zerline.

Anyway, the strategy could change depending on the market behavior. So, in the end we could end up with complete different strategy

hopefully option masters will help me out with this :clapping:
it is good to buy call and put
it is better to buy and sell nifty
it is best to buy call and put from intra day strong support and resistance as the case may be ,and close the position before end
of day
but it is worst to sell call and put
 

summasumma

Well-Known Member
#5
I think you should make sure that the premium collected in the short-straddle should be more enough to cover the money spent in buying the OTM call and put...

But in your case, you have already bought the OTM call and put and trying to enter short-straddle now to create a butterfly position, which might not be a good idea .... as you might not get enough premium which u might have got in the same day when u enter long OTM call/put if the market remains in same place due to little time decay...

try to use some option tools like optionoracle to see how ur strategy could work ...

some OptionExperts i know = aw10, Dan ...
and as you know one of the experts is already in this thread...:)

Thanks,
...summasumma
 
#6
Hi

Good idea to open a new thread about butterfly's. :)

What about posting the analyzing picture to your paper trades? or do you plan to show us just some math on paper?

It is ok for me, but I think many would appreciate some thing which shows how the trade looks on an analyzing picture. What is your meaning about that?

DanPickUp
As long as the figure is simple I think there is no need to post any pictures. Also, the "atnow" line of the strategy can be calculated with ease by looking at the prices. I am sure figure such as long strangle, long butterfly are familiar with many option traders.

If the figure gets complicated I will post images to explain it and to let you help me with it.

Othe
 
#7
Some questions:

1. Are you assuming that market goes up first as you buy a very expensive call compare to your put? Any chart picture to explain that reason?

2. What do you mean with: The goal is to place? Do you plan to place limit orders with your broker or what do you mean with that?
I made I mistake I wanted to buy a very neutral strangle strategy. So, a 4900CE would have been better. Anyway, it is late by now so I will stick with the original figure.

Let's wait and see what the market does over the few next days.

Time decay should not be a problem in the shortest term.
 
#8
The goal of the strategy is to wait and see what the marker does in the short term. Hopefully it'll move either up or down. We will adjust the strategy accordingly :thumb:

We do begin with a strangle. Yet, we might end up...who knows where...
 

DanPickUp

Well-Known Member
#9
it is good to buy call and put
it is better to buy and sell nifty
it is best to buy call and put from intra day strong support and resistance as the case may be ,and close the position before end
of day
but it is worst to sell call and put
Hi Ashwani chadha

May I ask: What is the meaning of your statements?

Why comments like: It is better or it is worst ?

Depending on each ones trading instruments, preferences, knowledge and experiences: All of what you mentioned can be done very successfully with out any valuations of what is done.

Don't you think the same ? :)

DanPickUp
 
#10
I would like to do some paper trading to see if it is possible to put on a butterfly strategy with each legs at different times.

I understand the NF index is a lot volatile.

I will choose 25JAN2012 series.

NF spot is 4779. Strangle to begin:

buy 1 lot JAN 4600PE @ 64/.
buy 1 lot JAN 4800CE @ 135/.

Total net debit 199/.
Nothing really special happend over the past two days.

JAN 4600PE is now 83/.
JAN 4800CE is now 93/.

NIFTY spot now is 4705.80
 

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