random walk option strategy

[DanPickUp]

Hi Theartofweb

The trade at the moment looks a bit messy to me on the down side, as I not like such risk pictures. But this is finally personal choice.

You wrote in post 18: "Yet, I must take care of the downside risk"

By selling the atm 4600 call you did it some how and some how not. For me, the risk is still there.

One solution is to buy a cheap otm put to break the down side risk permanently. This will cost some money and it will bring down your upper leg to a lower level.

As you also wrote, that you not want to give up what you have at the moment on the upper side, this may is not in your interest. Even than, just some input for others. Advantage and disadvantage of different trading styles and risk appetites.

DanPickUp

 

[DanPickUp]

Hi

Trade with prices given by yesterday from theartofweb:

Trade as given with the greeks. Theta at the moment is biggest and that is good for the sold options:

Trade with otm long put as an idea with no price. Improvement: The down side risk is clearly and definitely broken:

Trade with otm long put priced with for example 50 Rp. Disadvantage for the moment is: The upper side of the trade comes down and stays for the moment under the zero line.

Each ones personal choice and risk appetite.

Happy new year

DanPickUp

 

[theartofweb]

Each ones personal choice and risk appetite.

Happy new year

DanPickUp

Hi, I would like to thank you for posting those nice pictures that will help me and others understand both the figure and its greeks :clap:

Today NIFTY closed at 4624,30 (the index is going down for the forth day in a row! this is crazy!).

Strategy now looks like this:

-1 JAN 4600CE @ 137 (+27)
+1 JAN 4800CE @ 52,80 (-82,20)
+1 JAN 4600PE @ 114,05 (+50,05)
-2 JAN 4700PE @ 162,95 (-83,90)

AT NOW: -54,6 (Correct if I am wrong...I adding yesterday money I made from call buy back, it was 34,77)

I don't know what the market is going to do at the beginning of 2012

My break even point is still at 4557,80 (-1,45% from today's price) and today the market did not move that much. So I think I can wait and see what happens. You know, strategy needs not fixing after small index moves :thumb:

HAPPY NEY YEAR :clap:

 

[theartofweb]

NIFTY at 4636,75 and nothing special happend today...ATNOW decreased a bit :clapping:

 

[DanPickUp]

NIFTY at 4636,75 and nothing special happend today...ATNOW decreased a bit :clapping:

Hi

Time decay was in your favor over the weekend and you made some money with that. :thumb:

Selling options on a Thursday for the weekend is best, when nothing special happens over the weekend. In this case it worked and in other cases it doe's not work.

My calculations are based on this post, as OpVue not shows any Nifty options:

http://www.traderji.com/options/53702-nifty-options-trade-why-what-if-42.html#post627234

and your whole trade show now a loss of: - 41.28.

That is less compare to the -54.60 you had last week. Well done.

Biggest loss you still have is with this long 4800 call leg. At the moment -77.85.

Leg in next time or as mentioned go for a delta neutral start to make it a bit more easy for you.

DanPickUp

 

[theartofweb]

I hope someday before option expiration nifty will return to 4700 and above. If so, what you would suggest doing? Thanks :thumb:

 

[LivetoTrade]

I hope someday before option expiration nifty will return to 4700 and above. If so, what you would suggest doing? Thanks :thumb:

Your wish seems granted - where is the genie?

:lol:

 

[DanPickUp]

I hope someday before option expiration nifty will return to 4700 and above. If so, what you would suggest doing? Thanks :thumb:

Hi

What about testing it on the option matrix ? That is why they are here for.

One simple idea you can test: Sell your long 4800 call for a good price and buy back your sold 4600 call. Check the remaining risk on the down side. Margin stays around it was before. Good when vola falls as you still have two sold option in this strategy. Depending on the prices you are filled, you are over the zero line on the upper side.

An other idea is to sell your 4800 call and your 4600 put. Increase of margin and a vola play, as vola should shrink for this position. Here you have to be aware of the break evens on each side.

There are other ideas but you MUST play through your matrix to see it.

DanPickUp

 

[DanPickUp]

Hi Theartofweb

My calculation shows now a profit of 1.47 R. ( No broker commission and real time filled included )

Why not close the trade and start new ?

 

[theartofweb]

Nifty @ 4765,30 I think I'll leave the strategy untouched today....