random walk option strategy

[jain.er]

Whats the use of such complex strategies...

 

[DanPickUp]

Whats the use of such complex strategies...

Hi Jain.er

There are different reasons behind it.

Prerequisite is to have a good knowledge about options. That is the minimum which is requested for.

The next level is to understand any strategy by it self as there are various option strategies on different levels.

Then you have to understand the rules of the underlying you use for your option trading.

If you now reached that level of knowledge, then reasons can be:

- Fun factor.

- Reducing risk in trading.

- Being a market maker in options.

- Being a professional option trader to make money for your living or for the funds you are in charge for.

DanPickUp

 

[theartofweb]

Hi

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

I do not generally believe option softwares. I mean, what the strategy looks like at expiration is fine. Yet, I do not rely on the atnow line...softwares cannot predict the pricing of the options given days to expiry or volatility. They jsut make assumptions.

You never know what the market markers are going to price...

 

[DanPickUp]

I do not generally believe option softwares. I mean, what the strategy looks like at expiration is fine. Yet, I do not rely on the atnow line...softwares cannot predict the pricing of the options given days to expiry or volatility. They jsut make assumptions.

You never know what the market markers are going to price...

Hi

That is not the point. The point is to make profit in trading and if I want to make a profit with any option strategy, I need a clear plan how to implement this strategy. And that I can play through with an option matrix.

I am clear, that you put effort in this thread and in your strategy. Even than I ask you once: What is your plan? Having a profit of 1 Rp after all that days you are in the trade ? I am sure that this is not in your interest. So how could this be done better?

Answer: By having a plan.

How do I build up such a plan?

Answer: By playing through it in advance on a matrix and by defining entry rules, targets and steps I will do when certain levels are reached.

In that way I not just run behind the market only to adjust my trades and hoping that market finally then will do that and that.

And that is what you show her at the moment. Reason: ........................

DanPickUp

 

[theartofweb]

I am clear, that you put effort in this thread and in your strategy. Even than I ask you once: What is your plan? Having a profit of 1 Rp after all that days you are in the trade ? I am sure that this is not in your interest. So how could this be done better?

My goal is to have nifty to close inside break even points at expiry. My plan is to move break even points according what the market is doing. I am neither bullish nor bearish. Of course, by doing so, I will never be able to close out my strategy before expiration

 

[theartofweb]

Nothing special happend over the last few trading sessions :thumb:

 

[theartofweb]

Long time no update!

NIFTY has been trading away form the sold puts and that made me feel confortable over the past few days.

Let's see what we've got (original price) now price:

-1 4600CE (164) 250
+1 4800CE (135) 105,4
+1 4600PE (64) 20,75
-2 4700PE (121) 39,6

Downside break even is 5,43% away from current NIFTY price 4820,30

For the first time the strategy is worth something.

Expiry is creeping up.

As always, let's wait and see what happens :thumb:

 

[theartofweb]

3 days to expiry. What do you think I should do?

 

[DanPickUp]

3 days to expiry. What do you think I should do?

Hi

Just my two cents: The sold puts have done there work. I would take this profit now.

After that step, you have three legs left. What to do with them?

Depends on your personal market outlook:

If bullish, you could keep the long call and get rid of the other two legs.

If baerish, you coul keep the long put and get rid of the other two legs.

Next step then could be to roll this long call or put in to the next month option serie.

In that way you could start the next month with a position which is slightly over the zero line. That would open many new posibilties.

Your trade, your choices.

DanPickUp

 

[theartofweb]

I think I'll leave the strategy as it is. Buy/Sell would result in commisions. Also, the max profit of the strategy is a little below current market price. Provided nifty does not come down (-10%) over the next 3 days :annoyed: