random walk option strategy

[DanPickUp]

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

At the moment you are in a losing trade because you lose money. 23 Rp.

Any stop loss or just stick out the nose of the window and lets guess from where the wind comes?

Do you have any clear defined targets on the price chart when to sell the first 4700 call or 4700 put and do you have any clear idea about how much you want to have for this sold options?

 

[theartofweb]

Ok, I understand the thread needs some more action.

I will add those 3 options to the strategy.

SELL 1 JAN 4700CE 142/.
SELL 2 JAN 4700PE 121/.

Now, downside break even point is 2,10% (4606.50)

 

[DanPickUp]

Ok, I understand the thread needs some more action.

I will add those 3 options to the strategy.

SELL 1 JAN 4700CE 142/.
SELL 2 JAN 4700PE 121/.

Now, downside break even point is 2,10% (4606.50)

Bum. Big jump in margin.

Downside risk high.

Good for you if volatility would shrink.

 

[LivetoTrade]

Dan, why don't you suggest a strangle, we can all learn.

 

[DanPickUp]

Dan, why don't you suggest a strangle, we can all learn.

Hi LivetoTrade

I am not completely clear with your statement. Don't you learn anything her in this thread?

Theartofweb is showing his ideas and he is doing well. The start may was not at its best. But that is the way option trading is. We not always will have the best start and then we have to know how to adjust our miss position.

His idea is to implement a butterfly by leg in some of the legs. In this case there are only two legs left: Short put and short call. Both with strike 4700 and expire in Jan 2012.

He has started with a strangle which was not delta neutral. ( If you want any suggestions about a strangle: Try to do the strangle delta neutral )

Now he adjusted it with some kind of a short straddle, which is a combination you can do with the long strangle.

The way he did it: He toke out the risk on the upper side and he increased the risk on the downside. Some kind of idea and let's see what is next. ( He gave no explanation why he did it that way )

Any way: I have to say that this is on a level I not have seen from many here. :thumb:

Some thought and comments from my side:

- He never explained why he choose d that strikes for the strangle and he never told about any targets he has for his trade. I can live with that. If some body can trade such a free level for the whole live of the option with real invested money, and end up with any profit, I declare him: Option trader. So let's see what is going on next.

- If I spot on some points I do that when I see no information about it and I think it would be worth to be clear about it like increase in margin or volatility risk or targets which can be included in option strategies if some body is on that line.

Now lets move on with the thread and let me give the word to theartofweb. Please move on the way you do as Adjusting is the art of option trading and you do well.

DanPickUp

 

[LivetoTrade]

Surely theartofweb is doing well.

And you, not just limiting to be a critic, also suggest, which is also nice to observe.

Since you seem to have more exposure to this segment, I thought it may be of more help if you suggest a strangle.

 

[PGDIMES]

Hi LivetoTrade

...
Now lets move on with the thread and let me give the word to theartofweb. Please move on the way you do as Adjusting is the art of option trading and you do well.

One of the many ways to adjust FNO trades is to add futures leg to the options strategy(ies)... let's c how our friend defends his position...

 

[theartofweb]

NIFTY @ 4646.25

Some options in the strategy are gaining/losing money...

Today we have (YP = Yesterday Price, @ = Today Price):

-1 JAN 4700CE (YP: 142,32) @ 107,55
+1 JAN 4800CE (YP: 135) @ 67,80
+1 JAN 4600PE (YP: 64) @ 95,25
-2 JAN 4700PE (YP: 121,15) @ 140,50

Downside break even now is only 0,85% (4607,15)

NIFTY has come down for the third day in a row!

I don't want to give up the upside benefit. Yet, I must take care of the downside risk.

So, BUY BACK the JAN 4700CE (book a little profit of 34,77) and SELL 1 JAN 4600CE pricing at 164,00 :thumb:

Strategy now looks like this:

-1 JAN 4600CE @ 164,00
+1 JAN 4800CE @ 67,80
+1 JAN 4600PE @ 95,25
-2 JAN 4700PE @ 140,50

New downside break even now is 1,90% (4557.80)

Also, today I have made small profit of 34,77 I may use in the near future.

Let's wait and see...you never know what the market is going to do tomorrow!

 

[DanPickUp]

Hi

My calculation shows, that you not have any profit in the whole trade at this moment.

You have a loss of 39.88 Rp. in the whole trade.

Let me show you:

You made money with the short 4700 call leg : Sold at 142,32 and you bought back at 107,55 = + 34.77

You made money with the long 4600 put leg : Bought with 64 and actual value you show is 95,25 = + 31.25

You loose money with the long 4800 call leg : You bought with 135 and actual value is 67,80 = - 67.20

You loose money with the short two 4700 put legs : You sold with 121,15 and actual value is 140,50 = 2 x 121.15 - 2 x 140.50 = - 38.70

Total nett loss now : - 39.88

You not have any profit. You can start talking about any profit when you have zero positions and have made money. But at the moment you still must fight to not lose more money.

Yesterday it was 23 Rp.

Today it increased to 39.88 Rp.

DanPickUp

 

[theartofweb]

You not have any profit. You can start talking about any profit when you have zero positions and have made money. But at the moment you still must fight to not lose more money.

Yesterday it was 23 Rp.

Today it increased to 39.88 Rp.

DanPickUp

I am sorry. I might have sounded misleading when I wrote:

Also, today I have made small profit of 34,77 I may use in the near future.

Thanks for pointing that out :thumb: