Selling options for income query

#21
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This is current example for you. We take two major market swings in the past, and we assume banknifty going to expire below those swings.

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In that case we can prepare our Cspread like this . If market shoots up , then we can buy back 41400 ce and sell 41300 pe ( or current ITM strike at the time )
Banknifty you need constant attention in Cspread.
Thanks for all this really appreciate...Just would like to understand though if the market were to shoot up to say 41300 then buying back the 41400 ce is fine but selling another ITM put would really depend on the structure of the market at that time it wont really help in reducing the losses so it would be like taking a different trade and setup altogether based on the new S/R.
 
#22
Thanks for all this really appreciate...Just would like to understand though if the market were to shoot up to say 41300 then buying back the 41400 ce is fine but selling another ITM put would really depend on the structure of the market at that time it wont really help in reducing the losses so it would be like taking a different trade and setup altogether based on the new S/R.
That is what I told in the very first message. All trade executions should be based on your analysis. If market were to break above 41300 , you should know 41300 was the hurdle and the breakout will sustain. Then there is no issue in buying back our sold call and selling a ITM put. If you are confused and distressed , while your levels being broken... strengthen your analysis. When market breaks above it's structure of resistance, it would make sense to make a new trade altogether with new S/R.
Only booknerds believe S/R are there to stay. It will break and rebuild all the time. It's our job , as a trader to bet on the newly established ones.
 

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