Simple way to make 100 Nifty points a month (low risk)

[Blackhole]

Again we will make it more simple....

U people having very good charting softwares.....
take nifty monthly chart ...find out avg Range % wise (not point wise) ....
if its above 5.5 % then this strategy can be a failure....

so, smart trade said its more that 5.5% max 7...nowadays with algo spike it can easily go to 8-9% and can dramatically change the stance before or on expiry or can just stay stable on expiry.


so according to you its not profitable ? or profitable in few months and flat or negative in other?

 

[Blackhole]

@Pos_trader

I can understand your way of thoughts. On the other hand: You can trade short Strangles at least three months far away from expiry and close them

Have a nice weekend / Dan

hi dan and other seniors /thread owner


i had traded guts in past had mixed exp. tried again with futures(hedge),was good so tried with stocks but margin requirement was huge for me.

how would u trade/handle the following situation?

4. Example of adjustment - Created a short gut (7900/8500) when Nifty was 8200. Assume that Nifty falls by 400 points to 7800 in 10 days then I would wait for 8-10 days more. Two days before expiry if Nifty is still at 7800, then I would use balance of 80 k (refer Q3) to add some bearish position like selling 4 lots of 7600 CE around 240. So if Nifty expires at say 7750 part of the losses are compensated by this newly added position (suggestions on this are most welcome).

5. Year 2008 like situation

thanks
happy trading

 

[Bane]

This is a neutral strategy with limited profit potential and unlimited risk.in last 7-8 month nifty in a sideway range 8000-9000 ,So this strategy may give good result.Last year Nifty Monthly Chart make Higher High from march to November. Where this method would have gave losses 90% time.

This method is good only when you expect the range wouldn't broke.Once the range broke with high volatility average down will make the matter worst.But thanks for this beautiful strategy.:clapping:

 

[Somatung]

@Blackhole

As most know here: I am more in delta neutral trading and hedging and less in adding to positions who start to get into loss, it is clear that I handle such situations more the way you did in the past.

But this is personal choice and as told in the previous post: We have so many different choices and ways to handle our break evens or stop losses in each trade and on each leg and non of them is written in stone except that we have to act to our good and success.

Take care / Dan

 

[indianbank]

It looks like till mid-July NIFTY will remain range-bound between 8000 and 8500. Thus, I am planning to sell July 8000 CE and 8500 PE late next week for a premium of about 680 - 700 points and then cover the positions for about 550 points by 10-15 July.

pos_trader

According to the above post... i can see closing of the trade will be done middle of july month.

Max profit will be total premium - ( difference of stikes) = 200.

now the imp factor... when we sell anything .. we get max profit when its value comes to zero... and that max profit is 200 points...

Options value becomes zero only when expiry reaches...
in the middle of the month Options price will be high or not equal to zero...

i dont think middle of the month someone will sell options for cheaper price.. so that u can cover it....

If we closely watch the time period of this trade... then its life span is 45-50 days....
Avg range of 50 day time frame fits for this trade...

Only a senior practical option trader can explain this better than anyone...
i hope some senior will help ...:thumb:

 

[Smart_trade]

According to the above post... i can see closing of the trade will be done middle of july month.

Max profit will be total premium - ( difference of stikes) = 200.

now the imp factor... when we sell anything .. we get max profit when its value comes to zero... and that max profit is 200 points...

Options value becomes zero only when expiry reaches...
in the middle of the month Options price will be high or not equal to zero...

i dont think middle of the month someone will sell options for cheaper price.. so that u can cover it....

If we closely watch the time period of this trade... then its life span is 45-50 days....
Avg range of 50 day time frame fits for this trade...

Only a senior practical option trader can explain this better than anyone...
i hope some senior will help ...:thumb:

Yes I also noted that point the trade has to be kept open for 45-50 days so we can have only one trade in 2 months.

Smart_trade

 

[Somatung]

Yes I also noted that point the trade has to be kept open for 45-50 days so we can have only one trade in 2 months.

Smart_trade

If someone only wants to trade this strategy, then he can open every month at any time such a trade and execute it when ever he wants.

If the target is always end of expiry with 45 - 50 trading days, he still can have trades in the pipeline of every month series, but can not close his first trade in his first month because of the time frame used.

 

[lemondew]

Well I also was planning for this one. but thought Once nifty breaks the range especially on downside money made in 1 year can be lost in few days .

This strategy can also be adjusted in a variation of strategy written by munde.
http://www.traderji.com/options/91666-thoughts-trades-options.html

baiscally buying back profitable positions and selling close ATM options. Never quite back tested this one. May be would look into this one.

 

[lemondew]

You can also close 7900 CE book profits and open 7600 CE. Rather than have both open. You can do these adjustments periodically. Many times markets can rebound harder and your top can be in trouble as well while trying to save bottom.

@Somatung -- thanks for your encouraging
4. Example of adjustment - Created a short gut (7900/8500) when Nifty was 8200. Assume that Nifty falls by 400 points to 7800 in 10 days then I would wait for 8-10 days more. Two days before expiry if Nifty is still at 7800, then I would use balance of 80 k (refer Q3) to add some bearish position like selling 4 lots of 7600 CE around 240. So if Nifty expires at say 7750 part of the losses are compensated by this newly added position (suggestions on this are most welcome).

5. Year 2008 like situation had occurred in global fin markets after a long gap of 80 years, so I have not back tested for that.

Thanks

pos_trader

 

[pos_trader]

@indianbank

Pls read the first post of this thread where I have given THREE examples of covering the position in profit 8-10 days before expiry. There is no need to wait till expiry.

Thanks
pos_trader