Trade Nifty Options Intra Day Using Hedging Principle

[DanPickUp]

@Ananths

Yes, every thing works best at the stage/level of: It would work best when we would know....

Beside jokes: As I did show in the past some ideas from my side how to leg in and out or trade a short strangle/straddle, http://www.traderji.com/options/74905-advanced-nifty-option-strategies.html#post733503,yes I also would like to see any adjustment from Ankur on this strategy in his specific way.

Little improvement you may want to test in your market: Placed limit orders on specific levels you consider important in your chart, how ever you do that. Play around with that in case you not already did do that in the past. As market some times only jumps or falls for a quick move and recovers very quickly, you will be filled. Take care / DanPickUp

 

[bsrao]

Intraday Update:

To maximize returns, following method can be adopted

6200 PUT SELL 89 Price (5 Lot)
6300 CALL SELL 64 Price (5 Lot)

Calculate 10% levels as below:
89+9 = 98
64+6 = 70

Make your first sell positions near levels of 98 and 70. Once any order gets hit,
wait for levels to back to either 89 or 64.
After that make sell position in other side.
This way you will surely come under profits in last 30 minutes of market close.

This Strategy I called it as "Dragon" and way ahead than Option Writers style of trading markets.

Will you pl explain at what rate we have to sell the put at 89 or 98 and similarly the call at 64 or 70

 

[ankurpcl]

Thanks every one for making this thread get's star rating in less than 2 days time.

In Days to come I will surely add flavor in the theoretical strategies as mentioned in options books with my own stuff. As we know same strategy not work every day and every time. So it's challenge every day for an intra day option trader to take decision how market should behave after digesting all news which are coming from 360 degrees.

Reason for selecting only this strike prices for today is:
6200 PUT SELL 89 Price (5 Lot)
6300 CALL SELL 64 Price (5 Lot)

We have VWAP comes at these points. VWAP is combined average price of options in any particular strike be it Put or Call on any particular day.
Most of the trading software work on VWAP to determine any strategy. Exact implementation of such softwares difficult to tell in 1 thread and moreover its extremely complex and consider binomial exponential algorithms along with that.

I have added 10% flavour to these VWAPs as it increases the profit margin if gets successful.

But remember we are humans and not machines, so we need to design strategies which are crisp, clear and easier to understand at least for us. I have seen many options traders after designing strategy start getting confused when nifty makes sharp movements either way. As an option trader such confusion should be avoided all the times by anyone who wants to be an option specialist.

 

[DanPickUp]

Thanks every one for making this thread get's star rating in less than 2 days time.

In Days to come I will surely add flavor in the theoretical strategies as mentioned in options books with my own stuff. As we know same strategy not work every day and every time. So it's challenge every day for an intra day option trader to take decision how market should behave after digesting all news which are coming from 360 degrees.

Reason for selecting only this strike prices for today is:
6200 PUT SELL 89 Price (5 Lot)
6300 CALL SELL 64 Price (5 Lot)

We have VWAP comes at these points. VWAP is combined average price of options in any particular strike be it Put or Call on any particular day.

Most of the trading software work on VWAP to determine any strategy. Exact implementation of such softwares difficult to tell in 1 thread and moreover its extremely complex and consider binomial exponential algorithms along with that.

I have added 10% flavour to these VWAPs as it increases the profit margin if gets successful.

But remember we are humans and not machines, so we need to design strategies which are crisp, clear and easier to understand at least for us. I have seen many options traders after designing strategy start getting confused when nifty makes sharp movements either way. As an option trader such confusion should be avoided all the times by anyone who wants to be an option specialist.

As you came up with VWAP, could you kindly post just for once a chart you consider to have the value to be posted here? A chart only for once which shows (If possible with your own comments) on the chart what exactly you talk about, as many here are not familiar with the VWAP. I am clear that there is a thread about VWAP http://www.traderji.com/advanced-tr...0-combining-trend-vwap-ranges.html#post866548. But it surely makes sense to show a chart which is pointed to your thread and not to the future thread. Take care / DanPickUp

 

[traderite]

Good strategy Ankur. When we know the range it would work the best. :clapping:



VIX would impact any option price. In fact I'm playing intraday based on VIX changes.

For example:- Today morning VIX was +6% and I was short on both 6000PE & 6400CE with a combined premium of 67. It came down to 61 during the day when VIX came down. So it was a net 6 points profit.

VIX with a view on OI would give a great opportunity for options day traders. :thumb:

Ankur has an adjustment to this strangle (Dragon). Curious to see how it goes. :thumb:

I saw that this combined premium of 67 was at the beginning of the day. Rest all day it was hovering near 63 . So does it imply that you Short the Strangle at the start of the day ?

Thanks.

 

[jain.er]

Intraday Update:

To maximize returns, following method can be adopted

6200 PUT SELL 89 Price (5 Lot)
6300 CALL SELL 64 Price (5 Lot)

Calculate 10% levels as below:
89+9 = 98
64+6 = 70

Make your first sell positions near levels of 98 and 70. Once any order gets hit,
wait for levels to back to either 89 or 64.
After that make sell position in other side.
This way you will surely come under profits in last 30 minutes of market close.

This Strategy I called it as "Dragon" and way ahead than Option Writers style of trading markets.

What if market just rises or falls through your levels

Say you are able to sell put @98 but instead of gaining the market keeps on falling and you are unable to sell your call option and your Put makes losses

 

[ananths]

I saw that this combined premium of 67 was at the beginning of the day. Rest all day it was hovering near 63 . So does it imply that you Short the Strangle at the start of the day ?

Thanks.

Yes. I did it at around 9:40 AM.

I just saw VIX around +6% and high OI in both 6200PE & 6300CE. So took this trade.

Sold 6000PE @ 34 and 6400CE @ 33.

 

[ankurpcl]

You are right whatever you are saying can happen in any trade as markets sometimes very volatile.

To avoid same, strategy need to be protected with SL.
If after hitting 98 levels turns to 100, 105 and so on. What needs to be done?

You have 2 methods to work on this:
1. Want to take more profit along with increase in risk then adopt as below:
a) If you have shorted 1 lot at 98, short 1 lot again at 107 with final SL as 115
If chances of hitting 10% from VWAP is 100% then probability reduces to half thereafter, so you are at 50% of 50% i.e 25% probability that your SL gets hit with this

2 Mark simple SL as 10% away from 98 which is 107.

Till now I not seen much trades (just 5%)which cracks method 1 above. So you can follow the trade as per your risk potential.

Thanks

 

[traderite]

You are right whatever you are saying can happen in any trade as markets sometimes very volatile.

To avoid same, strategy need to be protected with SL.
If after hitting 98 levels turns to 100, 105 and so on. What needs to be done?

You have 2 methods to work on this:
1. Want to take more profit along with increase in risk then adopt as below:
a) If you have shorted 1 lot at 98, short 1 lot again at 107 with final SL as 115
If chances of hitting 10% from VWAP is 100% then probability reduces to half thereafter, so you are at 50% of 50% i.e 25% probability that your SL gets hit with this

2 Mark simple SL as 10% away from 98 which is 107.

Till now I not seen much trades (just 5%)which cracks method 1 above. So you can follow the trade as per your risk potential.

Thanks

Can you please share your view that is this 10% away from VWAP rule some random aspect or based on some backtesting ?

It would be really interesting to know if you could put your trade process in a step by step events of decision making .

Thanks.

 

[gmt900]

As you came up with VWAP, could you kindly post just for once a chart you consider to have the value to be posted here? A chart only for once which shows (If possible with your own comments) on the chart what exactly you talk about, as many here are not familiar with the VWAP. I am clear that there is a thread about VWAP http://www.traderji.com/advanced-tr...0-combining-trend-vwap-ranges.html#post866548. But it surely makes sense to show a chart which is pointed to your thread and not to the future thread. Take care / DanPickUp

I have only theoretical knowledge of VWAP. Please elaborate on how to apply this concept in practice for nifty.