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Raj232

Well-Known Member
I have searched yesterday but could not find it as I dont remember thread starter's id. Search option in Tj is not upto mark , I have searched 2009 election call option loss etc but no thread coming in search.
I have also tried to find it in derivatives forum/option forum by thread date but still could not find.
I feel most of the threads, links related to option selling / topn strategies are no longer on traderji :( .. at least I'm not able to find any :)
 

amrutham

Well-Known Member
Amrutham sir..today in Nifty..paper umberlla is formed...this is formed in upward rally..means hanging man. Help me to understand i am reading the candle sticks patterns correctly??
Its sure looks like hanging man. If the next day (tomorrow) is a red candle, then short trade can be initiated with SL as recent high.



Source: Zerodha Varsity

The Hanging man
If a paper umbrella appears at the top end of a trend, it is called a Hanging man. The bearish hanging man is a single candlestick, and a top reversal pattern. A hanging man signals a market high. The hanging man is classified as a hanging man only if is preceded by an uptrend. Since the hanging man is seen after a high, the bearish hanging man pattern signals selling pressure.



A hanging man can be of any color and it does not really matter as long as it qualifies ‘the shadow to real body’ ratio. The prior trend for the hanging man should be an uptrend, as highlighted by the curved line in the chart above. The thought process behind a hanging man is as follows:

  1. The market is in an uptrend, hence the bulls are in absolute control
  2. The market is characterized by new highs and higher lows
  3. The day the hanging man pattern appears, the bears have managed to make an entry
  4. This is emphasized by a long lower shadow of the hanging man
  5. The entry of bears signifies that they are trying to break the strong hold of the bulls
Thus, the hanging man makes a case for shorting the stock. The trade set up would be as follows:

  1. For the risk taker, a short trade can be initiated the same day around the closing price
  2. For the risk averse, a short trade can be initiated at the close of the next day after ensuring that a red candle would appear
    1. The method to validate the candle for the risk averse, and risk taker is exactly the same as explained in the case of a hammer pattern
Once the short has been initiated, the high of the candle works as a stoploss for the trade.
 
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SarangSood

Well-Known Member
Any forum related to option selling ? or selling strategies ..? available on traderji , unable to find any ...
I don't think there are any active threads. For that matter i don't think there are many geniune option writers on traderji. That's why I share my views sometimes on this thread only because amrutham is a good option writer and pursues it professionally which trust me is not easy.
 

Raj232

Well-Known Member
I don't think there are any active threads. For that matter i don't think there are many geniune option writers on traderji. That's why I share my views sometimes on this thread only because amrutham is a good option writer and pursues it professionally which trust me is not easy.
Great, I'm looking to measure the low risk and medium profit trades, (may be 1 position per day). Choosing strikes is important if it is for current expiry and was wondering whether there are some benchmarks which is already being followed ?
 
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SarangSood

Well-Known Member
Great, I'm looking to measure the low risk and medium profit trades, (may be 1 position per day). Choosing strikes is important if it is for current expiry and was wondering whether there are some benchmarks which is already being followed ?
Every writer follows his own rules because a lot depends on his market sense and thus benchmarks are created through the learnings (loses) only. The beauty of option strategies is that you can play them however your market sense is telling you to while also allowing you to take high or low risk. But that's where the complications also start.

A simple Credit spread is ideal for your low risk/medium profit trade. If you are not sure about the direction then you can add another credit spread of the other option making it an iron condor. But for doing all this you also need to read volatility as well. For example Friday was a high volatile day in bnf where this strategy wouldn't have worked while today it worked like a charm.

So you need to ask yourself first what exactly your market sense is telling you and then look for the exact strategy. Low risk/medium profit trades would be insufficient information because there are variety of market scenarios to achieve the same.
 

Raj232

Well-Known Member
Every writer follows his own rules ....

So you need to ask yourself first what exactly your market sense is telling you and then look for the exact strategy. Low risk/medium profit trades would be insufficient information because there are variety of market scenarios to achieve the same.
I'm not looking to guess the direction, or volatility. Those can be measured by the greeks itself. Using that information, looking to take a low risk-medium reward position on intraday basis .. so that no headache of gapup or gapdown.
'
Probably basic calculation in an excel sheet should be able to help. :up:
 

SarangSood

Well-Known Member
May turned out to be a good month specially after the elections as high premiums were able to negate the fast movements. Still needed to be quick in adjustments though & it's cost was also pretty decent. I preferred BNF over NF in the last week as movement/premium-erosion wise it was behaving better. Before this week it was only NF as there was liquidity issue in BNF during elections. This month still had it's fair share of volatility so i had to be on my toes to change the strategy as per the market conditions.
 

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