Trading for Living -- Successfully Completed one year as Full Time Trader

[bpr]

in option writing there is that one big loss which can wipe out all profit ...
If you understand this and has some way of controlling the risk then good ...
else it is bad ....

 

[amrutham]

Generally I avoid big positions during events. But there can be some unplanned events. One big loss I encountered in BN is during Bank Recapitalization news. I took a big hit in that week in my CEs and spent next 3-4 weeks to recover that loss.


I feel I need to change my strategy in BN and look for some BUTTERFLY strategies. Will test some of them in the coming weeks with 1-2 lots.

 

[amrutham]

in option writing there is that one big loss which can wipe out all profit ...
If you understand this and has some way of controlling the risk then good ...
else it is bad ....

Thanks bpr. I had couple of instances last year where I took big losses and spent the remainder of the months to recover those losses. Its very scary until you get chance to adjust your positions. One precaution I am taking is I am not deploying more than 60% of my capital at any point of time and keep the remaining for adjustment purpose.

I am limiting my biggest over night position to less than 10 lots with in the range of 2% on either side of the last closing price.

 

[amrutham]

One of my Favorite Strategy for BN on expiry date is Butterfly Spread. It has given me profits on most of the expiry days. Its intraday strategy and margin required is very less.

Let me explain how I use it.

Lets assume BN opens around 24000 on the expiry day. Wait for 10-15 minutes after the opening and let it stabilize. Lets assume world markets are bullish/slightly bullish.

1) Buy 30 lots (1200 Qty) 24000 CE at around 60-70.
2) Sell 60 lots (2400 Qty) 24100 CE at around 35-40
3) Buy 30 lots (1200 Qty) 242000 CE at around 15-20

Your total outgo will be around 10000-15000 rs. At any point during the day, your profit may rise to 15000-20000 rs on this position due to time decay of OTM options and then square it off and take the profit. Your max loss is initial outgo amount.

But most of the times the position will come into profits during some point of the day.

 

[timepass]

One of my Favorite Strategy for BN on expiry date is Butterfly Spread. It has given me profits on most of the expiry days. Its intraday strategy and margin required is very less.

Let me explain how I use it.

Lets assume BN opens around 24000 on the expiry day. Wait for 10-15 minutes after the opening and let it stabilize. Lets assume world markets are bullish/slightly bullish.

1) Buy 30 lots (1200 Qty) 24000 CE at around 60-70.
2) Sell 60 lots (2400 Qty) 24100 CE at around 35-40
3) Buy 30 lots (1200 Qty) 242000 CE at around 15-20

Your total outgo will be around 10000-15000 rs. At any point during the day, your profit may rise to 15000-20000 rs on this position due to time decay of OTM options and then square it off and take the profit. Your max loss is initial outgo amount.

But most of the times the position will come into profits during some point of the day.

Sell 60 lots of BN options ?? Using Zerodha, 1 lot will cost you about 25000Rs and you will receive a premium of about 1600Rs. So for selling 60 lots, you will need a margin of about Rs. 15 lakhs. So, are you playing with about Rs. 20-25 lakhs in your account ?

 

[amrutham]

Sell 60 lots of BN options ?? Using Zerodha, 1 lot will cost you about 25000Rs and you will receive a premium of about 1600Rs. So for selling 60 lots, you will need a margin of about Rs. 15 lakhs. So, are you playing with about Rs. 20-25 lakhs in your account ?

View attachment 24535

Time Pass,

When you convert your overnight positions from NRML to MIS in ZERODHA, you get some of the margin released.

In the above strategy I have protection in the form of LONG 24000 CE and 24200 CE and the effective margin blocked is around 15-20 lakhs for 60 lots on intraday basis. More over in this strategy, I do not receive any upfront premium. Its a debt spread and my outlay at the beginning would be in the range of 10-15 K. During some time in the day, I close all three positions when they are in profit. If they do not come into profit, I let them expire and take loss.

Yes my total trading capital is much more than 25 lakhs.

 

[bpr]

Thanks bpr. I had couple of instances last year where I took big losses and spent the remainder of the months to recover those losses. Its very scary until you get chance to adjust your positions. One precaution I am taking is I am not deploying more than 60% of my capital at any point of time and keep the remaining for adjustment purpose.

I am limiting my biggest over night position to less than 10 lots with in the range of 2% on either side of the last closing price.

for short vol strategy the only countermeasure is money management.
Have u seen the recent volatility spike and aftermath for SVXY and XIV traders in US market.

 

[DayTrader007]

Making Profit consistently .. Great.
Options writing is actually unlimited loss strategy so I can say trade cautiously.
But as per my knowledge Options Writing with Risk Management is actually great strategy even better than Options buying to make consistent money.
Best Luck.

 

[imfine]

I got shivered after seeing your trades. You are playing with options that also on sell side. Hats off to you. Must be holding good capital to trade.

 

[amrutham]

Here is the snapshot of other account..