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

VJAY

Well-Known Member
Nothing new. Same old strategies on BN and they are not working due to high volatility.

Currently short on Tata motors 200 PE and will buy the shares if it stays below 200 by expiry.
Nothing new. Same old strategies on BN and they are not working due to high volatility.

Currently short on Tata motors 200 PE and will buy the shares if it stays below 200 by expiry.
Dear amrutham,
are BN butterfly strategy also not working?
 

mycall

Well-Known Member
Dear amrutham,
are BN butterfly strategy also not working?
Conservative strategies don't perform well in high VIX market...

I have also stopped trading in option partly due to non availability... but mostly due to the high VIX... my strategies also don't work well and most often need active management...

Overenthusiastic and passionate/aggressive traders can find the weekly range by defining nearest swing high and low levels and take low cost debit spread or ratio spreads at the opposite level whenever price comes near any of the levels... as per my experience BNF most often comes back to test the other level just before or at expiry... this is purely on luck basis... but as the risk is minimal... worth giving a shot

Currently focusing more on cash... I have a trend system which gives good return yearly basis... also this suits my current job engagement as this needs very little involvement... only thing it is too slow...
 

SarangSood

Well-Known Member
It's not an easy market to trade. There is no fixed strategy that works in such market. So our strategies need to be dynamic and we need to be able to convert them fast according to the market movements.

My aim most of the time in this type of market is just survival while having positions because there comes a day or atleast 3-4 hours when the premium erosion is massive and so is the profit.

So how do we convert our existing strategy? For example you have taken a debit spread as follows:
(1)
25200 pe : 4000 @250
25100 pe : -4000 @ 205
24300 pe: -4000 @ 27
Net debit 18*4000 = 72000.

Now we have to be keep a close eye on volatility. If the premium start falling with very less bnf movement you can sell your 25200 put and also sell an equal delta cal. In this case a 25200 cal.
(2)
25200 pe : 3720 @250
25200 ce : -280@250
25100 pe : -4000 @ 205
24300 pe: -4000 @ 27
Net credit = -68000

Also in (1) position we have to keep on selling or buying 24300 put if market goes up or down respectively to maintain the delta of our position. If your not sure how to carry your position in (1), you can convert all your 24300 put in 25100 put.

(3)
25200 pe : 4000@250
25100 pe : 4400 @205.

There are endless things you can do with options and there is always something which is working. It's all about the hustle and active participation. One more thing, it's never advisable to take bulk position (in respect to your capital) in the market because it can turn against you in no time. It should always be built slowly with positive mtm so as when it turns against, you have got the leverage of your profit to adjust the position accordingly.
 

mycall

Well-Known Member
It's not an easy market to trade. There is no fixed strategy that works in such market. So our strategies need to be dynamic and we need to be able to convert them fast according to the market movements.

My aim most of the time in this type of market is just survival while having positions because there comes a day or atleast 3-4 hours when the premium erosion is massive and so is the profit.

So how do we convert our existing strategy? For example you have taken a debit spread as follows:
(1)
25200 pe : 4000 @250
25100 pe : -4000 @ 205
24300 pe: -4000 @ 27
Net debit 18*4000 = 72000.

Now we have to be keep a close eye on volatility. If the premium start falling with very less bnf movement you can sell your 25200 put and also sell an equal delta cal. In this case a 25200 cal.
(2)
25200 pe : 3720 @250
25200 ce : -280@250
25100 pe : -4000 @ 205
24300 pe: -4000 @ 27
Net credit = -68000

Also in (1) position we have to keep on selling or buying 24300 put if market goes up or down respectively to maintain the delta of our position. If your not sure how to carry your position in (1), you can convert all your 24300 put in 25100 put.

(3)
25200 pe : 4000@250
25100 pe : 4400 @205.

There are endless things you can do with options and there is always something which is working. It's all about the hustle and active participation. One more thing, it's never advisable to take bulk position (in respect to your capital) in the market because it can turn against you in no time. It should always be built slowly with positive mtm so as when it turns against, you have got the leverage of your profit to adjust the position accordingly.
Yes... this is actually not a 'normal' human's game... a perfect combination of man and machine can make it happen... here the man is the strategy builder or the shot caller (as in casino) and the machine (can be a man who has no emotion or truly zero sum mind) is the executioner... which is practically 1-2% or max 5% people can achieve in life...

there is a saying in America... that the marines turn out to be the best performing traders post service... just due to their training about obeying orders, patience and zero emotion while pulling the trigger on command

I am not sure about how many people (1 or 2% may be) understood the positions Sarangsood has explained...
 

mycall

Well-Known Member
People like me can't understand sir. It could be helpful if you explain.
Firstly please don't address me as 'sir'... I am just a fellow trader here and enjoy trading as well as try to enrich my mind psychologically which helps me to deal with my day to day challenges...

Truly speaking I also not understood much about the positions... I guess SarangSood used these levels to show some examples and help people to initiate some thoughts...

however, as you requested... I am trying to throw some light in whatever written in that post in my capacity...

First action:

25200 pe : 4000 @250 [delta -0.5x(+)100 lots averaged]
25100 pe : -4000 @ 205 [delta -0.4x(-)100 lots averaged]
24300 pe: -4000 @ 27 [delta -0.001x(-)100 lots averaged] (deep OTM option... so current delta is near to 0)
Net debit 18*4000 = 72000.
Delta neutral to positive position [-0.5+0.4+01] (neutrality gets disturbed with volatility and needs adjustment as suggested in the post as per volatility)

Initial position is ratio spread... ATM supposedly 25200... presuming BNF expires above 24300... this position will need adjustment if BNF starts moving down wildly...

2nd Action:
Adjustment done due to 'premium start falling with very less bnf movement'

25200 pe : 3720 @250 [delta -0.5x(+)93 lots]
25200 ce : -280@250 [delta 0.5x(-)7 lots]
25100 pe : -4000 @ 205 [delta -0.4x(-)100 lots]
24300 pe: -4000 @ 27 [delta -0.001x(-)100 lots]
Net credit = -68000
Negative delta position

3rd action
25200PE: 4000 @250 (delta 0.5x100)
25100PE: 4400 @205 (delta 0.4x110)
Somewhat delta neutral to positive position... but riskier than the initial position...

A few notes:

The irony is delta has 2 bed partners... they are gamma and vega... these are very very difficult to manage...and monitor or calculate... monsters during volatility

Volatility indicators like ATR is to be understood to gauge what may come... volume indicators like OBV (my favorite) also forecasts what is going on in the market at any given period of time...

apart from these there are congestions... sideways movement... particularly... the conditions 2nd action (above) is initiated... high volatility comes after congestion only... these situations can catch any trader off guard... it may help or ruin the position calling for immediate and drastic adjustments

please study... research... paper trade... do some low budget real trades (1lot each)... build mental strength and knowledge... know behaviour of options during start... mid sessions and expiry... then use your knowledge to rip benefit of option...

Hope this helps my friend... let me know if I can help any further... of course I will if it falls in my domain
 

Similar threads