Trading options with one month view

[Reki]

How delta neutral option strtg are worked, if one don't want to take any directional call? Can these be beneficial for a weekly or monthly holding period?

Hi Mangup, I think that instead of trying to do such a high precison strategy you may try doing what Smartcat had suggested earlier in this forum, doing wide spread condors. That in my opinion is much easier do to without having a directional view.

Reki

 

[Reki]

Hi all, I am pondering over a thought that options trading strategies for a holding period of week or above are essentially based on benefiting the time decay and volatility. It may not be on the direction because if you are trying to benefit from direction then why get into options at all. You can buy or sell futures itself with 1 delta.

Reki

 

[pannalal]

Hi, I am learning to trade options with one month view. I have paper traded options strategies like, straddle, strangle, covered call and credit spreads. These I have done with 2 to 3 days investment frame. Now I have taken a real trade of Call debit spread with one month view.

Buy 2 lots Call 6200 Nifty Option and Sell 2 lots Call 6300 Nifty option for a total debit of 2245 rupees. My view is bulllish for one month till expiry on 31 october. Initially I had planned to hold this trade till last week of October as I am willing to lose the entire 2245 to learn trade management.

I had irrationally taken this trade and hence there is no clear strategy of making adjustments till expiry. But after I took this trade with one month view, some questions came to my mind. Maybe people who are trading options strategy with this frame will know the answer.

How long does it take to enter the full strategies (i.e. all legs) if dealing with one month view. I have read that experts do not enter entire trade at one go but do leg by leg. Also after entering the entire strategy what is the monitoring frequency daily or weekly.

Reki

I have created strategy where you need to do only one trade per month (probably on last Friday of the month or in next 2-3 trading days). For example, I have given the following trade in my thread:

http://www.traderji.com/options/90686-high-profit-eod-based-option-strategy-advanced-traders.html

Transaction to be done on 05.11.2013 for Base Index at 6317.35:
Buy 6600 CE at Price 24.40
Sell 6400 CE at Price 87.25
Sell 6500 CE at Price 49.50
Net Points Received: 112.35

Very Important:
Either do not enter into trade, if enter, be sure to make all the three trades at one go. If you do two trades and miss one trade, then this strategy might result into huge losses. So, this is not for novice but only for Advanced Traders.

Profit / Loss in points (To convert to rupees, multiply it with 50):
Profit if Index is less than and equal to 6400 on 28.11.2013 is 112.35:clap:
Profit for Index equal to 6500 on 28.11.2013 is 12.35
Loss for Index equal to 6600 on 28.11.2013 is -187.65
Loss for Index equal to 6700 on 28.11.2013 is -287.65

If at any point of time, Nifty crosses 6400, you need to take loss and comes out, otherwise can go long for Nifty Future expiring on 28 Nov 2013.

Presently (on 14th Nov 2013), the Nifty spot is around 6056. So, those who have taken the position will be earning around Rs. 5000 (assuming 12.35 points are used for brokerage, STT etc.). The margin requirement is around Rs. 40,000. So, this is 150% return (almost sure shot as Nifty is not likely to cross 6400 by 28 Nov 2013). But, you never know. Anyway, the picture will be clear on 28 Nov 2013.