BC OPTION SELLING
Saved by @rishabhjain06

How to make 1% consistently via Option Selling?

• Analyzing the trend
• Selling OTM's
• Making adjustments
• Capturing trending move
• Without big drawdowns
• Right Position Sizing
• Risk Management

Here are the 11 aspects to focus on:

Collaborated with @AdityaTodmal

 1. Analyze the trend:

To begin with, determine whether Bank Nifty is trending, consolidating, or stuck in a range.

Why?

Cause we can predict what it will do then.
2. How many points to capture?

The margin required for selling one lot is around Rs. 1.5 lakh for a strangle.

If we earn around Rs. 1500 on one lot, we would make 1% return on our capital.

1500/25 = 60 points

Either sell directional 60 and make it zero.

Or 30-30 both sides.
3. How do we begin in the weekly expiry?

Can tend to skip Friday's as there are two days holiday.

In those 2 days market has ample time to come out with news, react to SGX and so forth.

So from a R:R perspective it is not great to carry from Friday.
Even the decay isn't huge if you see unless there's a big gap and you are on the correct size of it.

The Weekly candle also is from Monday to Friday.

So at Friday EOD we know how the weekly candle looks as well.
4. What was the recent trend?

If the market was consolidating recently then we are going to wait for a proper breakout or breakdown.

If it is taking too much time we can sell far otms.

But with the intention of exiting the strangle when a breakout/breakout happens.
5. Post-significant movement:

Post a big movement in the weekly candle, we are looking for an inside candle in the current week.

Thereby we would look for selling strangles as they would be most rewarding.

Usually can target around 30-40 rs premiums.
6. Adjustments:

Adjustments can generate more returns than you had originally planned.

Basic rolling up and down can be done to extract higher premiums.

Can't adjust every move though, so should know when to exit.

Here is where levels come into play.
7. Capturing trending move:

There are levels after which Bank Nifty is going to make a big move.

In my Youtube channel as well as my twitter, I always share my bias.
I mark S1, S2, S3 and R1, R2 and R3.

Sometimes I don't mark one side at all.

That's when I am expecting a trending move.
https://t.co/Ywik8EMxl0
You may refer to my weekly multi timeframe analysis threads and videos if you want to learn and observe more of the same.

https://t.co/g7MwzR706i
8. Without big drawdowns:

Don't take more than a 3% hit.

I have seen traders usually lose their minds when they lose more than this. The cycle of bad trading originates after this.

So we have to ensure to not let it happen in the first place.

Psychology needs to be intact.
9. Right Position Sizing:

On Rs. 10 Lakh maximum you can sell is 6 lots.

Beginner should avoid any leverage unless they are profitable for 6 months consistently.

Don't enter all your qty at once.

Stagger the qty as and when you make profits.
10. Risk Management:

Do respect your SL.

Never change it based on Hope or your bias as you always go wrong as the market is supreme. Your SL should be the one which you had planned before taking an entry in the trade.
11. Pro Tip: Go and backtest:

Can go and backtest your trading and look for areas for improvement.

Forward testing is also essential to see if you can do it in the live markets and keep a check on your emotions when trend is not in favour but your SL is also not hit.
We are on Youtube as well now!!

We have a FREE Youtube Channel where we cover our analysis of the markets.

If interested feel free to join using this link: https://t.co/ijbLiYzXml
If you enjoyed this thread here's another one:

https://t.co/7pmJkbBM2N
We also have a FREE Telegram channel as well.

Link to join: https://t.co/GpDL0dXbzS
That's a wrap!

If you enjoyed this thread:

1. Follow us @Adityatodmal & @niki_poojary for more threads on Price action, Option Selling & Trading growth.

We've got you covered.

2. RT the first Tweet to share it with your audience.

I appreciate it!

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Time for a🧵
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• Technicals of BNF
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• Support/Resistance of BNF on weekly TF
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1/Don't hate on any style:

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Sep 23, 2021 - Weekly expiry, preceded by the FOMC meet and not to mention the gap up which then turned out to be a trending day

Here’s how the strangles were converted into straddles & how the positions were managed!

Time for a Thread 🧵

• Wednesday night (IST) there was an event, FOMC meet
• Markets were jittery, as they say, when US sneezes the world catches cold
• Both Dow & Nifty were weak
• All eyes were fixed on the Fed Reserve Chair Jerome Powell’s take on interest rate and the pace of asset purchases

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• 37800 CE @ 43 & 37700 CE @ 34 & 36200 PE 28 & 36300 PE at 34


• On Wednesday 37K strike witnessed heavy CE & PE Open interest 2.5mn & 2mn of CE & PE writing respectively


• On Wed night, the cat was out of the bag and Mr. Powell kept interest rates at zero & continued the current pace of asset purchases
• Dow celebrated the news and on Thursday morning (weekly expiry) i.e. Sep 23, 2021 BNF opened with a gap up of ~300 points and opened at 37241
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Here's a breakdown of 11 simple yet powerful steps to create one: 🧵

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1/ Know your type:

First and foremost, understand whether you are a Scalper or Intraday trader or Swing trader or Positional Trader.

Create an account in @tradingview

2/ Set the Time Frame (TF) of the Charts:

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• Positional Trader: Weekly


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No matter which type of trader you are, its important to know the trend at higher TF.

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In my outlook for the week for #BANKNIFTY & #NIFTY I cover multi TF analysis.

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Simple and effective way 2 make Money


Idea 1:- Use pivot level like 14800 in case of nifty and sell 14800straddle monthly expiry (365+335) exit if nifty closes on daily basis below S1 or above R1

After closing below S1 if it closes above S1 next day or any day enter the same position again vice versa for R1

Idea2:- Use R1 and S1 corresponding strikes multiple
Incase of R1 15337 take 15300ce
N in case of S1 14221 use 14200pe
Sell both and hold till expiry or exit if nifty closes below S1 or above R1 around closing
If the same bounces above S1 and falls below R1 re-enfer same strikes

Use same criteria for nifty, usdinr and banknifty

(This is must)Use this margin rule for 1lot banknifty pair keep 4Lax margin
For nifty one lot keep 3Lax
For usdinr 100lots keep 4Lax

I bet you if you do this on consistent basis your ROI will be more than 70% on yearly basis.

Couldn't explain easier than this

Criticisms are most welcomed.
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Sir's Option Selling Logic 🧵:
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How to play reversals
• Always look at the chart as a starting point
• Spot the Swing low
• Sell Strikes 300-400 points below that swing low
• Buy a proper hedge


• Example on how to play reversals on Intraday
• Instead of the selling the support strike sell a bit far


• As the strike is far from the support you get enough cushion

• As soon as the SL is hit, you can exit the positions

• without your strike coming into ITM
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1/ Level-Based Trading on non-expiry days:

On expiry days all OTM options are going to go to zero, so you can take a bet on a particular level for a high reward.

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