Options Thread

How options allows to change and adjust view dynamically.
Let’s understand with a live example.

Example : Nifty is at 11921 and you are bullish on Nifty.

1) Buy Naked 11900 CE(call) at 167

Breakeven : 12068
Max Loss : Rs 12555
Max Profit : Unlimited

2) Now your view changes from bullish to slightly bullish so you can convert naked call into a bull call spread by selling 12100 CE at 72

Breakeven : 11996
Max Loss : Rs 7100
Max Profit : Rs 7800

#OptionsTrading #trading

3) Now your changes from slightly bullish to slightly bearish. You can convert the bull call spread into a ratio spread by selling more 2 calls of 12100 CE

Breakeven : 12224
Max Loss : Unlimited above 12224
Max Profit : Rs 18550

#OptionsTrading

4) Now if your view changes to sideways then you can buy 2 lots of 12200 CE to convert the ratio spread in a butterfly spread.

Breakeven : 11936 to 12182
Max Loss : Rs 2600
Max Profit : Rs 12300

#OptionsTrading

Thread
How to manage strangles dynamically incase of a violent move or IV spike ?

1) Yesterday and infact entire last week if you had created strangles you would have experienced that during upmove only call side were increasing but puts weren’t decaying.

#trading #Options

2)In morning I had created a short strangle
200 lots 25000 PE sell at 102
200 lots 27000 CE sell at 161

You can sell from below image that if I had waited in this strangle till day end I would have lost around -4.5 L

So lets see what all adjustments did I do logically.

3)After creating strangles the premiums strarted increasing as puts were not decaying and calls were increasing.
So I had kept 100 lots buy on 26500 CE at 400(day high)
My buy got executed at 400 around 12:15 pm & I exited 25000 PE at 75

4) I had kept more 100 lots buy at 435 (recent high made during upmove till now)

The buy got executed at 12:15 pm
So my current open postions now were

200 lots 26500 buy at average 420
200 lots 27000 CE sell at 161

5) Logic:
As short strangles are basically short vol so if there is a movement on one side with no decay then one can start buying atm calls.
What this does is it converts your strangles into ratio spread and if move continues eventually into a debit spread

How to manage straddles :

1) As bnf open was within yesterday range created a 29000 straddle at around 9:30 am

29000 PE sold at 528 and
29000 CE sold at 453

#trading #OptionsTrading

2) Instead of keeping SL on sold legs. I keep SL on otm options in the system

SL was on 28000 PE at 220 (day high)
SL was on 30000 CE at 165 (day high)

3) At 10:15 am, Bnf started to trend down and 28000 PE was bought at 220 and I immediately bought 30000 CE at 110

4) If you look at the straddle chart, there were lot of intraday spikes and your SL would have been hit if you had kept SL on atm sold legs

5) But after lot of intraday spikes the straddle from 980 closed at 880. A 100 point decay intraday.

But even if both your buy option got triggered you would have made around 15-20 points inspite of such violent moves on both sides.

#OpenDrive
#intradaySetup

Sharing one high probability trending setup for intraday.

Few conditions needs to be met
1. Opening should be above/below previous day high/low for buy/sell setup.
2. Open=low (for buy)
Open=high (for sell)

(1/n)

Apply this setup in below list of stocks

RELIANCE
HDFC
HDFCBANK
ICICIBANK
AXISBANK
KOTAKBANK
SBIN
YESBANK
TATASTEEL
VEDL
HINDALCO
TCS
INFY
TECHM
TITAN
HINDUNILVR
BPCL
HINDPETRO
UPL
SUNPHARMA
AUROPHARMA
M&M
MARUTI

Thread on how @ITRADE191 made 3 lakhs in 2 days.

I'm posting his chart logics here which he has shared with me realtime.

You will need:
1. Pivots
2. Vwap
3. PDL/PDH (Previous day high/low)
4. Advance/Decline Ratio.

(1/7)

This is the Pivot Setting used by @ITRADE191

(2/7)

At 11 he told me to short Nifty as it was breaking a pivot.

Gave immediate 60 points profit.

(3/7)

The red line marked here was PDL, he trades using these decision points daily. He shorted Nifty futures again the moment it broke that level.

Again made money while pyramiding into his trade.

His sl was PDH, Tuesday 24th Nov high. Would've reversed his position there.

(4/7)

Got his conviction from Advance/Declines in Nifty. All the bigger stocks were trading in red so he rode the downfall.

Here is his mtm of yesterday.

Made around 1.2 lakh here.

(5/7)

A THREAD

Topic: Why triple straddle has no real benefit.

A triple straddle is essentially an ATM Straddle & one or two step away straddle on either side. The position is almost neutral strategy just like any other neutral straddle or strangle.

1/

We can also view the position as an ATM straddle, a strangle & inverted strangle.

For example

Nifty: 14700

Triple straddle: 14600,14700,14800

Another view:

14700 straddle
14800-14600: strangle
14600-14800: Inverted strangle

2/

So the real question is what is the advantage of an inverted strangle over it's otm counterpart?

The answer is none.

They both have same premiums/theta. Only that slippages will be high in inverted strangle when we do the required adjustments plus liquidity issue.

3/

So isn't it better that instead of a triple straddle, we can just do ATM Straddle & 2* OTM strangle.

So in the above eg. the position will be

14700 ATM straddle
2* 14800-14600 otm strangle.

Same premium received, similar range just that there's no nuisance of ITM options.

4/

The question arises:

Why trade in an ATM straddle & 2* OTM Strangles? Why over-complicate?

Options are in itself a complicated instrument. Wouldn't it be better to stick to one straddle or a strangle & adjust accordingly?

Lesser the strikes, more there will be clarity.

5/

A THREAD on . . . .

How @ITRADE191 selects strikes to trade in and how he follows risk management.

Short thread explained via pictures with the help of @niki_poojary.

1. At the start of the week

i.e. on Friday and Monday, DJ Sir prefers to sell OTM options of 50 rs premium in Nifty.

- ATM options won't decay a lot at the beginning
- With this premium reward is good
- Since these strikes are 4-5 strikes away they are relatively safer

2. On Tue/Wed/Fri

He prefers to trade in ATM or near OTM options.

- ATM options have the highest theta decay
- Since there are only 2-3 days to expiry options sellers by default have a higher probability of winning
- Huge reward if market stays flat

3. Directional/Trending days

- Capture huge profit via ATM option selling
- Futures only where he has good conviction
- Even if doesn't trend much decay will be huge
- Only on days Tuesday to Thursday

4. Which series to trade options in?

- INTRADAY trades option selling is ONLY in weekly expiry
- Option buying for hedging is done MAJORLY in next week/monthly expiry
- This way we have time to adjust
- Theta decay slower than weekly