Time for a Thread🧵On yesterday’s “F&O Pe Charcha - Diary Of An Option Seller” with @Mitesh_Engr by @Paytm Money
• More than the Win Loss ratio check the total Gain /loss ratio
• If your avg loss is 1% and avg gain is +5% then even if you are losing in 7 positions and winning in 3 out of 10 still you will be net profitable
• Stick to a single strategy. Eg: A restaurateur usually wouldn’t be changing his recipe on a daily basis
• Mitesh Sir only works on BO or BD strategy, as he is a versatile trader
• Target 4% per month i.e. 48% p.a.
• Option buying requires skill, everyday there wont be huge momentum, so buying options won’t yield good results, but high chances of falling into a bad habit
• In F&O segment there are ~150 stocks
• Not everyday all stocks will move
• Only 5-7 stocks move upside or downside
• Focus only these momentum stocks
• Check which one is moving
• Range BO/BD never disappoints. BO/BD from a rectangle (consolidation)
• Trade only in trending stocks
• Mostly in the first hour itself movement can be seen
• Post market work is to check the range of the stock & whenever they are near the BO/BD one should add them into watchlist & monitor it
• By 9:07 i.e. the pre-open one can get the pre-opening rates of the stocks
• Check the ones that are near BO or BD and then add them to watchlist
• Even if you lose on 7 out of 10 and make on 3, with max loss of 1% of total capital when you lose & make 5-7% on the winners you are still net profitable
• Stocks after BO or BD usually moves in the range of 5-7-10%
• Traders having modest capital should always go with hedge or rather trade in cash to keep the risk under check
• In intra day one can stick to SL
• Mitesh Sir never hedges his position as he is disciplined enough to take a position only post a BD or BO
• In stocks never attempt straddle or strangle as the stock can move suddenly and unlike index stocks can move > 10% and beyond in F&O segment
• In such cases, one has to just exit with SL only
• In index weekly or monthly options are preferable
• For learning, one can try only in cash given the position sizing & risk management
• At the age of 38 years Mitesh Sir started as a full time trader after gaining experience for 3-4 cycles of the 3 situations (Bull, Bear & consolidation)
• He started in Dec 2017 with a capital of 45 lacs and made it to 70 lacs in a span of 3 months with a full time job
• Earlier there was a benefit of leverage,
• Now as per the norms leverage has been done away with
• So one is forced to play intraday
• Hence Better to opt for option buying instead of selling if one has a skill in finding direction
• Buy options with SL in intraday.
• Find the range in index. He would prefer index because in stocks whenever there is BO or BD stock moves by 5-7-10%
• In index he has witnessed 1 upper circuit and 2 lower circuits only so far
• Probability of a big move is less in Index, unless any mega events i.e. elections, Demon, lockdown, 3rd wave (if any)
• If you're satisfied with less profit but prefers more mental peace then hedge.
• Mitesh Sir doesn’t prefer hedges as his profit gets limited
• Nifty adjustments are very difficult given the low premium. Bank nifty has multiple strikes so easy to adjust
• Nifty has less theta component in it
• In nifty you'll have to make a straddle and then inverted strangle it's that difficult
• Some traders only sell options
• Some only buy
• Some only do intraday futures
• Everyone has different skill
• He does everything
• His skill is more in selling than buying options, so whenever he buys options he only puts 2% of his capital
• Preferably buy a future over buying a Deep ITM CE if one wants to gain 100% absolute as futures do not have a time value component, they move lock step vis-à-vis spot
• Bull market means direction is clear. Wherever the fresh breakout starts one can sell that option with full capital also and make 2%.
• Next day again if it again gaps up and goes up he will sell last day closing price strike put to gain more after squaring off the previous put
• And that’s how he identify the range
• With practice anyone can learn this, so practice is the only key to the success
• Sell strangles as we're in a range
• If market goes up near the resistance you can try with straddle selling there as market may halt for 2-3 days there before taking the level out
• If resistance crossed then go single side only
• Better play positional
• He doesn’t prefer Intraday straddle or strangle
• New traders should get disheartened in the learning phase, and hence start with a small capital
• Don’t risk more than a 1% of the total capital
• In case he is holding a strangle and the next day there is a gap down
• For the First 15 mins he doesn't do anything, he analyses the price action:
i. Gaps down and comes up : don’t do anything(just keep the SL of the PE at day high+ 10points)
• Gaps down & continues down move: exit the PE’s as direction is clear & sell only CE’s aggressively(usually the expensive ones now)
• If he sells for 100 and it opens at 300, he will either cut the option or straddle or sell future
• Fear only sets in, when the position size is not proper
• He doesn't recommend leverage if you want to become a professional trader.
• Either get huge capital or train your mind to see percentage return instead of absolute return
• If Mitesh Sir loses the current trading capital that he has in his account, it won't affect him as he's invested part of his wealth in other assets
• Also he is confident about his knowledge & skill which will always help him out.
More from Nikita Poojary
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
• So didn’t wanted to get caught on the wrong side, hence on Wednesday noon Shorted a strangle
• ~700-800 points away from where the BNF was about to close i.e. 37k levels
• 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
4 Legit ways to retain most of the trading income: 🧵
Collaborated with @AdityaTodmal
1. Divide your capital amongst your family members:
• Ensure they are not salaried employees as they might not be allowed to trade as per their employer's policy.
• Your family is your strength, not just emotionally, but financially too.
• E.g. your net taxable income works out to Rs. 50 lacs, as per the new tax regime, you are in the 30% tax bracket.
However, if you divide the capital amongst your family members in such a way that the net taxable income works out to Rs. 12.5 lacs per member (assuming 4).
This way the tax bracket gets shifted from 30% to 20%, clear saving of 10%
2. Expenses a trader can claim:
All the expenses directly related to the trading business can be claimed.
i) Rent Expense: If one has an office on rented premises, rent paid is a valid expense. However, you should have the rent receipts & rent agreement as valid proof.
Collaborated with @AdityaTodmal
Lets start with the harsh truth.
80% of traders just maintain a trading journal and never evaluate.
Recording your trades on day-to-day basis is just maintaining a trade book which your broker can furnish anytime.
Hence this exercise of recording trades is simply futile.
Things to record in the Trading Journal:
4. Buy Date
5. Buy price
6. Sell Date
7. Sell price
10. % of cap risked
15.Set up used
Once all the records are in place you need to build an analytics tool.
Trade records on its own is just the raw data which needs to be processed to derive info out of it.
Record your 50 or 100 trades.
Thereafter, analyse the following:
1. No. of wins
2. No. of Losses
3. % of winning trades ( No. of wins/Total trades)
4. Avg gain %
5. Avg loss %
6. Gain to Loss ratio ( 4./5.)
7. Reward to Risk ratio
8. Open Risk
Here are the 10 most Powerful Positional Setups with Screeners that is available for FREE: 🧵
Collaborated with @AdityaTodmal
1/ Short term breakouts:
This strategy involves finding stocks that are trading near their high in the past 4 months with rising volumes and closing strong, indicating a possible breakout.
• 15-minute stock breakouts
2/ Volume Shockers (stocks with rising volumes):
Stocks that have seen a sudden spurt in their volume by over 2x times the average volume over the past 10 trading sessions and have gained or lost more than 5%
3/ Potential breakouts:
• Stocks nearing 200 day high by 5% & showing consolidation for the past 30 days with volume above 50 day
4/ Strong Stocks:
• This strategy involves finding stocks closing higher than their previous trading day continuously for the past 5
• 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.
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.
More from Mplearnings
Mitesh Sir's Positional Option Selling 101:
• How to find direction
• Which options to sell
• How to deploy capital
• Exit criteria
• What ROI he targets weekly
• What % risk he takes
Done with the help of @niki_poojary
How @Mitesh_Engr Sir finds the direction?
• Daily charts S/R
• 75 min charts S/R
• Intraday trend
• Always play directional
• Never trades in strategies
Which options to sell in weekly expiry according to @Mitesh_Engr?
• Weekly candle High/Low
• Sell 1% away options from those
• Exit when levels breached
Position Sizing by @Mitesh_Engr Sir.
How to deploy your capital?
• First sell 20%
• Pyramid the next day
• When to exit
• What to do when view goes wrong
• What to do with idle capital
Some important tweets of @Mitesh_Engr Sir
• What Data to look at
• ROI for safe players per month
• Max risk per day
• Gather knowledge and play directional
• Never play strategies
Mitesh Sir's FUTURES BREAKOUT TRADES 101:
• How to pick stocks at right time?
• What to look for?
• Importance of BO post consolidation
• How to manage SL
• How to get huge profits
• Multiple Examples
In collaboration with @niki_poojary
Importance of Trading only BO or BD stocks by @Mitesh_Engr Sir: 👇
•Two questions to always ask:
~Why stock is going up/down and when?
~ Who is behind big up/down and when?
• Trade only stocks with Momentum
• Instant results
• Small SL or huge profits
Sir's take on how to Trade: 👇
• Observe fight between buyer & seller
• Position will be created within first 3 hours
• Operators will win
• Just find BO or BD
• Look for huge volume support
• Give company to operators
• ATP importance explained
How to take trade in Breakout/Breakdown stocks by @Mitesh_Engr Sir: 👇
• Check Support & Resistance
• Wait for 2-3 months consolidation
• Surge in volumes
• Trade on 3 min charts
• Small SL
• Keep trailing
• Always pyramid in profit
When and Why to Pyramid? By @Mitesh_Engr Sir
• Adding to winning positions
• Signals of continued strength
• Potentially large profits
• An Example of pyramiding in one of his trades
How I am playing expiry trades.
Catch me if you can @Mitesh_Engr— Nikita Poojary (@niki_poojary) July 17, 2021
Time for a\U0001f9f5
Mitesh Sir's EXPIRY Option Selling 101:
\u2022 What to look for?
\u2022 Strike Selection & Ratios
\u2022 SL mgmt
\u2022 Avoiding freezes
\u2022 Monthy Expiry
\u2022 Event days
\u2022 How he would have traded last expiry?
In collaboration with @AdityaTodmal pic.twitter.com/9uN2vQQ4hc
My trading is very simple. Selling option based on support and resistance. Time frame: Daily and 75 min.
Keep distance of 1-2% from S & R so one has chance to exit or adjust if trade goes against.
And last one my tgt is 4% pm. Above it bonus.
Dear Nitesh can you share some idea how you makes successful trade. Please I am in a big loss since I started my journey of stock market in 2017. Then I took 15 lac loan and everything is vanished. Now I am in so much struggle to pay the EMI— Ganesh (@Eshan70302504) May 30, 2021
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