Categories Option selling
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
Mostly will work on Monday to Wednesday. Sometimes on Friday.
Why to pay your money to learn this if u can get it here.
U need only practice.
Say bank nifty future is at 32000.
Sell both 32000 call and put.
Considering current volatile market lest say premium on Monday morning is 350 on both sides.
Sold with 700 points combine premium.
If bank nifty will trade in narrow range say +\- 100 hold it.
If moving 200 points
then exit previous sold straddle. Sell new one. Let’s say BN moved +200
Now sell 32200. If bank nifty will move here within range then u will get profit through theta decay. Follow same procedure for next 150-200 pts move.
This is only for single straddle sell position.
Now in second case sell three straddle. 31900/32000/32100
In case of 100 points move no need to change.
If 200 + then future is 32200.
Exit 31900 and sell 31200 straddle.
If moving another 100 then exit 32000 and sell 32300. Continue same with 100 points move.
If no move then
it will consolidate between 32000-32200 or 32100 to 32300 and u will get theta decay.
This is for normal move. Sudden big move may come anytime. So keep SL in system.
If u r selling at 350-350 then keep SL in system 475 for both legs.
Practice it. No need to attend webinar.
"Intraday Banknifty Strangle based on OI data"
(System already shared, today just share few examples)
-Trade timing after 9:45
-Check Banknifty change in OI data at 9:45, and identify the highest OI built up in call side and put side
-We will sell both strikes with combined premium as SL on both legs.
28th June 2021
At 9:45 trading at 35350
Highest OI in call side at 35500 CE and 35000 at put side
Strike selection 35500 CE- 35000 PE
29th June 2021
At 9:45 trading at 35112
Highest OI in call side at 35300 CE and 35000 at put side
Strike selection 35300 CE (232) - 35000 PE (150) Combined premium 382 , Both legs SL 382
30th June 2021
At 9:45 trading at 35002
Highest OI in call side at 35000 CE and 35000 at put side
Strike selection 35000 CE(176)- 35000 PE(213) Combined premium 389 , Both legs SL 389
• I have curated some of the best tweets from the best traders we know of.
• Making one master thread and will keep posting all my threads under this.
• Go through this for super learning/value totally free of cost! 😃
1. 7 FREE OPTION TRADING COURSES FOR
A THREAD:— Aditya Todmal (@AdityaTodmal) November 28, 2020
7 FREE OPTION TRADING COURSES FOR BEGINNERS.
Been getting lot of dm's from people telling me they want to learn option trading and need some recommendations.
Here I'm listing the resources every beginner should go through to shorten their learning curve.
2. THE ABSOLUTE BEST 15 SCANNERS EXPERTS ARE USING
Got these scanners from the following accounts:
3. 12 TRADING SETUPS which experts are using.
These setups I found from the following 4 accounts:
4. Curated tweets on HOW TO SELL STRADDLES.
Everything covered in this thread.
2. How to initiate
3. When to exit straddles
5. Videos on
Curated tweets on How to Sell Straddles— Aditya Todmal (@AdityaTodmal) February 21, 2021
Everything covered in this thread.
2. How to initiate
3. When to exit straddles
5. Videos on Straddles
Share if you find this knowledgeable for the benefit of others.
Curated the best tweets from the best traders who are exceptional at managing strangles.
• Positional Strangles
• Intraday Strangles
• Position Sizing
• How to do Adjustments
• Plenty of Examples
• When to avoid
• Exit Criteria
How to sell Strangles in weekly expiry as explained by boss himself. @Mitesh_Engr
• When to sell
• How to do Adjustments
1. Let's start option selling learning.— Mitesh Patel (@Mitesh_Engr) February 10, 2019
Strangle selling. ( I am doing mostly in weekly Bank Nifty)
When to sell? When VIX is below 15
Assume spot is at 27500
Sell 27100 PE & 27900 CE
say premium for both 50-50
If bank nifty will move in narrow range u will get profit from both.
Beautiful explanation on positional option selling by @Mitesh_Engr
Sir on how to sell low premium strangles yourself without paying anyone. This is a free mini course in
Few are selling 20-25 Rs positional option selling course.— Mitesh Patel (@Mitesh_Engr) November 3, 2019
Nothing big deal in that.
For selling weekly option just identify last week low and high.
Now from that low and high keep 1-1.5% distance from strike.
And sell option on both side.
1st Live example of managing a strangle by Mitesh Sir. @Mitesh_Engr
• Sold Strangles 20% cap used
• Added 20% cap more when in profit
• Booked profitable leg and rolled up
• Kept rolling up profitable leg
• Booked loss in calls
• Sold only
2nd example by @Mitesh_Engr Sir on converting a directional trade into strangles. Option Sellers can use this for consistent profit.
• Identified a reversal and sold puts
• Puts decayed a lot
• When achieved 2% profit through puts then sold
Already giving more than 2% return in a week. Now I will prefer to sell 32500 call at 74 to make it strangle in equal ratio.— Mitesh Patel (@Mitesh_Engr) February 7, 2020
To all. This is free learning for you. How to play option to make consistent return.
Stay tuned and learn it here free of cost. https://t.co/7J7LC86oW0
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.
The Straddle is a delta neutral strategy and it is important to keep deltas in check during the course of the Trade and not let them run away from you. Of course Volatility is the elephant in the room- but not going there as that will require a separate discussion
The first and most common method is to go 'inverted.' That is to say to shift the untested side to generate additional Premium and increase the runway to Breakeven. So if you start with a Straddle at 700 and price goes to 740, you can move the PE up to say 720.
How much should you move the untested side? While again this is a matter of skill, experience and artistry, the rule of thumb is to cut deltas by half. Remember, prices will move and you have to allow sufficient room for them to fluctuate
The second method is to shift the entire Straddle in the direction of the move. So if you have a 700 Straddle and Price goes to 740, you can shift the Straddle to 720. If you time this right, it can generally be done at virtually no cost or minimal cost.
Why Gain/loss ratio is important that the batting average
• 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
Treat Trading as a business:
• 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
• Any trader should atleast experience 3 scenarios i.e. bull, bear & consolidation
• 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)
The purpose is simple to capture overnight theta decay,
Generally, ppl sell ATM straddle with hedge or sell naked options,
But I am using Today’s price action for selling options in STBT,
Its work on both index (Nifty, BNF) as well some standard stock but i used only for Index on every day and Last 10 days monthly expiry i do in stocks only specific,
It’s purely STBT type’s trade sell today and buy tomorrow kind,
Let’s start the strategy,
Every day at 3:15 PM, Open Nifty or BNF chart in daily TF.
See the last candle formation only; we take trade always based on the last candle formation
If Red Bearish candle formation, Mark the high and low of that candle
High 35979, Low 35667. (16th July)
Based on this candle we simply sell credit call spared (Sell 36000 CE and Buy 36300CE) you can make the difference between two calls 300 or 400 as per your risk,
Bullish strong candle
High 35238 and low 34922 (5th July) (Refer the image)
Based on this candle we sell credit put spread (Sell 34900 Put and buy 34600 put)
*Capital must be above 6lac
*Target only banknifty (weekly expiry)
* Target 1/2% per week
* combine premium should above 100
Two types of strategy normally i use
⚡Non directional (strangle)
⚡Direction - when banknifty & out of 5 major banking stocks 2 given breakout or breakdown.
(5 major banks 🏦 - #hdfcbank #icicibank #kotakbank #sbi #axisbank)
✨Breakout - when #banknifty gives breakout & 2/3 banks looking strong.
Then mark swing low of #banknifty & start selling 200 points down strike puts and add more at support line.
If swing support broken then exit.
✨Breakdown - when #banknifty gives breakdown range & (2/3 banks are weak or breakdown stage)
Mark it's swing high & start selling its 200 points above call .
If swing resistance broken then exit .
⚡Non directional (strangle) - when #banknifty and major banks all in range then mark their support & resistance zone.
Selling 200 points above calls of resistance zone & selling 200 points below puts of support zone.
When ever support & resistance break exit position .
He was kind enough to share all his trade strategies and was patient enough to answer our doubts.
Thought of making a 🧵for the benefit of the larger audience here.
Sir's Option Selling Logic 🧵:
• Reversals in Intraday Option selling
• Strike Selection & SL
• Hedging for any Black Swan Event
• Positional Option selling
• Ratio Spreads
• How to manage the positions
• Capital mgmt
In collaboration with @AdityaTodmal
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
Start with a low capital and master all 3 phases of the market – upward, downward and consolidation. If your winning trades are >60-70%, then increase your capital.
Treat trading as a business and target similar gains. An annual profit of 25% is reasonable and achievable.
Does a restaurant change recipes every day? No.
Similarly, stick to strategies if there is a 70% success rate. If it doesn’t work for 2 months, don’t worry, it might work for the rest of the 10 months
Option buyers need more skill than sellers as they need to catch the direction at the right time.
Here are the 11 mistakes I've made in my journey, that you desperately need to avoid: 🧵
Collaborated with @AdityaTodmal
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.
But on the other days, the spikes are just too much, especially in this low-Vix environment.
• 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.