Short Strangle

Net credit with a sideways stance

A thread 🧵

#options #trading

THREAD: SAVE YOUR TAX ON TRADING INCOME

Investors and traders want to make big money in the stock market. But what about paying taxes. All of them would like to save some chips.

In this thread, you will learn a few smart ways to save on your taxes

1. Set-Off Your Losses

Losses from speculative trading can be set off against speculative gains made during a year.

You can carry forward these losses for 4 years.

These losses can’t be set off against non-speculative trading income.

Losses from Short Term Non-Speculative trading can be set off against STCG as well as LTCG for the same year.

However, losses from Long Term trading can be set off against LTCG only.

An investor can carry forward such losses for a period of 8 years.

2. Plough Back Your Profits

Exemption on LTCG of up to 1 lac. So, you can plough back these gains to increase your capital.

Example ~

Investment = 5 lacs
Time period = 1 year
Profit = 1 lac

Book this profit after one year and re-invest after a few days.

No tax liability for this 1 lac but this time your new capital invested will be 6 lacs.

IRON CONDOR (IC)

If Short Strangle’s margin and unlimited loss potential is too much for you then the Iron Condor option strategy could be a perfect fit for you. It's not as complex as it sounds

A thread 🧵

#options #trading

1/ Big Brother of Short Strangle (SS)

I am sure you read our previous thread on SS where you sell slightly OTM options in a sideways market.

To create an IC

Create an SS first

Buy the next OTM CE

Buy the next OTM PE

Let’s clear with an example

Ex.

If Nifty is trading at 16300 and you expect it to trade in a narrow range of 200 points till expiry then

Sell 16400CE

Sell 16200PE

This is SS, right?

Now Buy 16500CE

Buy 16100 PE

That is IC

All strikes should belong to the same underlying, have the same number of lots, and same expiration

2/ The Credit Part – Max Profit

Almost every trader trades breakouts, yet very few are able to trade them properly.

In this article, we’ll be covering every aspect of breakout trading.

What are they?
Why do I prefer trading breakouts and not pullbacks?
And much more.
https://t.co/Mk5QW86x8s

Four Powerful Techniques to Trail Stop-Loss and Maximize Gains.

Are you still suffering from the problem of taking profits too early or getting stopped out too early?

Then this thread is for you.

This writeup will introduce you to some powerful techniques of trailing stop-loss which will help to stay in a trending stock for more time and hence maximize your gains.

Let's dive right in! 🧵

I have spiced up these techniques with some tweaks to make them more effective in riding the juiciest part of the trend.

Trailing is a technique that works well in a strong trending phase of the market.

The market is said to move in four phases – accumulation, markup, distribution, and markdown.

The markup and markdown are the trending phases so, trailing would work best during these phases.

The four techniques that I am going to discuss are:

1. Moving Averages Stops

2. Super Trend Stops

3. Swing Lows Stops

4. Percentage Stops

What! Do you already know about them?

I bet after going through the text below you will learn some new tweaks.

I keep getting asked about what books to read to learn about Options. My compilation

Beginners Options Books:

1) The Bible of Options Strategies - Guy Cohen
2) The Financial Times Guide to Options - Lenny Jordan
3) Simple Options Trading Formulas - Billy Williams

Books on Options Greeks:

1) Trading Options Greeks - Dan Passarelli
2) How to Calculate Options Prices & their Greeks - Pierino Ursone

Books on Options Volatility Trading:

1) Option Volatility & Pricing - Sheldon Natenberg
2) Option Trading: Pricing & Volatility Strategies & Techniques - Euan Sinclair
3) The Volatility Smile - Derman & Miller

Books on Options Trading:

1) Trading Options At Expiration - Jeff Augen
2) Options as a Strategic Investment - Lawrence Williams
3) Positional Options Trading - Euan Sinclair
4) Options Spread Strategies - Tony Saliba
5) Options Strategies for Directionless Markets - Tony Saliba

Other important Options Books:

1) Options, Futures & other Derivatives - John Hull
2) Options Trading Strategies - Scott Danes
3) Covered Call for Beginners - Freeman Publications

**Options Strategies Broaden Your Range of Trades**

1/n

Going Long Calls/Puts are the plays most retail traders use (equity trader strategies, higher leverage/lower margin)

The beauty of options is there are many more ways to profit, beyond pure directional bias.

#MomoTwit

2/n *Quick Review of Options*

Options are a derivative contract which allows the holder to buy/sell the underlying at a determined price by a certain expiration date.

Options Greeks (delta, gamma, vega, theta) affect contract P/L based on changes in volatility, time, & price.

3/n -Covered Calls-

If you have 100 shares of XYZ stock, you could short a call contract, w/ your shares as collateral. Strategy allows you to collect premium.

Either your call expires worthless or it closes ITM. If ITM you sell the shares at the strike price of ur short call

4/n Generally, you employ a covered call strategy when you have a near/short term neutral/bearish view on your position. Thus this allows you to collect money/premium or hedge when the stock is not rallying.

5/n -Straddle-

This is where the trader buys a call & put at the same strike price and expiration date. You would do this when u expect a large move outside the expected range in *either* direction

You will lose on this trade if the stock does not move/stays within a range.

https://t.co/av7mZ6uc8a

Watchlist Building Strategy and Execution. Independence & success. Nail these and we'll see y'all at the top! 😊