We don't have to be smarter than
the rest. We have to be more disciplined than the rest. - Warren Buffett.

https://t.co/a04hGBm8YK

Trading make easy and make money 💰

In this thread, I'll walk you through my set up, absorb it as much as you can.
The instrument that I trade in are Nifty (NF) options
Thanks to @AdityaTodmal @niki_poojary for contributing in making this

How to set your charts:

Lets try to understand what to sell when 50EMA, VWAP & RSI works in different scenarios

What options to sell and how to place the SL

Important to have a birds eye view when trading in NF options as many stocks influences its movement

Nifty today

It’s May be help u ,Created by a friend in our group.

The most valuable hedging strategy you aren't using:

The IRON FLY STRATEGY.

Knowing how to use it will protect you from gaps and intraday spikes and 10x your hedging experience.

Here's the step-by-step guide:

Collaborated with @niki_poojary

Here's what you'll learn in this thread:

1. What is an iron fly
2. Perks and Drawbacks
3. What to do when in profit?
4. How to adjust when in loss?
5. Thread on How to keep shifting an iron fly for max credit?
6. Risk-free trades benefits

Let's dive in ↓

1/ What is an iron fly?

Sell ATM CE and PE (Short straddle)
Buy OTM CE and PE (Hedge it by buying on both sides)

Look at the picture below for an example of an iron fly in current weekly options.

2/ Why do traders like iron fly?

Many traders want to receive maximum theta or max credit.

This is why they sell straddles.

But straddles have unlimited risk in them, and can't handle gaps or intraday spikes.

This is why traders like knowing the maximum loss in their trades.

3/ Perks of Iron Fly

Low capital required—Possible to buy first, sell later

Limit losses—Know your maximum loss upfront

Adjustments—Can reduce losses to zero or almost nothing

Weekly earnings—Possible on a weekly basis

Jackpot—Potential for a jackpot if it expires in middle

The best spreads trader on Twitter: @Ronak_Unadkat

He trades in Nifty & Bank Nifty via spreads majorly.

In the Jainam Broking Speech, he shared how he trades debit and credit spreads:

Here's a breakdown of his 10 step method: 🧵

Collaborated with @niki_poojary

1. Why trade via spreads?

Overnight risk will be always capped
Limited Risk will keep you cool
Hedge our position

Strictly not to do for margin, as that will lead to overleveraging.

Traders Sell option for 100 and buy 10 rs option.

That is for margin reduction, not a spread.

2. Circuit:

If the market opens at the lower circuit or upper circuit, then our loss should be limited.

Eg - Expiry Trading on the 24th Feb Expiry

The market gapped down & traders lost huge sums of money.

Some lost 15% or 20% of their capital in a 4% index move.

If in 4% people are losing so huge then imagine if Modi says black money is back, we will open at an upper circuit.

If India-Pakistan tension news comes again we will open at a lower circuit.

In a 4% index move, people lost 10%, so in the case of a circuit, they will lose 50%.

To recover a 50% loss on capital, you need to make 100% returns with the leftover capital to break even.

In these cases, spreads cover your risk.

Even he lost 3-4% of capital on 24th but it is easy to recover in 1-2 months.

Here comes the 3rd and final part of the long weekend 'Beginners' Pathway" series.

In this we'll see Open Interest basics and Option Chain Analysis.

There are two types of Options, Call Option & Put Option.

This graphics show when to buy and when to sell options.

The first thing that we need to know is the moneyness i.e. whether an Option is At the money (ATM), In the money (ITM) or Out of the Money (OTM).

The strike closest to the market price is At The Money.

I have tried to explain OTM & ITM in a very simplistic & easy manner.

Option chain of Nifty can be seen here