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Nifty today

SIMPLE & FREE LEARNING FOR U ALL FRIENDS

Today trade

Sharing a simplest ever to trade options.

Chalk out Support & Resistance.
Play contra.
Like make bullish positions on support
Or
Bearish on resistance.

Bullish means sell ATM PE & OTM CE
or bearish means ATM CE & OTM PE

Exit if support or resistance broken.
As it gonna be a trending day.
Hold another leg to breakeven.

If moves comes into favour, one gonna make awesome.

A THREAD

Topic: HOW TO TRADE IN RISING PREMIUMS SCENARIO

Option sellers specially Straddle sellers feel that rising premiums give them excellent opportunity to make easy money. So what they are seeing is the theta aspect of options & ignoring the delta/gamma/vega forces.

1/

With rising premiums come high delta moves. There is a reason why premiums are all increasing up in the first place. High uncertainty & fear is what's controlling the markets during such times. So a volatile 200 point move in nifty is always on the cards.

2/

Adjusting during such delta moves involves high slippages. Such costs go in our system & are irrecoverable. So if the ATM straddle is around 400 & after 200 point downmove, the next straddle is at 450 & the loss is not just 50points but compounded much more.

3/

Also there are chances that there is no decay throughout the day. So a straddle seller has to take that heavy risk of carrying it forward & chances of gap openings are high during such times. If converted into Ironfly, then the cost of the wings is too expensive.

4/

Thus cutting down the initial credit significantly.

There will also be very few instances when premiums don't fall till expiry day. So with each delta move the cost of holding a straddle gets accumulated & pressure keeps mounting for the stubborn option sellers.

5/

Nifty today

Why we sold only CE's today ?

A small 🧵

Collaborated with @AdityaTodmal

• BNF reversed from 32155 (low made on Mar'8)

• One side rally to butcher the CE writers

• Gap up opening by ~1300 points

• From Mar'8 low till today open ~2800 point rally

• 2800 point rally in just 1.5days

• Trend on the larger TF still bearish

• Due to election results we decided no to carry any overnight positions

• Selling PE on the back of 2800 point rally would have been disastrous due to unfavorable R/R

• So we were very clear to short only CE's

• But then need to follow the trend

• We decided to short CE at the break of first 5min candle

• By 9.45 it started to reverse

• Spotted M pattern at the resistance and started shorting CE's thereafter i.e. post 12.12 hours