#FreeTip
Basic rule for day trading in option buying for beginners.
1) Stick to monthly atm options.
2) Suppose u have a capital of Rs 5 lacs. Your max risk appetite is 1% which is 5k. Assume u look at BNF chart and find a buy setup at 35000 ...

...
with a stop of 34900 ( 100 point difference). This essentially means that the 35000 atm options will have a stop of Rs 200 ( delta 0.5) assuming all other things are equal. So the number of lots U should typically deal with based on 1% Risk on 5 lacs capital ...
....
is 5000 / 200, which is 25 , ie 1 lot. If your risk appetite is 2%, then u are allowed to take 50, ie 2 lots. Hence if option price is say, Rs 400, ur stop will be 200 and u have to deal with one lot which means your deployment is 25 x 400 = Rs 10,000....
...
On the contrary if you deploy the full amount, 500000/(25x400) = 1250 , 50 lots, u r bound to lose the capital at the shortest possible time.
3) This might appear ridiculous, but this is the only way to go steady with control over risk.
Option stop difference is Rs 50 and not Rs 200 as mentioned. Simple calculation overlooked. Accordingly number of lots will increase . However concept remains unchanged.

More from HMK alias MANOJ

More from Optionslearnings

๐™Ž๐™๐™–๐™ง๐™ž๐™ฃ๐™œ ๐™ข๐™ฎ ๐™ฌ๐™ž๐™จ๐™™๐™ค๐™ข ๐‘พ๐’๐’'๐’• ๐’ƒ๐’† ๐’”๐’–๐’“๐’‘๐’“๐’Š๐’”๐’†๐’… ๐’Š๐’‡ ๐’•๐’๐’Ž๐’๐’“๐’“๐’๐’˜ ๐’– ๐’“๐’†๐’‚๐’… ๐’•๐’‰๐’† ๐’”๐’‚๐’Ž๐’† ๐’”๐’•๐’–๐’‡๐’‡ ๐’Š๐’ 50๐’Œ ๐’˜๐’๐’“๐’Œ๐’”๐’‰๐’๐’‘ ๐’๐’“ ๐’”๐’๐’Ž๐’†๐’๐’๐’† ๐’Ž๐’‚๐’๐’‚๐’ˆ๐’Š๐’๐’ˆ ๐’š๐’๐’–๐’“ ๐’Ž๐’๐’๐’†๐’š ๐’˜๐’Š๐’•๐’‰ ๐’”๐’‚๐’Ž๐’† ๐’๐’๐’ˆ๐’Š๐’„
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.

You May Also Like