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.
3. Rules:

Shouldn't lose more than 15% of your capital in case of a lower circuit. (Worst scenario)

Adjustments become easy if the risk is capped.

Doesn't care for greeks but you should know if delta or gamma impacts you, what is our risk we should always be aware of it.
4. Adjustments:

If the market goes against you in a debit spread, you can adjust by selling more options to make it a ratio spread.

Debit Spreads adjustments he does by converting it to a ratio.
Credit spreads no adjustments only stop loss.
5. Holding power:

If you trade in debit spreads, your 100 comes down to 60 but the 40 rs sold one will come down to 25.

If you bought naked options, then your 100 rs when it comes to 50, you will get out due to 50% capital loss.

After some time it goes back to cost. (regret)
In the case of selling options:

Selling naked options at 100, you will get out when it becomes 200.

Imagine you've sold the 100 rs option and bought a 40rs one for 60 rs credit.

If the 100 becomes 200 then 40 will become 80 so you can hold.

The worst-case loss is fixed.
6. SL hitting without index level move

If you have an index level stop loss, you will get out in naked option s if it doubles without it even touching your level.

They will double and then come back to the price you sold it at.

Whereas in spreads, you can wait out the moves.
7. Overnight Risk:

In credit spreads, you will sell high premiums and buy lower premiums.

To counter this some people think to sell naked options whatever the credit you received in the credit spread.

But the overnight risk is huge in that case.
8. Risk Reward:

Risk reward is not in your favor in such trades.

But the probability is always there. So you will win 8/10 times.

This win rate ensures we make money.
9. When to use which strategy?

During Breakout/Breakdowns go for debit spreads.
You'll get quick money in such trades.

For reversal trades, use credit spreads.
Premiums vanish very quickly in this case.
10. Setup for debit spreads

When PDH breaks trade a call debit spread, keep the current day low as stop loss and trail via swing lows.

When PDL breaks trade a put debit spread, then keep the current day high as stop loss and trail via swing highs.
During Reversals:

Sell Credit spreads during reversals as they help you in case of IV spike

You are protected from IV spikes if you play reversals.

Debit Spreads won't make sense in reversals due to IV crush.
This is the only thread you'll need on spreads trading.

Watch out for @niki_poojary's thread on Mitesh Sir, which she will post today.

If you found this useful, please do RT first tweet.

Follow to never miss them.

See past threads here:
@AdityaTodmal & @niki_poojary

More from Aditya Todmal

Compilation of the best learnings from @BankniftyA through his tweets.

Have compiled his:

1. Expiry day trading.
2. Trade logics.
3. Multiple Charts analysis.
3. BTST criteria for stocks.

Share if you find it helpful so that everyone can benefit.

A pdf of his moneycontrol article where you can read about his journey and how he trades.


Advice on how to not let your mood influence your decisions.


Expiry day Trading:

How to become better?

When I had spoken to him on phone he advised me to backtest all expiries and rigorously practice them again and again to develop conviction. Superb advice!


Acts based on support and resistance levels from charts
Here are my top 10 best tweets of the week: 24th September.

• Stocks to buy & hold forever
• Companies which will always be in business
• How to 10x money in 10 years?
• Feedback of company employees
• MWPL & F&O ban list explained
• Tradingview free version tricks

Stocks one can buy and hold


These companies will always keep running, no matter if recessions come or not.


26% CAGR makes your money 10x in 10


Some life
Curated tweets of @sourabhsiso19

Found awesome content: ⏬
1. Moneycontrol
2. Bank nifty Strangles/Straddles
3. Learnings
4. Expiry Trading
5. Directional trading
6. Long Term Investing
7. Pivot system
8. DHS pattern
9. Multiple trade management threads/ways.

Moneycontrol article on @sourabhsiso19


What Sourabh does and how to trade like him?


Why trade multiple systems? ⏬
1. Keeps drawdown at minimum.
2. Strong money management can be applied.
3. Better psychology.


Thread on how options allow you to change your positions in a dynamic manner.

More from Optionslearnings

You May Also Like

And here they are...

THE WINNERS OF THE 24 HOUR STARTUP CHALLENGE

Remember, this money is just fun. If you launched a product (or even attempted a launch) - you did something worth MUCH more than $1,000.

#24hrstartup

The winners 👇

#10

Lattes For Change - Skip a latte and save a life.

https://t.co/M75RAirZzs

@frantzfries built a platform where you can see how skipping your morning latte could do for the world.

A great product for a great cause.

Congrats Chris on winning $250!


#9

Instaland - Create amazing landing pages for your followers.

https://t.co/5KkveJTAsy

A team project! @bpmct and @BaileyPumfleet built a tool for social media influencers to create simple "swipe up" landing pages for followers.

Really impressive for 24 hours. Congrats!


#8

SayHenlo - Chat without distractions

https://t.co/og0B7gmkW6

Built by @DaltonEdwards, it's a platform for combatting conversation overload. This product was also coded exclusively from an iPad 😲

Dalton is a beast. I'm so excited he placed in the top 10.


#7

CoderStory - Learn to code from developers across the globe!

https://t.co/86Ay6nF4AY

Built by @jesswallaceuk, the project is focused on highlighting the experience of developers and people learning to code.

I wish this existed when I learned to code! Congrats on $250!!
This is a pretty valiant attempt to defend the "Feminist Glaciology" article, which says conventional wisdom is wrong, and this is a solid piece of scholarship. I'll beg to differ, because I think Jeffery, here, is confusing scholarship with "saying things that seem right".


The article is, at heart, deeply weird, even essentialist. Here, for example, is the claim that proposing climate engineering is a "man" thing. Also a "man" thing: attempting to get distance from a topic, approaching it in a disinterested fashion.


Also a "man" thing—physical courage. (I guess, not quite: physical courage "co-constitutes" masculinist glaciology along with nationalism and colonialism.)


There's criticism of a New York Times article that talks about glaciology adventures, which makes a similar point.


At the heart of this chunk is the claim that glaciology excludes women because of a narrative of scientific objectivity and physical adventure. This is a strong claim! It's not enough to say, hey, sure, sounds good. Is it true?