BC OPTIONSLEARNINGS
Saved by @SAnngeri

Undisputed champion 🏆 in option selling and undoubtedly India's best trader @Mitesh_Engr Sir

Lessons on how to trade in such difficult times from the Indian Options Conclave 3.0 by Jainam Broking Ltd

Time for a🧵

Collaborated with @AdityaTodmal

 How to trade in options during high volatility i.e. India vix>22-23 ?

In the current scenario, option sellers who are deploying strangles are unable to make money
E.g.: If a trader is selling a strangle of Rs. 100 each leg then during a fast momentum on either side, one leg becomes 80 & the other one Rs. 200
So overall, the strangle seller is at a loss

Strangles & Straddles are easy to manage in low vix

During high vix, find reversals
Mitesh Sir follows 3min TF in Bank nifty futures chart

Specimen:
In a down trending market people are tempted to sell CE & avoid selling PE's, however it would be disastrous to hold those CE's till expiry

Trailing is the answer during high VIX, as the momentum is faster on both sides

Check past few days charts on 3min TF for more clarity
How to find reversals?

Whenever market breaks a support, check the volumes in the downfall

If you intend to catch a trend, then volume is the best indicator for trading, rest all indicators like RSI, MA's etc. are lagging indicators as they indicate post the movement in price
Hence, volume can be used as a leading indicator

Whenever volumes are declining when prices are making fresh lows, it indicates that the participants are not interested in fresh/further selling for the current period (in intra)
For reversal you just need to take the decision basis one candle which has the highest volume

However all the pre-conditions needs to be met, Lets recap all the conditions to capture reversal from the bottom:
1⃣ The ongoing trend was downwards i.e. making fresh lows in intra for the day

2⃣ However, the volumes were shrinking whenever prices were making a fresh low, indicating no more interest by the sellers to push the prices to fresh low

3⃣ LL2 was not breached for the day
4⃣ Now wait for reversal

5⃣The moment you get a significant volume, on the upside, play for reversal

6⃣In this case, all you need to do is, if you sold CE’s just exit them
Mitesh Sir’s trades on March 4, 2022:

Post gap down, he had sold 35800 which was a PDH and also acted as a high for the past two days, the moment he spotted a reversal from the bottom, he exited from CE’s at 12.35 hours
Reason: In current scenario, trading is based on news, so if in case there is a cease-fire, market might reverse entirely, so always have to have a SL
How to spot a reversal from the top?

Basis the below chart, he sold 35800 CE at 14.45 again
Worst case scenario:

Post selling a CE for the 2nd time, lets assume if the prices again start to move up, then you will have a surety of atleast 80% that market is taking support of that level so in this case, the 2nd time after selling a CE, you can sell a PE to adjust it
In the first reversal, we wont sell PE’s as we are not sure when it will reverse from the upside, especially when the overall market is in downtrend, however in the 2nd attempt one can take that risk after observing multiple supports
Another set-up: Rejection Candle:

🖊️Ongoing trend: upwards

🖊️After a small consolidation there is a BO

🖊️The very next candle rejected the entire upmove

🖊️Action: CE sell
One can utilize the same set-up for PE sell as well

🖍️Ongoing trend: downwards

🖍️After a small consolidation there is a BD

🖍️The very next candle rejected the entire down move

🖍️Action: PE sell

The key in finding rejections is to spot large sized candles
For intra-day all you need to focus is on huge candles

Spot the big candles, you need to act basis the break of the High or Low of that huge candle

Example 1: Here SL got hit
Example 2: Trade worked here
Rejection Set-up: You might get stopped out once twice or thrice , lets say each time it takes 10 points, but then whenever it turns in your favour, you'll be able to fetch 70-80 points

However for this you need to sell high premium options only then it will work
How to play Breakouts (BO)?
How to spot fake moves?
Another set up to sell CE’s with a small SL and a better R/R set up:
Strangles are not favorable on Friday, Monday & Tuesday in current environment i.e. high VIX

Better to play with reversal set ups on these days, with small SL

Overall profit/loss ratio would triumph the lower win ratio
Mitesh Sir trades only in weeklies & avoids monthly options, as it is difficult to predict the trend beyond 3 days

Trade set up: He uses one indicator i.e. VWAP, if prices trade > VWAP indicates buyers are strong & vice-versa

Thereafter, he relies only on big volume candles
How to initiate option selling during normal market conditions?

In times of normal market conditions when there are no gap ups & gap downs, then you just need to spot weekly S/R
During normal market conditions, spot the weekly Support & resistance

Scenario 1: if the prices are between both, one has to simply sell 1% above & below the resistance & support respectively to make consistent returns via options selling
Scenario 2: If price is hovering near support, only Sell CE’s

Scenario 3: If price is hovering near resistance, only Sell PE’s

Greedy traders think that they can eat prem on both sides while keeping their margin low as strangle attracts lower margin than directional
However during Scenario 2& 3 such greedy positions traders would be badly screwed

Lets take the example of current weekly S/R i.e 34k & 36800, assuming VIX is normal & there are no news. In that case, as a positional trader one is supposed to sell only CE’s
Lets understand the worst case scenario: if the market takes support of 34k and bounces back and starts to trade above 1.5% above the lows i.e. 34500-34550, then one can have an outlook to sell PE’s as well as some kind of immediate bottom for the week has been made
So the idea is to then convert your directional only CE sell to strangle by selling a PE after it taking some support

However remember you don’t have to exit the CE’s unless the resistance of 36800 is taken out
Traders fear that the CE that they have sold at Rs. 50 has doubled i.e. 80-100-120 and they exit

However these are intermediary spikes, the moment prices hit the resistance and stays there, time decay will come into play
If the index really is trying to break the resistance, we can get the indication of the same by looking at volumes

If the market is trying to move up from lows, then buyers would wipe out all the sellers, in such case they need to absorb all the selling i.e. volumes will⬆️
So, if the volumes are going up along with the prices for 30min to 60mins then it is a clear indication that buyers are dominating

In such scenario, exit CE’s and short only PE's

However if the price upmove is not backed by the surge in volume then stay in CE sell position
If the buyers really want to take the market up, they will buy as much as possible thereby witnessing a surge in volume & that too back to back candles will have huge volume

Big money/operators 👣 can be tracked from volumes
So in case the CE option of Rs. 50 that you have sold has doubled, however there is no surge in volumes then you can stay in that CE and try to adjust it by selling a PE

The last adjustment is to convert the strangle into straddle.
Lets say the combined prem of that straddle is Rs. 600 then one can keep a SL of 600 on each side, now if the market still keeps trending on the upside the SL on the CE leg will get hit however the PE leg would give you some gains
And if one still has balance capital & if the trend is clear one can sell more PE's

Another scenario, even if one end up making a loss in the current week, the upcoming week one can sell a PE of higher prem as a strong base and support is made in the previous week
In option selling, one has to spot strikes which has high probability of going to 0

In case the market moves up strongly after taking a support of 34k (in normal market conditions) Mitesh Sir would sell 34k PE’s

If the prices keep going up then he’ll keep moving up his PE's
Eg: Spot = 34550 backed by higher b2b volumes, he will sell 34k PE, now if the index further moves to 34800-35k he would roll up his PE’s to 34200

He would maintain a distance of 1.5% at all times as that will give him the time/cushion for adjustments in case of any reversal
Mitesh Sir has made huge fortune in option selling since 2017 using the above method
Example:

Feb 25th buyers rejected the heavy selling made on Feb 24th

On the third day (Feb 28th), if the buyers were really strong they would have further taken up BNF, however notice that on the third day BNF fails to cross event he 2nd day high that itself is a confirmation
Further confirmation was on the following day i.e. Mar 1 post the gap down opening itself one can sell CE of swing high i.e. 36800CE

However for a safe trader, he can still wait for a confirmation i.e. when BNF reaches the low made on Feb 24, at that time he can sell the CE
Always make decisions based on huge candles the way we saw in intra day same applies in higher TF as well

Example 1: On huge candles and trade logic
Example 2: On huge candles and trade logic
Example 3: On huge candles and trade logic
Example 4: On huge candles, when BNF hit fresh ATH and trade logic
Example 5: On huge candles (strangle) and trade logic

One can practice these 5 examples in single lot to gain confidence
Mitesh Sir doesn’t believe in Credit/Debit spreads

E.g.: Sell OTM strike X at Rs. 90
Buy far OTM strike X+500 points at Rs. 45

If the index goes down then:
Strike X = Rs. 70
Strike X + 500 = Rs. 35

Net reward: Rs. 10 only

Despite capturing the move, making only Rs. 10 ☹
Lets say close to the expiry
Strike X = Rs. 10
Strike X+500 = Rs. 2
Now if you still holding this and in case there is a reversal
Strike X = 90
Strike X +500 = 0

Mitesh Sir, sells only those strikes which has 90% probability of going to 0
If you are using leverage by buying far OTMs to sell more qty

Leverage is a double edged sword, it will have a multiplier effect when you make money & similarly when you lose

So each individual needs to check the risk capacity and accordingly stick to their position sizing
The current SEBI norms of margins will ensure you won't lose more than 5% of your capital (if you are trading using only your capital w/o leverage)

One can make consistent 3% monthly return and if compounded works out to 38-40% p.a. which very few other business can generate
Traders are unsatisfied due to absolute returns instead of focusing on RoC

If your capital is low ~Rs. 10lacs & you are making 3-4lacs p.a. instead of being☹️by the absolute amt, be disciplined to make it consistently as compounding magic will play out in the longer term
@Mitesh_Engr Sir himself targets only 1% a week via option selling

anything>1% is bonus

SL is always based on the levels and not on points or %

Needless to say @Mitesh_Engr Sir has shared everything in detail & it is nothing less than a workshop in itself
• This was a 🧵on the Indian Options Conclave 3.0 conducted by Jainam Broking Ltd; Speaker: @Mitesh_Engr Sir

• Link: https://t.co/hxw235CMQP

• If you❤️this, why not share?

• 🔃 the first tweet and help others find this🧵

See past 🧵 here:
@AdityaTodmal
&
@niki_poojary

More from Nikita Poojary

Nikita Poojary
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@niki_poojary
Sep 1, 2021, fresh month starts with a challenge i.e. introduction of Peak Margin rules by SEBI

Time for a 🧵

Lets demystify the Peak Margin rules and try to find solutions for the option sellers!

Peak Margin by SEBI:
• 100% upfront margin for intraday trades in the derivative segment
• Effectively MIS orders = NRML orders, as both will attract same margin in the derivative segment
• Minimum margin for equity intraday trades will be 20% of trade value i.e. 5X leverage

How things used to operate erstwhile?
• Until last year there were no standardization of leverage
• Brokerage firms used to offer their clients intraday leverage of 5x, 10, 15x, 20x etc. as margin reporting was done on EoD basis

• Brokerage firms were allowing customers to take intraday positions with margins far lesser than required via products like MIS, BO, CO, etc. as the positions used to get squared off before the trading hours

• Eg: If 1 lot of Nifty futures require (SPAN + exposure of) Rs. 1.1L, brokerage houses would allow to trade with just 20-30% of this amount i.e Rs. 33k
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@niki_poojary
The most valuable aspect in trading you aren't using:

POSITION SIZING

Sizing is the key, you'll make big money only if you own a significant size without compromising on risk.

Here are 10 of them, and they are for free: 🧵

Collaborated with @AdityaTodmal

1/ For a faster growth, one needs to have a bigger size:

• What difference would it make if a stock moves by 300%?

• But then, what if you had only 1% capital allocation?

• Despite the stock performing spectacularly, your account won't reflect the same, due to small sizing.

2/ Three types of position sizing:

1. Fixed absolute Rupee amount that one is willing to risk.
2. % risk of the total capital.
3. Basis the edge.

Risk tolerance should be taken into consideration while determining appropriate position sizing.

3/ Fixed absolute Rupee Amount:

• Eg: Total capital is Rs. 10 lacs and the max risk per trade is Rs. 7500

• Lets say a stock is trading at 1200 and your SL is 1120 (i.e. your risk per unit us Rs. 1200-1120 =Rs. 80)

• Optimum qty: 7500/80 = 94 units

4/ Percentage risk of total capital:

• Lets say you want to risk 1% of the total capital on each trade.

• Considering the total capital of Rs. 10 lacs, you shall risk Rs. 10,000 i.e. 1% of 10lacs on each trade.

• Quantity to be traded/invested calculation remains the same.
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Nikita Poojary
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@niki_poojary
One of the most successful stock trader with special focus on cash stocks and who has a very creative mind to look out for opportunities in dark times

Covering one of the most unique set ups: Extended moves & Reversal plays

Time for a 🧵 to learn the above from @iManasArora

What qualifies for an extended move?

30-40% move in just 5-6 days is one example of extended move

How Manas used this info to book


Post that the plight of the


Example 2: Booking profits when the stock is extended from 10WMA

10WMA =


Another hack to identify extended move in a stock:

Too many green days!

Read
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In the month of September 2022, we have shared 11 threads, which includes:

• Inside Bar set up
• Free option selling course for beginners with small capital
• List of best books on technical analysis and chart reading
• How to reduce your tax liability

and much more 🧵

1/ Powerful Concepts that every trader should


2/ List of Books based on Technical Analysis that will help you


3/ Free options trading courses from 10 different


4/ Points to know for beginners in
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Nikita Poojary
Nikita Poojary
@niki_poojary
Since April 2019, I've been a full-time trader.

Have been selling index options on weekly basis for the past two years and consistently making returns.

Option Selling 101 course worth 50k for FREE 🧵

Collaborated with @AdityaTodmal

1. Know where the market won't go:

Our minds are usually wired to be curious about where a stock or an index will move. ,

However, when it comes to option selling, we need to know where the market certainly won't go.

2: Theta/ Time Decay:

Option is a wasting asset, hence theta/time decay is a friend of option sellers.

Option sellers have a natural edge because the value of the option decreases as time goes by.


3. Benefit of premium eating of OTM options:

OTMs usually have a higher probability of going to zero, option sellers try to gobble up these strikes, and adjust their positions or exit with an SL if need be.

4. When to play non - directional:

When an index is trading within a range.

Let's say, BNF is trading within a range of 44000-42500 then one can look to sell CE options of 44k and above and PE strikes of 42500 and below.
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Jig's Patel
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@jigspatel1988
A thread about STBT options selling,

The purpose is simple to capture overnight theta decay,

Generally, ppl sell ATM straddle with hedge or sell naked options,

But I am using Today’s price action for selling options in STBT,

(1/n)

Its work on both index (Nifty, BNF) as well some standard stock but i used only for Index on every day and Last 10 days monthly expiry i do in stocks only specific,

It’s purely STBT type’s trade sell today and buy tomorrow kind,

(2/n)

Let’s start the strategy,

Every day at 3:15 PM, Open Nifty or BNF chart in daily TF.

See the last candle formation only; we take trade always based on the last candle formation

(3/n)


Case 1:
If Red Bearish candle formation, Mark the high and low of that candle

High 35979, Low 35667. (16th July)

Based on this candle we simply sell credit call spared (Sell 36000 CE and Buy 36300CE) you can make the difference between two calls 300 or 400 as per your risk,


Case 2:
Bullish strong candle

High 35238 and low 34922 (5th July) (Refer the image)

Based on this candle we sell credit put spread (Sell 34900 Put and buy 34600 put)
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Aditya Todmal
Aditya Todmal
@AdityaTodmal
12 TRADING SETUPS used by professional traders:🧵

Collaborated with @niki_poojary

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

1. Capture Overnight Theta Decay
2. Trading Opening Range Breakouts
3. Reversal Trading Setups
4. Selling strangles and straddles in Bank Nifty
6. NR4 + IB
7. NR 21-Vwap Strategy

Let's dive in ↓

1/ STBT option Selling (Positional Setup):

The setup uses price action to sell options for overnight theta decay.

Check Bank Nifty at 3:15 everyday.

Sell directional credit spreads with capped


@jigspatel1988 2/ Selling Strangles in Bank Nifty based on Open Interest Data

Don't trade till 9:45 Am.

Identify the highest OI on puts and calls.

Check combined premium and put a stop on individual


@jigspatel1988 3/ Open Drive (Intraday)

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To be used when the market opens above yesterday's day high

or Below yesterday's day's
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@ITRADE191
https://t.co/15abL7Q0yj
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@AdityaTodmal
DJ SIR THREAD

Great video with points helpful for beginners.

Made 4 threads on DJ Sir with the help of @niki_poojary

1. Selecting strikes to trade in with risk management.
2. How he took some aggressive trades.
3. Multiple charts analysis for intraday trading.
4. Trade Setup


Attaching all threads made on DJ Sir. After watching the video you can refer to this tweet for notes about his strategy and learn a few other ideas.

Compiling these together for easy access to his knowledge.

1. Selecting strikes and risk


2. Going aggressive with help of data and


3. Intraday
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Why I trade in Nifty or Reliance most ...If you are confused what to trade watch this
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