In the current scenario, option sellers who are deploying strangles are unable to make money
Undisputed champion š 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 aš§µ
Collaborated with @AdityaTodmal
In the current scenario, option sellers who are deploying strangles are unable to make money
So overall, the strangle seller is at a loss
Strangles & Straddles are easy to manage in low vix
During high vix, find reversals
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

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
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)

However all the pre-conditions needs to be met, Lets recap all the conditions to capture reversal from the bottom:
2⣠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
3⣠LL2 was not breached for the day

5ā£The moment you get a significant volume, on the upside, play for reversal
6ā£In this case, all you need to do is, if you sold CEās just exit them
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 CEās at 12.35 hours
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
šļøOngoing trend: upwards
šļøAfter a small consolidation there is a BO
šļøThe very next candle rejected the entire upmove
šļøAction: CE sell

šļøOngoing trend: downwards
šļøAfter a small consolidation there is a BD
šļøThe very next candle rejected the entire down move
šļøAction: PE sell
The key in finding rejections is to spot large sized 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

However for this you need to sell high premium options only then it will work
Better to play with reversal set ups on these days, with small SL
Overall profit/loss ratio would triumph the lower win ratio
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

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

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 3: If price is hovering near resistance, only Sell PEās
Greedy traders think that they can eat prem on both sides while keeping their margin low as strangle attracts lower margin than directional
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 CEās
However remember you donāt have to exit the CEās unless the resistance of 36800 is taken out
However these are intermediary spikes, the moment prices hit the resistance and stays there, time decay will come into play
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 willā¬ļø
In such scenario, exit CEās and short only PE's
However if the price upmove is not backed by the surge in volume then stay in CE sell position
Big money/operators š£ can be tracked from volumes
The last adjustment is to convert the strangle into straddle.
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 case the market moves up strongly after taking a support of 34k (in normal market conditions) Mitesh Sir would sell 34k PEās
If the prices keep going up then heāll keep moving up his PE's
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
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

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
Example 1: On huge candles and trade logic

One can practice these 5 examples in single lot to gain confidence

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 ā¹
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
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
One can make consistent 3% monthly return and if compounded works out to 38-40% p.a. which very few other business can generate
If your capital is low ~Rs. 10lacs & you are making 3-4lacs p.a. instead of beingā¹ļøby the absolute amt, be disciplined to make it consistently as compounding magic will play out in the longer term
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
⢠Link: https://t.co/hxw235CMQP
⢠If youā¤ļøthis, why not share?
⢠š the first tweet and help others find thisš§µ
See past š§µ here:
@AdityaTodmal
&
@niki_poojary
More from Nikita Poojary
⢠Creative enough to look beyond the obvious
⢠Covering another unique set up: Rating Houses Contra Trades or as he calls it "Moody-no-so-Moody indicator"
š§µ to learn from @iManasArora
⢠Usually international rating agencies come with a downgrade only after a massive correction in the stock
⢠Similarly these rating agencies come with an upgrade report post a sharp rise in the stock
⢠Don't take them on face value and DYOR!
⢠How Ultra Bullish articles from rating/broker houses is used to dump the stock to retail
⢠New traders provide liquidity for BIG players to offload their stocks
#HEG

⢠Example 1: BofAML sees 100% rise
⢠Read this thread to know in detail
Next 2-4 weeks are crucial for #HEG. If it does not hold up the current level plus minus 5%, there will be an 80% chance of a 20% drop which could extend to up to 50% drop.
— Manas Arora (@iManasArora) October 19, 2018
News based rally on a low volume could turn into a classic case of late stage base fail. pic.twitter.com/eh3ncaSxoy
Folks you can check his y'days video
Although, I have learnt this extended move set up from @iManasArora š
Do follow him & check his timeline for such set ups!
#BANKNIFTY
— Nikita Poojary (@niki_poojary) November 30, 2021
90degree upmove qualifies for abnormality, be cautious \U0001f6a8 pic.twitter.com/uyFCMpGOuR
I shorted the ATM CE's which Subasish Pani does, and hence I mentioned strike selection inspired by Mr. Pani!
For some reason, people seem to love it
Here are all of them, chronologically:
DJ Sir's set up made in collaboration with @AdityaTodmal
In this thread, I'll walk you through my set up, absorb it as much as you can.
— itrade(DJ) (@ITRADE191) June 27, 2021
The instrument that I trade in are Nifty (NF) options
Thanks to @AdityaTodmal @niki_poojary for contributing in making this pic.twitter.com/BrMrGydb1v
More from Optionslearnings
Curated the best tweets from the best traders who are exceptional at managing strangles.
⢠Positional Strangles
⢠Intraday Strangles
⢠Position Sizing
⢠How to do Adjustments
⢠Plenty of Examples
⢠When to avoid
⢠Exit Criteria
How to sell Strangles in weekly expiry as explained by boss himself. @Mitesh_Engr
⢠When to sell
⢠How to do Adjustments
⢠Exit
1. Let's start option selling learning.
— Mitesh Patel (@Mitesh_Engr) February 10, 2019
Strangle selling. ( I am doing mostly in weekly Bank Nifty)
When to sell? When VIX is below 15
Assume spot is at 27500
Sell 27100 PE & 27900 CE
say premium for both 50-50
If bank nifty will move in narrow range u will get profit from both.
Beautiful explanation on positional option selling by @Mitesh_Engr
Sir on how to sell low premium strangles yourself without paying anyone. This is a free mini course in
Few are selling 20-25 Rs positional option selling course.
— Mitesh Patel (@Mitesh_Engr) November 3, 2019
Nothing big deal in that.
For selling weekly option just identify last week low and high.
Now from that low and high keep 1-1.5% distance from strike.
And sell option on both side.
1/n
1st Live example of managing a strangle by Mitesh Sir. @Mitesh_Engr
⢠Sold Strangles 20% cap used
⢠Added 20% cap more when in profit
⢠Booked profitable leg and rolled up
⢠Kept rolling up profitable leg
⢠Booked loss in calls
⢠Sold only
Sold 29200 put and 30500 call
— Mitesh Patel (@Mitesh_Engr) April 12, 2019
Used 20% capital@44 each
2nd example by @Mitesh_Engr Sir on converting a directional trade into strangles. Option Sellers can use this for consistent profit.
⢠Identified a reversal and sold puts
⢠Puts decayed a lot
⢠When achieved 2% profit through puts then sold
Already giving more than 2% return in a week. Now I will prefer to sell 32500 call at 74 to make it strangle in equal ratio.
— Mitesh Patel (@Mitesh_Engr) February 7, 2020
To all. This is free learning for you. How to play option to make consistent return.
Stay tuned and learn it here free of cost. https://t.co/7J7LC86oW0