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Thread: Free Options Trading Course for Beginners with small capital.

Reference: Option trading marathon series, part 1 from Mr. Subasish Pani ft. @PushkarRThakur

Collaborated with @AdityaTodmal

 1/ Trading journey of Mr. Pani

• He has an experience of 7 years.

• He has made a profit of Rs. 20 cr. over these years with a capital of Rs. 2 cr.

• However, it's not easy to make such profits.

• More difficult, is to retain those profits and build more on it.
2/ How he ventured to options selling

• He started with futures and option buying however after a certain point when his capital grew, he faced scalability issues and hence he resorted to options selling.
3/ Investing becomes imp once the capital grows:

• Since his trading profits have grown well, he has started investing (investing is always for LT).

• For folks who dnt have much info regarding investing can simply buy Nifty 50 stocks & keep rebalancing as Nifty 50 does.
4/ Covered calls strategy for the portfolio:

• Pledge the portfolio and receive margin ~80% which he would then use to sell OTM CEs of the stocks which are in his portfolio.

• This helps in generating fixed income from the portfolio.
5/ For folks who wish to learn trading, check this:

• Need to have a firm commitment.

• In terms of money and in terms of how much time you would give yourself in market.
6/ Start with a small capital:

• Lets say you start with Rs. 10k.

• Buy everyday one single stock exit with Rs. 300 loss and profit of Rs. 600 with position sizing.

• Do this exercise for 30 days.

• This is to understand the process.
7/ Stick to your set up

• Be disciplined

• Don't do system hopping

• Try to take atleast 100 trades to understand the nuances of the system, as develop discipline over the period.
8/ What is Call option (CE) & Put Option (PE)

• If your view is that market will go up, an option buyer will buy a CE and if the view is that market will go downside then an option buyer will buy a PE.

• Every option has a premium.
9/ Intervals in NF & BNF:

• Nifty option strikes has an interval of 50 points and Banknifty has 100 points.

• Check Option chain for more details:
- Nifty : https://t.co/5BrThceFd3
- Banknifty: https://t.co/HbPkJw310q
10/ When does an option buyer or a seller makes money?

• Buyer makes money if the market moves in his favor.

• Option sellers make money if the market remains sideways or moves in his favour.
11/ Basic set up for option sellers: Short Straddle

• Wherever the spot is sell both CE & PE of the same strike.

• Currently NF spot is at 17530, so to short a straddle one has to sell both 17550 CE & PE together.
12/ How to initiate a trade:

• Net premium collected is Rs. ~330

•Premium decay happens the most on Tuesday Wednesday and Thursday

• Trade this in intraday and avoid overnight risk while learning.

• Probability of this set up is 70%

• The R/R should be 1:2
13/ When to exit:

• Capital required for 2 lot of strangle is aprrox. 3 lacs

• Book out based on target or SL:
- SL: if the losses amount to Rs. 5,000 or
- Target: it if the strangle is in profit of Rs. 10,000.
14/ Don't go into adjustments:

• Especially when you are in learning phase.

• Also Subasish doesn't believe in adjusting the legs, its usually SL or target for him.
15/Don't get sad when you SL is taken out

• Take that as a learning, as you will exactly know how much point SL you need to keep.

• How does the option premium behaves towards the expiry etc.
16/ Option buying requires more discipline

• Although any trader requires discipline while entering and exiting trades however option buyers requires this virtue a lot more.

• An option buyer can make money only if he can time the momentum properly.
17/ Option buying Timing:

• Usually momentum is better from 9.15- 10.30am.

• 5min TF will have more trades than 15min.

• Select the TF as per your temperament.

• If one has slightly more capital then look for trades between 1.30-3.30pm.

• 10.30-12.30pm: No trading zone.
18/ Trading psychology & discipline in option buying:

• If you have booked losses in 3-4 trades in the morning hour then just close for the day.

• If you are in profit in the morning trade , then you can risk that profit and trade in the closing hour.
19/ When to buy?

• E.g. you are using 5min TF.

• If any candle breaks the first 5min high or low buy CE or PE accordingly.

• Eg: Market gives a BO of the first 5min candle basis which you buy a CE option, but thereafter before reaching your 1:2 target it makes a downmove.
20/ When to exit?

• Now exit the CE buy and buy a PE.

• If the market is in momentum then you'll be in profit.

• If your SL gets hit, then that's an indication that market is consolidating.

• If both the sides SL gets hits then better to close trading for the day.
21/ Best time for option buyers having small capital:

• Focus only on 9.15-10.30am everyday.

• Thursdays when there is weekly expiry focus on 1.30-3.30 pm as well, as a strong move towards the end of expiry can fetch handsome returns.
22/ Take inspiration rather than getting influenced:

• Performance comparison should be with oneself rather than comparing with profits of others on the SM.
We have an upcoming two day workshop on October 15th and 16th, 2022.

Venue: Andheri East.

Go through these links and sign up for the workshop.

- FAQ here: https://t.co/l00nLRLgvN

- Registration form: https://t.co/2VdjEKPn5v
Source for this thread:

https://t.co/rVds8oqrdH
If you enjoyed this thread, here's another one which might be helpful:

https://t.co/tDscnKiAKg
Hope you discovered something new (because that's the point!)

If you did:

1. Follow us for more:

@AdityaTodmal
&
@niki_poojary

2. RT the tweet below to share this thread with your audience

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Sep 23, 2021 - Weekly expiry, preceded by the FOMC meet and not to mention the gap up which then turned out to be a trending day

Here’s how the strangles were converted into straddles & how the positions were managed!

Time for a Thread 🧵

• Wednesday night (IST) there was an event, FOMC meet
• Markets were jittery, as they say, when US sneezes the world catches cold
• Both Dow & Nifty were weak
• All eyes were fixed on the Fed Reserve Chair Jerome Powell’s take on interest rate and the pace of asset purchases

• So didn’t wanted to get caught on the wrong side, hence on Wednesday noon Shorted a strangle
• ~700-800 points away from where the BNF was about to close i.e. 37k levels
• 37800 CE @ 43 & 37700 CE @ 34 & 36200 PE 28 & 36300 PE at 34


• On Wednesday 37K strike witnessed heavy CE & PE Open interest 2.5mn & 2mn of CE & PE writing respectively


• On Wed night, the cat was out of the bag and Mr. Powell kept interest rates at zero & continued the current pace of asset purchases
• Dow celebrated the news and on Thursday morning (weekly expiry) i.e. Sep 23, 2021 BNF opened with a gap up of ~300 points and opened at 37241
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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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#NIFTY

Bearish engulfing on monthly or bullish harami on Weekly , which one will play out?

Outlook for the week Jan 2 - 6, 2022.

THREAD: Deconstructing NIFTY on 5 different TF's.

#NIFTY

1. Monthly TF:

• Although the structure in monthly TF is of HH-HL, December monthly candle is a more of a bearish engulfing.

• However it is exactly at the support

• 17800-18000 looks like a strong support.


#NIFTY

2. Weekly TF:

• 17800- 1800 used to be a resistance in April & August 2022.

• However post BO of those levels, they might act as an immediate support.

• Current weekly candle is closer to the support (erstwhile resistance)


#NIFTY

3. Daily TF:

• After a sharp vertical fall, we expected a buying momentum

• Also Nifty filled the Gap.

• Strong support at 17800


#NIFTY

4. Hourly TF:

Moving within the rising channel, albiet the channel is quite steep.
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1/n

Nothing can substitute experience of live trading

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2/n

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Max loss for the day, 1%, i.e. Rs 1000

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How?

@niki_poojary taught me how to form a weekly trading plan.

I'm going to share what I've learned in this thread.

Here's the simple 10 step process: 🧵

1. Check on the daily chart if Bank Nifty is in a higher high or lower low:

A higher-high (HH) is a bullish pattern, it signifies that it is difficult for the market to go down.

If that has formed on the daily chart, the market will give all the surprises on the upside.


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Simply knowing a higher high or lower low does not make money. It gives you a bias for the week.

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⚡Downtrend - #bluedart


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