BC TRADING
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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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Catch me if you can @Mitesh_Engr

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• Avoiding freezes
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In collaboration with @AdityaTodmal


Edward de Bono says intelligence is like a🚗 Automobile

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What @Mitesh_Engr Sir looks at for Expiry Trading:

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• Moneyness of Option contract:
• ITM option
• ATM option
• OTM option


• Intrinsic Value of an option:
• Positive payoff for the buyer


• Intrinsic value of ITM CE options = Spot- Strike


• Intrinsic value of an:
i) ITM for a CE option: Positive
ii) ATM for a CE option: Zero
• Intrinsic value is never Negative
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How to save taxes on the trading profits for an individual

4 Legit ways to retain most of the trading income: 🧵

Collaborated with @AdityaTodmal

1. Divide your capital amongst your family members:

• Ensure they are not salaried employees as they might not be allowed to trade as per their employer's policy.

• Your family is your strength, not just emotionally, but financially too.

• E.g. your net taxable income works out to Rs. 50 lacs, as per the new tax regime, you are in the 30% tax bracket.

However, if you divide the capital amongst your family members in such a way that the net taxable income works out to Rs. 12.5 lacs per member (assuming 4).

This way the tax bracket gets shifted from 30% to 20%, clear saving of 10%

2. Expenses a trader can claim:

All the expenses directly related to the trading business can be claimed.

i) Rent Expense: If one has an office on rented premises, rent paid is a valid expense. However, you should have the rent receipts & rent agreement as valid proof.
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CHEAT-SHEET

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2. OBV divergence.

3. Accumulation with Bearish candles and Volume increase on Price decrease.

STUDY IT!


Explanation

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How to save tax when income is above 50 lakhs?

Here are 9 benefits of trading in a corporate account: 🧵

Collaborated with @niki_poojary

1. Make a Pvt Ltd Company.

Form a company with family members and trade under it. The family members should be directors of the company. Will explain why later.

Why form a company?
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Check the picture below:


Total Tax Outlay:

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