Re: 1 lakh to 652 lakhs in 497 trading days - Winning 20% of Trade in NIFTY Futures -
Simple Option Strategy based on MAX OI in CE and PE
This strategy is not for Intraday. People who want to wait and Trade for atleast 2-3 days can try this Strategy.
For taking positions it is better to take at the end of the day so that we would also gain some points due to Time erosion
At EOD,
Find out the Strike Price where CE OI is Maximum.
Find Out the Strike Price where PE OI is Maximum.
In Jul-13 Series, For example the
MAX CE is at 6000 and MAX PE is at 5600.
Sell 1 lot of 6000 CE - LTP is 13.8
Sell 1 lot of 5600 PE - LTP is 78.6
Combined premium of 92.4.
If Market moves UP, this could give good result.
Why Choose to Sell ?,
The basic assumption is that when the OI or Volume is High in a particular Strike price, then that means the Operators are Selling. When the Operators are selling they normally would expect the pricess to go down.
So the next question, Why would not the Operators Buy, Options?
The Operators are there to Create the market and So they need to sell to create the market and for them buying is squaring of their positions. They are not really buying...
What is the Stop loss ?
Take positions when the market is atleast 50-75 points away from either of the Strike price. In our case market closed at 5682, 82 points away from 5600. Close the poistions if 5600 is brken on the downside or 6000 is broken on the upside.
I am just exploring options and just my view. Please do your homework before you put your trade. When you are going for a combined premium strategy. Go for a minimum combined premium of 90+
The Same Strategy could be applied looking at the MAX Volume (This is for Intraday)
If the MAX Volume is at the Same strike price, then Sell PE and CE at the strike price. Fro example in the morning the Max volume was at 5600 when the Market was going up and Down, So at that time Sell 5600 CE and 5600 PE. When to Exit When the Strike Price changes... When the market moves UP the MAX CE would up to the Next strike Price ie 5700... OR PE changes to 5500 if market went down... Today at around 10:40 AM, Max volume changed hands from 5600CE changes to 5700CE, At that time Close 5600 CE SELL and Buy 5600 CE. (Not Sell 5700 CE right now).
At 10:40 AM, Market made the low 5640 (Of course it also made a low of 5631 after that).