I just finished off reading the whole thread and this is what I have understood and I am outlining my action plan as below. Request Linkon Sir to kindly approve each point so that I can proceed ahead with the action plan. May be he can write 'approved' after putting each point in quotes and can provide his changes whereever necessary.
1) Have a mindset that the movement of Nifty just cannot be predicted by anymeans.
2) Get an account with RK Global with ODIN interface and an internet connection with inverter setting.
3) Wait till 17th-20th of a month and then when NF is close to some '00 value, short a straddle of that value with expiry of next month. So lets say this 17th-20th June, Nifty is at 4700, so I short a 4700 straddle.
4) I put a buy order with NF Current (NFC) + 10 pts and a short order for NFC - 10 pts. Whichever gets executed, I put a SL at NFC.
For eg. Nifty is at 4700, I put a buy order at 4710 and sell order at 4690. Suppose 4690 order gets executed, I put a SL at 4700 and buy order of 4710 also stays intact.
5) If SL gets hit, I put the order that was executed again. So if NF comes back to 4700 and hits SL, I put the 4690 sell order again.
6) If NF moves further in the direction in which the order had got executed, for every 10 point move in that direction, I bring the SL down 10 points and also the other non-executed order also by 10 points in the same direction.
So as in the above example, if NF falls from 4690 to 4680, SL is moved to 4690 and that buy order is moved to 4700 from 4710.
7) Steps 4), 5), 6) are repeated during the whole trading day.
8) At around 3:15-3:20 pm, either of the three things will happen. Either I will be long NF, or short NF or without any position in NF.
8a) long NF : Buy the nearest OTM put or sell the nearest OTM Call as a hedge for gap down next day. If buying option, buy that of far month, if selling, then buy of near month.
Short NF : Buy the nearest OTM call or sell the nearest OTM Put as a hedge for gap up next day. If buying option, buy that of far month, if selling, then buy of near month.
Without any position in NF : Take a position in NF and then go to 8a) or 8b).
"Request Linkon Sir to kindly provide some comment on this point as to what is the best manner to handle gaps. I personally feel selling options is the better way."
9) The next day, as the market opens and you get the price of Nifty, either it will be near yesterday's close or gapped up/down in your favour or against you.
Near Yesterday's close or Gapped in your favour: Quickly put the SL and the reverse order of your open position according to point 4 above. Once done, close the hedged option that you had bought yesterday during the closing hours.
So for example, yesterday you had a short position with LTP as 4784 with your SL as 4790 and buy order at 4800. So if NF opens around 4784 only, you quickly put the 4790 SL and buy order of 4800 again. If suppose NF gapped down to lets say 4756, quickly put the SL to 4766 with a buy order at 4776.
Once done, immediately close the option bought/sold during yesterday's closing hours.
"Request Linkon Sir to kindly tell that whether buy orders and SLs of previous days get carried over to next day automatically/can be entered before market opens or they have to be again entered only after market opens"
Gapped against you: First quickly put a order in the direction of the gap at - 10 points from the opening price of double the qty. Then close the Option position taken during yesterday's close.
If the order gets executed, put the SL and reverse order as detailed in point 4above. If however the gap starts filling up, for first 10 point move, reduce the qty of the reverse order to half and put the other half at the opening price. For another 10 point move, move both the orders in the direction of the gap.
For eg. I yesterday had a long NF and LTP was 4877 with an OTM Call sold of 4900. Now today, suppose market gaps down at 4853. I immediately put a Short order of double the NF qty at 4843 and then close the OTM call of 4900.
If suppose NF falls down thru 4843, I will be effectively short, so I will quickly put a SL at 4853 and a long order at 4863 in line with step 4 above.
On the other hand if NF rises from 4853 to 4863, I decrease the qty of 4843 short order to half, i.e the normal trading qty and put another short order of normal qty at 4853. If it further rises to 4873, I move both the orders further up by 10 points to 4863 and 4853 and this goes on.
If now suppose 4863 order gets hit. I would basically be out of NF. I would then put a long order at 4873 and my short order of 4853 will also be live. Thus it would again become a situation of point 4 as detailed above.
10) Take on another similar position at 20th of next month and exit from this position on/near expiry.
11) Get Linkon Sir's bank account to deposit some part of the profits made by this strategy.
"Linkon Sir, you dont have to approve this point no. 11.":thumb:
Thanks and Regards
Saurabh
