Lets Make some Money

[nirbhay Dixit]

Dear Friends,

I have been active in the market for some years and now I have devised a technique that will give around 60% return annually (conservative estimates). In all there will be around 6-8 trades in an year. The technique will involve selling options so this will be suitable only for people having capital in excess of 2-3 lakhs but dont have time to day trade. As the no of trades are low will post only when required. For simplicity PL statement will be made with a base of 1 contract. P/L statement will also be uploaded with each trade.

regards

The trade execution will be updated through excel sheet. The Format of data upload could be seen in the attachment.

Nirbhay Dixit

 

[dineshknp]

Thanks for initiating the thread of this kind. can you please share further, which type of strategy will be used by you? when to short options? which strike and how much target you will decide and how to manage the position when it goes against the trade etc.?

 

[nirbhay Dixit]

The big idea is to sell the options in place of buying options,which we all do and so loose money. You can go long or short by selling put and call respectively. If you have any stocks in delivery than I can devise other alternative strategy for you too. The stop loss will not be predefined but to be on the safer side one can keep a stop loss at 20% loss. Neither the profit will be predefined but will depend upon the market situation.

 

[dineshknp]

hi nirbhay, i was actually asking about the trades you are going to initiate by shorting options. 60% annum returns. if shorting pair of options, so margin reuired 60000 and required output will be rs.3000, so 60 points profit on the pair. and if shorting single option then 30 points profit. so please share here the strategy.

 

[mmca2006]

The big idea is to sell the options in place of buying options,which we all do and so loose money. You can go long or short by selling put and call respectively. If you have any stocks in delivery than I can devise other alternative strategy for you too. The stop loss will not be predefined but to be on the safer side one can keep a stop loss at 20% loss. Neither the profit will be predefined but will depend upon the market situation.

I have shares in delivery , what strategy i can employ to earn income using option , please suggest.

 

[nirbhay Dixit]

Ok, Right now there is no trade, But I will be you an example. During the start of a series suppose nifty is at 5200, The call option with a strike price of 5200 will carry a premium of 125 to 150 depending upon the IV. Suppose the nifty expires below 5200. The profit will be 125*50 = Rs 6250 and the total capital required for this trade will be around 26 -28 k. so the return will be around 20% on capital in one month. So if if you get it right thrice you van make a return of 60%. Of course its not so simple, u still need to get the direction right. But getting a return of 60% is not far fetched. The actual decision to take the trade will be qualitative decision, so its not a formula.

 

[nirbhay Dixit]

What shares do you have? is it in F&O? and the quantity so i can tell you nos of contracts that you will need to sell.

 

[dineshknp]

hi nirbhay, is there any strategy in which we long in futures and short otm strikes? how this works?

 

[nirbhay Dixit]

This is aggressive long strategy. What will you do if the market opens 10% down, you will be wiped out of the market. It depends upon your risk appetite, it will work very well in a bull market,

 

[nirbhay Dixit]

This is aggressive long strategy. What will you do if the market opens 10% down, you will be wiped out of the market. It depends upon your risk appetite, it will work very well in a bull market,

If you are selling OTM calls and going long on futures then its pretty safe and this is what the hedge funds do, However they sell otm calls options of the share they have in delivery.

For example

you have 125 Shares of SBI. and one lot of SBI has 125 shares. Now if you sell a call option at 5% (strike price 2250)above the current price you will get around 68 rupees(yst day closing price). this is around 3%, so now this month you will make at least 3% but maximum of 5%. So its more of a steady income strategy. Hope I have made myself clear.