Low Risk Low Returns- Target 50 NF per month per NF Lot

[jamit_05]

5700 PE APR is worth Rs.25... will sell a some at LOD break.

 

[PartTime_Trader]

5700 PE APR is worth Rs.25... will sell a some at LOD break.

Once we decide to unwind a strat we can recover some $$ by selling the leftovers, another way to go is use them as wings and build a strat around it.

for e.g. with your long 5700 PE APR consider creating a ratio spread / credit bull spread / calender spread . . . if you think that its high probability that this dip to 5700 created a short term bottom, then short 5800 PE APR, but if you see a probability of that level being retested before April expiry then it might be worthwhile just to hold onto 5700 PE APR.

Cheers
::thumb::

 

[jamit_05]

Once we decide to unwind a strat we can recover some $$ by selling the leftovers, another way to go is use them as wings and build a strat around it.

for e.g. with your long 5700 PE APR consider creating a ratio spread / credit bull spread / calender spread . . . if you think that its high probability that this dip to 5700 created a short term bottom, then short 5800 PE APR, but if you see a probability of that level being retested before April expiry then it might be worthwhile just to hold onto 5700 PE APR.

Cheers
::thumb::

So you say

1) If I see 5700 being reached before apr expiry, then make a strategy around it. Or just hold onto them. (I'd prefer making a Strategy).
2) If i dont, then sell 5800 Pe.

Right?

 

[PartTime_Trader]

Broaden your perspective along with PE 5700 Apr that you are carrying and PE 5800 Apr

also consider , PE 5900/5800 Mar, PE 58/5900 Apr, and PE 56/57/5800 May

Usually once we have a position mind gets into tunnel vision and start thinking only from that perspective, instead think fresh about market possibilities

Cheers
::thumb::

 

[jamit_05]

Now we want to take an educated decision about the 5700 APR PEs that we have in stock.

After looking at it from the Risk and Reward point of view it appears selling 5800 MAR PEs could prove sensible. Reason;

5800 MAR PEs worth 20
5900 MAR PEs worth 40;

5700 APR PEs worth 24;
5800 APR PEs worth 40;

So in case I am wrong about the bullishness, then I will know in around 100 points correction for sure which is when I will reverse the sale. This is going to cost me 20 points, but also APR PEs will appreciate 16 points... so loss will be around 4 odd points, which is minimal.

But if I am right, I will get to keep 20, have still have a month of APR PEs to hold onto. Which is much better than selling APR PEs at 25 bucks... tks PartTime_Trader

I am fine with both these possibilities. Limited Risk and Limited Returns.

So let sell some 5800 Mar PEs.

 

[jamit_05]

Have 20 lots, 1000 units of 5700 APR PEs in stock.

SOLD 200 UNITS of 5800 MAR PEs SOLD at 22 bucks a pop.

Gain: 200*22 = Rs. 4400

 

[jamit_05]

Total profit collected thus far:


200*22 5800 MAR PEs = 4400 (4 Pe)
NF 6000-5700 = 300*100 = 30000 (2)
100*117 5900 APR CE = 11700 (2)
50*130 5800 APR CE = 6500 (1)

==========================
Total gains = Rs. 52600

Hence, all expense of this hedge has been covered. And

We still have 5 NFs lots and 16 5700 APR PEs left to profit from. At CMP this has value of

6000-5700 = 300 * 5 * 50 = Rs.75000
25*16*50 = Rs.20000

A total of Rs.95000; That is 20% profit with Zero Risk !!

 

[jamit_05]

I think we have had it really easy this time. Beginners luck. Times when the EOD to EOD movement is very sideways, like in Aprils, the result is not so encouraging. But, the idea is to not care much as long as there is no loss. Sit back and relax, should be the name of this method.

Once I sail through the tough months I will start a thread with real positions.

 

[jamit_05]

In this method, it all boils down to one fact:

The trader should have confidence that every situation can be salvaged by taking on minimal risk which is covered by our bias of the trend.


Till that confidence comes one will continue such trials.

 

[SaravananKS]

In this method, it all boils down to one fact:

The trader should have confidence that every situation can be salvaged by taking on minimal risk which is covered by our bias of the trend.


Till that confidence comes one will continue such trials.

Jamit,

I Tried this type of delta neutral Strategies very Long ago. at One Stage I stopped. since we need good swing in price.

As You said we had very good swing (Fast also) This is ideal situation for this type of methods.

Eagar to watch how you going to trade in sideway(ie no Price movement) Period :thumb: