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

[jamit_05]

SOLD 50 units NF @ 5776

LOSS: 5936 - 5776 = 160 Pts.


As market fall will sell a pair of PEs.

SOLD 5700 PEs @ 60 units 100.

Net gain/loss 120-160 = -40;

 

[jamit_05]

SOLD 5700 PE 100 units @ 65

gain 65*2 = 130 points

 

[jamit_05]

For 500 Units of each:

Sold 6300 CE @ 36
Sold 6000 PE @ 30

Credit:

36*500 + 30*650 = 37500

 

[jamit_05]

EDIT:

When price threatens to make any one leg ITM we shall take evasive maneuvers.

Since we have sold 6300 CE, we shall consider purchasing NF only above 6250. That is 50 points before the SP. By that time the other leg will becomes penny/worthless.

 

[jamit_05]

All in all, the idea is to keep the initial premium. While the market goes up and down (or up and up) I shall adjust delta to neutral and hence eliminating risk. I will have to run this show for the next 10 trading sessions only.

In the 2nd half of expiry time decay is the fastest, hence is an apt time to short strangles. Moreover, market has moved enormously this week. So I expect atleast 75% of flat time hereon.

Although, I have posted 500 Units each I will not be taking up more than half of it. Will execute on EOD Friday.

Hope to get some strong learning.

 

[manojborle]

Managing the trade:

Since yesterday's HOD is breached, we suspect more upside.

Hence, purchased 500 Units of NF @ 6173.50 SL 6150; If hit, it will give a loss of 24*500 = 12000;

To cover this additional risk will sell 6400 CE @ 14;

Credit:
14*900 = 12600;

Current Position:

Sold:

6400 CE @ Rs. 14 Units 900
6300 CE @ Rs. 36 Units 500
6000 PE @ Rs. 30 Units 650

Bought:

500 NF @ 6173.50 SL 6149.50

How much margin is required to take this position ?

 

[manojborle]

Managing the trade:

Since yesterday's HOD is breached, we suspect more upside.

Hence, purchased 500 Units of NF @ 6173.50 SL 6150; If hit, it will give a loss of 24*500 = 12000;

To cover this additional risk will sell 6400 CE @ 14;

Credit:
14*900 = 12600;

Current Position:

Sold:

6400 CE @ Rs. 14 Units 900
6300 CE @ Rs. 36 Units 500
6000 PE @ Rs. 30 Units 650

Bought:

500 NF @ 6173.50 SL 6149.50

Around 15 lakhs of margin is required to hold this margin, am I correct ?

 

[jamit_05]

Around 15 lakhs of margin is required to hold this margin, am I correct ?

50 units OTM option needs around 15K.
50 units NF needs 25K.


So 33 lots *1.5 = 5L and 10 lots * 2.5 = 2.5L

So, yes 7.5L.

 

[jamit_05]

Reason for Selling Strangle at 6300 and 6000.

Price is expected to be stay in this bracket. If it breaks it, the trader will resort to NF to cover that leg. And when the trade becomes profitable will neutralize it.

 

[pm_shah]

Is there any screener/tool which will help to identify stocks having high premium on OTM call/puts based on certain criteria like volatility, time decay etc?

The tool will help us to review the list and take appropriate action like selling call/put to eat premium near to expiry month. I do understand market context is very important and we need to be reasonably sure about market trend. But I feel the screener will reduce our work and we can effectively use the time to review those stocks.