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

[DanPickUp]

Thanks for your suggestion. Jamit may be able to use it. I neither have any software available with me nor do I have a mentor who could help. ( even option oracle is not working these days ).
It is just that I have taken fancy for short strangle especially after going through your thread in which you have discussed hedging at great length.
If one keeps position small to begin with, it is comparatively easier to manage trade.
Earlier I used to think that the only way to minimise risk is to get out of the trade at the first opportunity if trades starts going sour. Or else hang in there hoping that the tide will turn in your favour only to find that things have gone out of control. Thanks a million Dan for showing a way to manage such trades.
I know I am indulging in a game which is risky for a person of my age as well a person who is just learning to trade options but that is what I find interesting.

Thanks for the kind words. What you have seen is just one part of many ways you can trade such a short strangle. If you stay with your pure short strangles, then you do fine the way you do it. Can be done with out the matrix. At the moment you start to combine your short strangles with other trades, like converting it in to a short condor or short synthetic butterfly and so on, then better with a matrix.

Take care / DanPickUp

 

[jamit_05]

Well, interesting discussion. What I would recogmend to both of you is to work with an option matrix which is able to show you the analyzing pictures to what you do. Makes the job really much more easy, as you will see your BE and all the greeks at glanze. When you work with such a matrix, you can test what ever with what ever. So you literally will have a very clear picture about what you do or plan to do.

About the post handling a short strangle with futures. It was meant to make people thinking about it and becoming clear about the risk involved in such kind of trading. Short a strangle or straddle is already a risky game, specially when done in short time frames and then adding a play with the future is not for beginners, as when done one mistake on either side or on either derivative it could be come very sad. You may flip the coin to the other side when you trade short time frames.

Take care / DanPickUp

Could you recommend a good place to get a option matrix.

 

[jamit_05]

@GMT

This plain vanilla short strangle will not consistently work. It is an incomplete strategy. I have backtested it and am not satisfied with the results. For ex. if the market decides to go south in the current position, we shall be stumped.

Having given it a lot of thought, I think one will have to work with a "moving short strangle bracket".

 

[gmt900]

@GMT

This plain vanilla short strangle will not consistently work. It is an incomplete strategy. I have backtested it and am not satisfied with the results. For ex. if the market decides to go south in the current position, we shall be stumped.

Having given it a lot of thought, I think one will have to work with a "moving short strangle bracket".

I entirely agree with you. In fact I am trying to learn and if possible master
what you call " moving short strangle bracket".

 

[jamit_05]

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[jamit_05]

Quite clearly, when price is trending close to expiry then the job becomes very margin intensive ! Best to switch to the next month.

 

[gmt900]

How do you switch to next month? By squaring off the current month's positions?

 

[jamit_05]

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[jamit_05]

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[jamit_05]

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