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

[amar_gr]

Sorry posted in wrong thread

 

[gmt900]

Better would be to buy back 6300 CE instead of Selling 6100 PE; This would:

1) Adjust delta
2) Free Margin
3) Reduce risk on the upside, which is very important since the price is still trending and strong.

Jamit, this is exactly what I find fascinating, unlike looking at charts or speculating about the direction of the market. Not that it does not require knowledge and skill, but I for one find this more stimulating. And I am sure just like anything else one can attain profficiency through practice and I have just begun.

 

[jamit_05]

<......................>

 

[jamit_05]

Jamit, this is exactly what I find fascinating, unlike looking at charts or speculating about the direction of the market. Not that it does not require knowledge and skill, but I for one find this more stimulating. And I am sure just like anything else one can attain profficiency through practice and I have just begun.

Q1. How would you manage the Shorted Strangle if price when to 6400 ?

Q2. How would you manage the Shorted Strangle if price when to 5800 ?

 

[jamit_05]

Hi GMT.

CMP 6200

6400 CE 56
6000 PE 54
-----------
Total 110

One pair will fetch Rs.5500, blocking a capital of Rs.40000; That is 13.75 %

It is too good to be true because we will have to employ more capital to manage the shorted strangle till expiry. This will involve buying and selling more options. Inevitably, this will involve losses, profits and expenses.

Interesting.

 

[jamit_05]

Phew, it is a tough job to even maintain Delta Neutral !!

 

[gmt900]

Hi GMT.

CMP 6200

6400 CE 56
6000 PE 54
-----------
Total 110

One pair will fetch Rs.5500, blocking a capital of Rs.40000; That is 13.75 %

It is too good to be true because we will have to employ more capital to manage the shorted strangle till expiry. This will involve buying and selling more options. Inevitably, this will involve losses, profits and expenses.

Interesting.

There are no stock solutions to various situations that arise when you enter a short strangle. And as I have been repeatedly saying, one will get a hang of the ways of managing the trade only by practice.
A few things which I have found useful for me are:
Enter short strangle not too close to expiry. Keep track of the way trade is going on EOD basis. At any given time ensure that whatever market does ,you will not be in loss or if the loss is inevitable it should not make you jittery to the extent you will lose your cool in handling the trade.
Most important,
prepare plan of action for ongoing trades each day before market opens and make minimal changes to your plans during market hours. I have just begun following these steps and am in no way vouching for it's efficacy. However, I feel that if I religeously follow this practice I will at least avoid losses and will definately make profits later. I have no time frame in mind .
I feel that coaches like Dan and Wastej have done their job. It is for the players like us who have to use the lessons learnt in improving our game.
Happy trading,
gmt900

 

[jamit_05]

Punched in the following trade

At Spot 6169

Sold 150 Units 6300 CE 73.25
Sold 200 Units 6000 PE 63.50

 

[jamit_05]

For 500 Units of each:

Sold 6300 CE @ 36
Sold 6000 PE @ 30

Credit:

36*500 + 30*650 = 37500

Squaring off this trade for a total of 32 points, because it is simply too demanding to manage a strangle in the last two weeks. The delta swings are wide.

 

[jamit_05]

Rightly said GMT.

As days pass, price could:

Make a decisive break of an important level (like 6200 and 5900 currently).
Solution: In that case, there is no point making amends. Price is not ranging anymore, it is trending. It is sensible to square off the losing leg. In addition, one could take a trending position by buying options or spreads.[/COLOR]

Maybe squaring off would be the last resort, if you are not able to manage the trade with hedging in time[/COLOR]

@GMT

How will go about managing a short strangle which is just shown a breakout of an important level and is threatening to move 300 points fast? Also, note that this breakout could be false, cuz 50% of them are, and reverse strongly too.