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

[angira]

Jamitbhai,
In the beginning of the month max_oi at 10500pe-11000ce.
Now, OI moved to 10700pe from 10500pe.

we have to weeks for JAN expiry.
Now anyone can go for short FEB expiry ATM pair or OTM pair.
what risk include if we sell and play strangle for FEB strike like 300 point up-down.
short 10600ce-11200pe with premium near 834.

Angira...

 

[jamit_05]

OI movement is not a clear cut indication of anything. This information could be a part of a trading system, but cannot take decision solely based on OI.

Sold strangles have a high success rate, but you must also have a way to book your loss when Nifty starts moving. Right now nifty is moving, it could breakout the 11000 level, therefore I suggest you wait for the price to settle. Then selling March OTMs on both sides will be a good idea. Sell OTM CE at a resistance, and sell OTM PE at a support on a daily chart.

 

[jamit_05]

Balance stock

Buy 6 lots NF Feb @ 10970
Buy 3 lots NF Feb @ 10895 (spot 10818)
Buy 3 lots NF Feb @ 10907
-------------
12 NF

Buy 3 lots Feb PE 10800 @ 205
Buy 10 lots FEB PE 10900 @ 225
Buy 6 lots Feb PE 10900 @ 218
Buy 3 lots Feb PE 10800 @ 210 (added to balance delta)
Buy 8 lots Feb PE 10800 @ 210
------------
30 PEs

Total Cost: 615 + 2250 + 1310 + 2310 = 6500 + 500 (profit) = 7000 points.

Trade is Delta neutral.
NF : PEs = 1 : 2.50
--------------------
SELL 1 lot FEB PE 10900 @ 287
SELL 1 lot FEB PE 10900 @ 297
SELL 1 lot NF Feb @ 10,953
gained 25 pts
--------------------
Sold 1 lot NF Feb @ 11010 (corresponding to spot 10950)
sell 3 lots FEB PE 10900 @ 220
gained 25 pts
----------------------------------

SELL 1 lot NF Feb @ 10,947
Pending action: PE target 234.
----------------------------------

 

[jamit_05]

Balance stock

Buy 6 lots NF Feb @ 10970
Buy 3 lots NF Feb @ 10895 (spot 10818)
Buy 3 lots NF Feb @ 10907
-------------
12 NF

Buy 3 lots Feb PE 10800 @ 205
Buy 10 lots FEB PE 10900 @ 225
Buy 6 lots Feb PE 10900 @ 218
Buy 3 lots Feb PE 10800 @ 210 (added to balance delta)
Buy 8 lots Feb PE 10800 @ 210
------------
30 PEs

Total Cost: 615 + 2250 + 1310 + 2310 = 6500 + 500 (profit) = 7000 points.

Trade is Delta neutral.
NF : PEs = 1 : 2.50
--------------------
SELL 1 lot FEB PE 10900 @ 287
SELL 1 lot FEB PE 10900 @ 297
SELL 1 lot NF Feb @ 10,953
gained 25 pts
--------------------
Sold 1 lot NF Feb @ 11010 (corresponding to spot 10950)
sell 3 lots FEB PE 10900 @ 220
gained 25 pts
----------------------------------
sold 2 lots FEB PE 10800 @ 208 (corresponding to spot 10800
SELL 1 lot NF Feb @ 10,947

GAINED 16 PTS
----------------------------------

SOLD 3 LOTS PE 10900 @ 244 @spot 10822
NF Feb sold @ 10938 for gain of 25 pts
------------------------------------
SOLD 2 LOTS PE 10900 @ 244 @spot 10822
NF Feb sold @ 10938 for gain of 25 pts
---------------------------------
sold 3 lots pe 10800 @ 209
pedning: to sell nf one lot feb target 10908 cmp 10880
profit target 25 pts.
-------------------------------

Balance NF = 6
Balance PEs = 15

 

[jamit_05]

Starting a new set. Last time around we made some progress. More clarity in this one.

Jan 24
spot 10837
Buy 20 Lots Feb NF @ 10885
Buy 50 lots FEB PE 10800 @ 190

Jan 25
spot
sell NF 10978 10924
sell NF 10975 10921
sell NF 10973 10920

one lot Bought NF 10950 Spot 10896 Gain 25 points
one lot Bought NF 10922 Spot Gain 53 points
one lot Bought NF 10918 Spot 10866 Gain 55 points
------------------
Collected 133 points, and stock is reset.

This is not without risk. We are bleeding time decay of around 220 points each pair of NF+PEs. Therefore, when we come across a strongly trending month, we must strategise such that we are able to recover entire cost of spread, and time decay cost. And that is a challenge !

Till that happens, real time a few times over, I will not declare this strategy as workable

 

[jamit_05]

Jan 24
spot 10837
Buy 20 Lots Feb NF @ 10885
Buy 50 lots FEB PE 10800 @ 190

Jan 25th gained 133 points

Jan 25

sell 3 lots feb pe 10800 @ 205 spot 10793


sell 1 lot feb pe 10800 @ spot 10765 218
sell 1 lot feb pe 10800 @ spot 10761 215
sell 1 lot feb pe 10800 @ spot 10767 221

-> Buyback Target avg for all these is 186.50

 

[angira]

jamitbhai,

I've tracked JAN 10500PE-11000CE pair near 200 which have max_oi in starting of first week,
After some days, SOLD it near 104 and exit near 83-84.
Friday morning morning it's traded near 54.
When i sold near 104, it test upside 20 to 30 points.
Basically i maintaing and try to strickly stoploss nearly 30-40 point not much.
But in Past befor 2-3 months, I've played 4 trades this way, and out of one got SL was hit near 40 points.
This is totaly based on OI trades. And Target is 30 points with SL 30-40 points.

But what if we SOLD same strike 10500pe-11000ce pair of FEB or MAR expiry with target and stoploss of near 50 - 100 points.
Which is better have to go with This OTM strikes with next month-FEB or of far month-MAR. ?
And which is good time for entry, is the first week of starting expiry of middle of any week?

Angira...

 

[jamit_05]

Jan 24
spot 10837
Buy 20 Lots Feb NF @ 10885
Buy 50 lots FEB PE 10800 @ 190

Jan 25th gained 133 points

Jan 25

sell 3 lots feb pe 10800 @ 205 spot 10793


sell 1 lot feb pe 10800 @ spot 10765 218
sell 1 lot feb pe 10800 @ spot 10761 215
sell 1 lot feb pe 10800 @ spot 10767 221

-> Buyback Target avg for all these is 186.50

sell 3 lot feb pe 10800 @ spot 10705 244

Since day is forming a strong bottom, taking a little more risk....

Sell 2 lot Feb PE 10800 @ spot 10713 244
sell 1 lot Feb PE 10800 @ spot 10675 261

sell 1 lot Feb PE 10800 @ spot 10650 273
sell 1 lot Feb PE 10800 @ spot 10635 281


Total 14 PEs sold out of 50.

 

[jamit_05]

jamitbhai,

I've tracked JAN 10500PE-11000CE pair near 200 which have max_oi in starting of first week,
After some days, SOLD it near 104 and exit near 83-84.
Friday morning morning it's traded near 54.
When i sold near 104, it test upside 20 to 30 points.
Basically i maintaing and try to strickly stoploss nearly 30-40 point not much.
But in Past befor 2-3 months, I've played 4 trades this way, and out of one got SL was hit near 40 points.
This is totaly based on OI trades. And Target is 30 points with SL 30-40 points.

But what if we SOLD same strike 10500pe-11000ce pair of FEB or MAR expiry with target and stoploss of near 50 - 100 points.
Which is better have to go with This OTM strikes with next month-FEB or of far month-MAR. ?
And which is good time for entry, is the first week of starting expiry of middle of any week?

Angira...

If you are shorting OTMs then same month is best, because time decay is fastest, hence % gains will be more. But, so will be the losses. When you look at the chart and feel confident that it will remain in 300 point range, only then short.

With elections around the corner. These are not good times to short options

 

[jamit_05]

Jan 24
spot 10837
Buy 20 Lots Feb NF @ 10885
Buy 50 lots FEB PE 10800 @ 190

Jan 25th gained 133 points
Jan 29th gained 84 points

sell 3 lots feb pe 10800 @ 205 spot 10793
sell 1 lot feb pe 10800 @ spot 10765 218
sell 1 lot feb pe 10800 @ spot 10761 215
sell 1 lot feb pe 10800 @ spot 10767 221
Sell 2 lot Feb PE 10800 @ spot 10713 244
sell 3 lot feb pe 10800 @ spot 10705 244

pending
sell 2 lots feb pe 10800 @ spot 10655 257

Jan 30th
sell 1 lot feb pe 10800 @ spot 10628 280-268 = +12
sell 1 lot feb pe 10800 @ spot 10638 270-256 = +14
sell 1 lot feb pe 10800 @ spot 10645 265 - 256 = +9
sell 1 lot feb pe 10800 @ spot 10677 248 - 239 = +9
sell 1 lot feb pe 10800 @ spot 10663 254 - 239 = +15