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

[jamit_05]

We have sold this pair and collected almost 170 premium points. This covers us for around 300 Nifty points move.

Nonetheless, the fear factor is very high while naked selling options. No denying or sugar coating that fact.

 

[jamit_05]

Nifty Hourly chart has made a lower pivot high. This is not good. And there is this 200 point unfilled gap between 11600-11400. So, I think if 11800 gets beaten, we must buy cover.

 

[jamit_05]

Sold 20th June 11900 CE+PE @ 89+78=167 CMP 70+80=150

Trigger for action will be after price reaches 11850. Which is when we will sell
20June11850 CE (for around 75)

This will create a win-win situation, such that if price keeps going down, we win on 20June11850 CE and if it goes back up,

a) with the help of timedecay we will square off 20June11850 CE near breakeven
b) our initial pair 20th June 11900 CE+PE will lose heavily in premium.

 

[jamit_05]

Buying a cover for CEs is probably a good idea....

12000CE for only Rs.20 This would completely protect us from all upside threat till expiry, for only Rs.20....

Sold 20June 11900 CE+PE @ 89+78=167 CMP 137
Bought 20June12000 CE @ 20 CMP 34

Tracking 20June11800PE CMP 28


Effectively, if we get both side wings for 20+20, then we get a net collection of 167-40= 137, which is becomes a fully profitable trade at expiry, no matter what.


Following these lines, if we see a 50 to 100 point up move, I will be keen on buying

20June11800PE for around Rs20 as well. And then start another set.

 

[jamit_05]

Sold 20June 11900 CE+PE @ 89+78=167 CMP 51+82= 133
Bought 20June12000 CE @ 20 CMP 20
Tracking 20June11800PE CMP 40

The CE side is much lighter
PE side is heavier. There is Imbalance. CE needs to increase, means we would benefit if price went up. I also want to make an arrangement to benefit if price went down, therefore sell CEs. Selling ATMs should be beneficial.

therefore,

Sold 27June11950CE 67 Took the next week expiry in case market falls another 100 points.

 

[jamit_05]

Sold 20June 11900 CE @ 89 CMP 48
Sold 20June 11900 PE @ 78 CMP 80
Bought 20June12000 CE @ 20 CMP 18
Sold 27June 11950CE 67 CMP 65
----------------------------------------


CE Side premium sold: 48-20+65 = 93
PE Side = 80

So the sold premiums are now somewhat balanced.

 

[jamit_05]

Nice 70 points fall, this has changed the situation, lets see by how much.


Sold 20June 11900 CE @ 89 CMP 33
Sold 20June 11900 PE @ 78 CMP 112
Bought 20June12000 CE @ 20 CMP 12
Sold 27June 11950CE 67 CMP 54
----------------------------------------


CE Side premium sold: 33-12+54 = 75
PE Side = 112

Due to the recent fall, again CE side has become light. Inspite of only recently selling 27June 11950CE. Will wait for some pullback, and sell more CE side.

Profit // Loss is:

Collection: 89+78-20+67 = 214
CMP: 33+112-12+54=187

Mark to market, there is a profit of 30 odd points. Which is no big deal, because the challenge is in managing the balance. Profit is an automatic.

 

[jamit_05]

Nifty seems to be wanting to breakout. This is not favourable for selling options. Therefore, at the next pullback, will take the profit which should be around 50 points, and square off the spread.

 

[[email protected]]

Hi jamit,

Any update? Any adjustments made? or closed?

 

[jamit_05]

Sold 20June 11900 CE @ 89 CMP 13
Sold 20June 11900 PE @ 78 CMP 185
Bought 20June12000 CE @ 20 CMP 5
Sold 27June 11950CE 67 CMP 24

CE Side premium sold: 13-5+24 = 32
PE Side = 185

Huge imbalance has happened. at NF 11800 will sell more CEs to balance.

Profit // Loss is:

Collection: 89+78-20+67 = 214
CMP: 13+185-5+24=217
Expense: 10
Loss: 214-217-10 = -13

Only 13 points loss thus far.

In fact, out of CMP, only 185 is In the money, rest all will expire worthless. Meaning, we collected 214 and have to pay 185, so at expiry we will still have profit.

Waiting from some upside movement to sell CEs.