My Daily Options Trading Diary

[findvikas]

I have been working on a strategy to generate BUY/SELL signals on the basis of simplest form of moving averages. The only difference is that I use Fibonacci periods for the average

3,5,8,13,21,34,55,89,144

3,8 works best where you want the stop loss to be minimal, but more whispaws
34,55 works best in mid term trend and keeps you in trend for most of the time

I personally use 13,21 which works great on any interval.

My way to enter/exit is not at crossovers but when you have 2 continuous bars made their lows lower than 13MA and enter at the 3rd bar lower than 13MA

Similarly I ride the trend until you have 2 continuous bars made their highs higher than the 21MA and exit at the 3rd high bar

Try it out for once and you will be surprised to see the accuracy over normal periods

Here are few charts with the BUY/SELL signals

Here I am using 3 Years weekly chart and see how we get into the trend even before crossover came. I am using 21,34 as the chart is for a long term trend.


That is approx 5000 Nifty points in 2 years 3 months time frame (31 Aug 07 - 05 Nov 09)

ACC chart


there were times when the stock went from random walk zone where both MAs are near the same values... see if there is enough gap in MA around 2-5% of the values in such situations or look for bigger trend in weekly chart or bigger MA levels (34,55) to decide the position

Past strategy

1) find a liquid stock with high volumes , like suzlon or Unitech
2) make sure that the stock is less than Rs. 200 in Spot value and their near money call is less than Rs. 10
2) find their support & resistance levels
3) buy near money put when the stock reach near resistance level, and switch to call when it reach near support level.

 

[Prabhan]

Hi,

Here is the strategy I am working on...
1) find a liquid stock with high volumes , like suzlon or Unitech
2) make sure that the stock is less than Rs. 200 in Spot value and their near money call is less than Rs. 10
2) find their support & resistance levels
3) buy near money put when the stock reach near resistance level, and switch to call when it reach near support level.
Experts please comment on my strategy.. I am not hedging my positions and keeping a SL of 10% or gain of 50% from every Position I take... I will follow 10/50% rule strictly to close my positions.

Hi Vikas,
I am new to trading and trying my luck too....will not b able to contribute much but hoping that we can try to make sure shot strategies to save our invested money first and to make profits asap...
My experience says that we need to include
1.. Nifty Resistance/Support level.
2. Expected Market direction (Range) for the day/week.
3. Money Management -
3a. We should always keep 50% of the investment amount in cash.
3b. No Trade shall have the investment of more than x% (need to decide the x%) of balance money.
3c. Number of trades shall be less - to save brokerage
4. Need to decide the stocks - Will not invest other than the selected stocks
5. If market direction and selected stock direction matches, then either put/call can be taken. - Need to think more on this.

Also as said by you, need to have advise from the seniors to create the sure shot strategy.

 

[spiritunit]

findvikas, wishing you the success, let me know, how much margin you need for suzlon or unitech? I am currently doing only on Nifty Options.

 

[pkgmtnl]

There is no sure shot strategy,
everything has some element of risk.

U take gr8 rick of buying Put at R,
and Buying call at S.

If breached R or S, U will loose.
So hedging is always suggested.

 

[trader.trends]

Vikas
You gave up the first two strategies (Delivery and NF) because of volatility. If anything Options are into more volatility not less. Add Time corrosion which is not there in Delivery and Futures and you are entering a more risky area.
This is just to raise consciousness about your reason to enter option trades.

 

[mayavi99]

Vikas, nice that you have framed a strategy. I am sure it will be fine tuned in course of time by you with sufficient trade experience in options. But while taking S/R for buying calls or options, you have to take into account the trend as well. If the trend is up and you have bought put at resistance, next day there is a break out the put loses its value.

Please also incorporate a study of MACD, RSI & stochastic in your strategy, so that you can have an idea of the direction of the trend.

Since you don't propose to hedge, it will be better to exit on a daily basis even if you get 20-30% without waiting for a 50% return. Keeping naked overnight positions is risky.

I also do something similar though I have not properly codified it. I wish you good luck in this endeavour.

 

[sagar55]

Vikas, mayavi99 is right. I am giving my 2 cents.
While selecting the stock, you should use ADX to know that the stock is range bound or in strong trend.
If the stock is in range bound, then you need to use oscilator ( RSI,Stoch etc) to pinpoint your entry and exit.
If the stock is in strong upward/downward trend then you need to buy Call/Put.
This technical Indicators, will improve your profitability.
Sagar

 

[findvikas]

findvikas, wishing you the success, let me know, how much margin you need for suzlon or unitech? I am currently doing only on Nifty Options.

Buying Options is always on CASH and no margin required. If Suzlon spot is at 100 its 100CA might be 5-6 and a lot size is 3000 so you pay 3000x5 = 15000 + brokerage (1% in my case).. so total comes 15175 including taxes.

 

[findvikas]

There is no sure shot strategy,
everything has some element of risk.

U take gr8 rick of buying Put at R,
and Buying call at S.

If breached R or S, U will loose.
So hedging is always suggested.

Thanks for suggestions... I am no perfect
That strategy is for Intraday only.. forgot to mention. 50% profit strategy is when I am going by trend and taking overnight positions.

 

[findvikas]

Vikas
You gave up the first two strategies (Delivery and NF) because of volatility. If anything Options are into more volatility not less. Add Time corrosion which is not there in Delivery and Futures and you are entering a more risky area.
This is just to raise consciousness about your reason to enter option trades.

The only fundamental reason to coming to options was Leverage with known loss. Futures give you leverage but the risks are unknown.