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[jamit_05]

Gunsho,

In the more recent thread he has started using futures more sparingly.... he speaks of holding future trades overnight and not trading them intraday... so yes, those links are of much help...

thanks again.

 

[gunsho]

Re: LinkOn

Hi Gunsho,

Browsed through linkon's thread, a very elaborate, intense, advanced and informative at that.

It has drafted out some really nice techniques and thought processes to gain maximum profits. At one point the focus shifted from simply gaining from time decay of the shorted option pair to maximizing profits from NF. Now, that is a twist in the tale.

One snippet from the thread:


3400 CE bought at 230 has a current price of Rs. 234 is at a loss of Rs. -400
3400 PE bought at 215 has a current price of Rs. 148 is at a profit of Rs.6700
Nifty Futures long Innitiated at the averaged price of 3253 has a current price of Rs. 3473 is at a profit of Rs. 22000

Total = profit of Rs. 28300


Total profit is Rs.28300; out of that NF profit is 22000 and rest is of Options. This thread is trading futures aggressively. And that was possible in 2009... now the market is different, moves are sluggish and few and far between.


I have resorted to using a really broad timeframe to trade futures. So that, I have fewer futures trades. Hence, the focus will be only singular "defending the shorted pair". At month end, our majority profit will be from the option pair credit... that is around 175 points only. A little too simple... but easy (or so I think)

The intention can be both ways, either to hedge the futures trade with options (in range bound market future traders will not get many points). Or use futures as hedging and aim is to take away the premium from options selling (which is what I do, as I am not a good directional trader).

Broader is what looks dangerous to me. If you take a 30 min bar to close above 5200, it might close at 5230. We loose 30 points there itself. In an entire range bound month with whipsaws, such trades can eat up this 175 easily . Hope I don't sound so negative when you are starting this Just sharing what I faced.

 

[jamit_05]

Gunsho... i liked this honest post of yours... and it is the truth. Whipsaws happen a lot... is there a good way to tackle them?

http://www.traderji.com/advanced-tr...ofit-through-nifty-strategy-4.html#post702742

 

[jamit_05]

Re: LinkOn

The intention can be both ways, either to hedge the futures trade with options (in range bound market future traders will not get many points). Or use futures as hedging and aim is to take away the premium from options selling (which is what I do, as I am not a good directional trader).

Broader is what looks dangerous to me. If you take a 30 min bar to close above 5200, it might close at 5230. We loose 30 points there itself. In an entire range bound month with whipsaws, such trades can eat up this 175 easily . Hope I don't sound so negative when you are starting this Just sharing what I faced.

A valid point... a broader timeframe could be dangerous for the reason you mentioned. It also has a plus point... that it will give fewer whipsaws, fewer trades and SL is more reliable to hold beyond EOD..... i will start with this... and evolve if need be.

 

[gunsho]

Gunsho... i liked this honest post of yours... and it is the truth. Whipsaws happen a lot... is there a good way to tackle them?

http://www.traderji.com/advanced-tr...ofit-through-nifty-strategy-4.html#post702742

Didn't found any fruitful way to tackle them. I shifted to shorter timeframe, so I reverse early. As I said, there are few months which will have such whipsaws. There is no strategy with easy money right .

 

[jamit_05]

Didn't found any fruitful way to tackle them. I shifted to shorter timeframe, so I reverse early. As I said, there are few months which will have such whipsaws. There is no strategy with easy money right .

As long as we keep our minds clear and focus on retaining the credit/premium of the shorted options and use futures only as a means to this end, we should be more or less profitable.

Any advanced techniques can be picked up along the road. But, as of now... nice and simple.

As of today... I got no entry and market is down about 25 points from open. Now looking for a long over 5144.50; No shorts for today. You?

 

[jamit_05]

Hi Ravinder,

Hope the markets are treating you well.... have been unable to post for the past few days. But, will do so now..... at least for a few weeks. Keep your inputs coming... tks gurmy, gunsho.

 

[jamit_05]

For tomorrow... will not take any intraday longs... will just let them go by untouched, but will take shorts. The idea is to reduce NF trades to bare minimum...

also, since the trend is downward... am considering placing a bear call spread along the week... lets see.

 

[PartTime_Trader]

The strategy assumes 'no trend' (directionless), but it is in the nature of the markets that eventually a trend will develop. To manage this (i.e when markets start trending) we will buy/short a future to hedge our risk on shorted option that will get in the money.This way, strategy becomes a reactive one . . .

Now, we can work with the same 'short strangle' but create the pair in a more pro-active way... We can use our knowledge of trends and consider selling one leg at a time, because any-which-way we do it we have to deal with trends and doing so up-front gives our position an advantage.

 

[jamit_05]

The strategy assumes 'no trend' (directionless), but it is in the nature of the markets that eventually a trend will develop. To manage this (i.e when markets start trending) we will buy/short a future to hedge our risk on shorted option that will get in the money.This way, strategy becomes a reactive one . . .

Now, we can work with the same 'short strangle' but create the pair in a more pro-active way... We can use our knowledge of trends and consider selling one leg at a time, because any-which-way we do it we have to deal with trends and doing so up-front gives our position an advantage.

Okay.... it is a fair proposition.

You mean, if the market trends down and we get our trigger as per our systems, we sell the CE leg... and do not act on PE leg? Right?....

If so, then the first problem is of whipsaw. If the shorted leg goes into a whipsaw mode then what?