TARGET :500 Nifty points per month...!

[VJAY]

now the Big question comes on how to select the strike price...

I'll be carrying the positions over night, so i prefer to select strike price that's at an extreme end of the trading band. To accomplish this, i plot the keltner band of the ema-34 of the close with atr settings at 30.

then i use a fast ema as a smoothened substitute of the close. when this line crosses the bottom band from below, that's my signal that price has finally left the bottom band and will slowly move towards the upper band or the upper band will slowly come down to meet price.

I use normal stochk to time my entry date for initiation of the trading strategy...

Dear linkon,
Can you eloberate these settings.....in my chart(ami) am not getting these values...is it ketler band 34 or 30? atr? fast ema?

 

[linkon7]

Dear linkon,
Can you eloberate these settings.....in my chart(ami) am not getting these values...is it ketler band 34 or 30? atr? fast ema?

_SECTION_BEGIN("Price");
Plot( EMA( (H+C+L)/3, 3 ),"TRIGGER", colorBlue, styleThick ); 
Plot( C, "Close", colorWhite, styleBar ); 


CenterLine = EMA( (H+C+L)/3, 34 );
KTop   = CenterLine + 1.8 * ATR( 30 );
KBot = CenterLine - 1.8 * ATR( 30 );

Plot( KTop, "", colorRed, styleThick); 
Plot( KBot, "", colorBrightGreen, styleThick ); 
_SECTION_END();

 

[VJAY]

Dear Linkon,
Thanks for quick reply to my querry....now I want to know following things
1.entry.....is when price touch upper or lower bands?or fast ema line came back after crossing ..please clarify
2.strike price ...is now upper band value?
3.how we manage timing looking the stoch?
Hope i not asked silly Qs...

 

[linkon7]

Dear Linkon,
Thanks for quick reply to my querry....now I want to know following things
1.entry.....is when price touch upper or lower bands?or fast ema line came back after crossing ..please clarify
2.strike price ...is now upper band value?
3.how we manage timing looking the stoch?
Hope i not asked silly Qs...

Lets look at the logic first... price will keep shifting up and down...so in order to get a feeling of the direction in the very short term, we use a fast ema as a subsitute for price.

This ema will move between the to extreame range and then pierce either side. like, say it pierces the upper band and then comes back inside. this signifies that maket has found a top and we use the strike price near the top band as our target.

This ensures that we can now ride NF in one direction with lesser whipsaws...

upper band is at 5235 and it was touched intraday today... We can use that level to book some profit but we cannot initiate a sell there. We need to wait for the ema (which is at 5172) to cross the band and then reverse. Atleast a reversal is needed to confirm us that we have a top... and we will short the 5200 strike price straddle...

Stoch confirmation is when it breaks the trendline which is at 80 now...

 

[AW10]

We can use that level to book some profit but we cannot initiate a sell there. We need to wait for the ema (which is at 5172) to cross the band and then reverse. Atleast a reversal is needed to confirm us that we have a top... and we will short the 5200 strike price straddle...

Stoch confirmation is when it breaks the trendline which is at 80 now...

Linkon7, food for thought.. (don't know if you have already thought about it or not)

When u are anticipating that price are dropping from higher band (5200) to lower band (4900).. then why are positioning straddle at extreme strike of 5200. Maybe you can Postion straddle at 5100 or so. Collected premium may no be more or less same.. but the gain will be much faster cause u are gaining from drop in time value as well as from drop intrinsic value.

With 5200 straddle, u will gain only timedecay.. but you will start getting hurt due to increase in intrinsic value. When u short ATM straddle, you have all timevalue +ZERO intrinsic val. But as price moves away from center, it starts accumulating intrisic value at much faster rate then what timevalue can give a benefit.

Just think about it. Maye backtest on prev months and see if this makes sense.
Till then, please continue with your strategy in current form without making any change till u know the outcome of backtest..

Happy Trading

 

[sikandar]

What is the probability of selling
july 4900ce @ 375
july 5500pe @ 300

or

july 5000ce @ 295
july 5400pe @ 226

 

[linkon7]

Linkon7, food for thought.. (don't know if you have already thought about it or not)

When u are anticipating that price are dropping from higher band (5200) to lower band (4900).. then why are positioning straddle at extreme strike of 5200. Maybe you can Postion straddle at 5100 or so. Collected premium may no be more or less same.. but the gain will be much faster cause u are gaining from drop in time value as well as from drop intrinsic value.

With 5200 straddle, u will gain only timedecay.. but you will start getting hurt due to increase in intrinsic value. When u short ATM straddle, you have all timevalue +ZERO intrinsic val. But as price moves away from center, it starts accumulating intrisic value at much faster rate then what timevalue can give a benefit.

Just think about it. Maye backtest on prev months and see if this makes sense.
Till then, please continue with your strategy in current form without making any change till u know the outcome of backtest..

Happy Trading

Thanks for the input... !

The biggest weakness of this system are gap ups and gap down. So to avoid gaps against the positions held... selecting strike price near the extreme end of the trading range is preferred.

Like now, if i am convinced that 5250 is the top of the range and i get sufficient indication that momentum has reversed to the down side, then 5200 strike price will give better hedge for my Nifty short positions. here all i'll need is some protection in the form of 5300 call long for my nifty short positions and hold on to 5200 straddle short till the time, i am able to job it for 500-600 points...

5100 will offer me better time decay but chances of nifty jumping around both side of the 5100 strike price remains high... cost of hedging aginst the gap up and downs for NF positions will be a added burden...

most of the time..i never wait for end week of the series to close my positions...

A warning for every one else...
I trade in 2 min and 3 min TF... so my view point is very short term and intention is to job the positions for 400-600 points. My intention of carrying the straddle short is just to act as a covered call or covered put while the other leg act as naked short put / short call... This is till the beginning of the next trading day. Intra day, i treat all 3 legs separate and sometimes, if the signal is good, i exit the loosing straddle leg also just to gain a few extra points...and then cover it when i feel its right... sometimes, when the direction is not clear... or when its too choppy, i just sit idle... and just hold on to the positions...

 

[linkon7]

What is the probability of selling
july 4900ce @ 375
july 5500pe @ 300

or

july 5000ce @ 295
july 5400pe @ 226

with july 4900 ce-5500pe short, you are just getting a 75 point security on either side, means ur safe points are 4825 to 5575, if market trades between the 4900-5500 mark then u get to keep the 75 points..

july 5000-5400 spread gives you safe points of 4879 to 5521.

You have to decide if u feel if NF will respect these boundaries...

 

[sumitdasjoshi]

one question do we have to take the posistion till expiry means if we are righting next month s call that we have to take the position till next month is over to get the complet juice of the position.

 

[linkon7]

one question do we have to take the posistion till expiry means if we are righting next month s call that we have to take the position till next month is over to get the complet juice of the position.

that depends on your comfort factor...

If you can manage to see it through to expiry then gain is maximum...