TARGET :500 Nifty points per month...!
- Thread starter linkon7
- Start date
Hi Linkon7,
Thanks for your informative thread. I am new to option trading and trying to learn .
Could you please help me to understand if my think is right .I think market will go down for some time (will see tomorrow) and want to short nifty . I was thinking to
Short nifty around 5280 and buy long call 5200 . Could you please let me know where am I wrong. Below is my payout dig.
Thanks for your informative thread. I am new to option trading and trying to learn .
Could you please help me to understand if my think is right .I think market will go down for some time (will see tomorrow) and want to short nifty . I was thinking to
Short nifty around 5280 and buy long call 5200 . Could you please let me know where am I wrong. Below is my payout dig.
Last edited:
this is for linkon and the like...
http://www.reddit.com/r/IAmA/comments/9s9d7/iama_100_automated_independent_retail_trader_i/
http://www.reddit.com/r/IAmA/comments/9s9d7/iama_100_automated_independent_retail_trader_i/
Dada,
U r right...I'm expecting a retest of 5392 and then am looking for confirmation of weakness for a tgt of 4870 on the down side...
I am using this thread just to see if 500 points can be achieved by simple adjustments of positions without including intraday jobbing. btw, my NF cost is now 5678 and the strangle cost is 364.
U r right...I'm expecting a retest of 5392 and then am looking for confirmation of weakness for a tgt of 4870 on the down side...
I am using this thread just to see if 500 points can be achieved by simple adjustments of positions without including intraday jobbing. btw, my NF cost is now 5678 and the strangle cost is 364.
may be very basic query....
Pls advice how have you calculated Nifty cost as 5678?
Hi Linkon/AW10,
I have following position.
2lot of 5000CE sold at 255
2lots of 5400PE sold at 150.
Initially I had taken only first position when market was around 5200 & I was expecting it to go down. But it did not happen. hence added two lots of 5400PE to hedge it.
This is just keeping me in no loss no profit zone in the range of 5000 to 5400.
If market moves to 5500 then I will be shorting one more lot of 5000CE @520. This will make me profitable below 5500 till 4800
OR if I short four more lot of 5400PE @130 then I will be profitable above 5260 to 5600.
But I am not sure which way to select. Pls advice based on technicals.
Also do let me know if I can do something else with this positions to cover myself from 4900 to 5600
I have following position.
2lot of 5000CE sold at 255
2lots of 5400PE sold at 150.
Initially I had taken only first position when market was around 5200 & I was expecting it to go down. But it did not happen. hence added two lots of 5400PE to hedge it.
This is just keeping me in no loss no profit zone in the range of 5000 to 5400.
If market moves to 5500 then I will be shorting one more lot of 5000CE @520. This will make me profitable below 5500 till 4800
OR if I short four more lot of 5400PE @130 then I will be profitable above 5260 to 5600.
But I am not sure which way to select. Pls advice based on technicals.
Also do let me know if I can do something else with this positions to cover myself from 4900 to 5600
One golden rule is... never try to hedge a loss... with the hope that things will turn around... as things normally tends to get worse... emotions makes us do stupid things... and then regrets make it worse....!
preferably have ur options plan worked out before the market starts with well defined entry and exit points... every possible what-if scenario needs to be documented...so that during market hrs, all you have to do is follow your plan...
when the premium comes down..then shorting options is a not advisable... Once volatality increases, both ur short legs can see a swelling in premium....
5500 call is trading at 36, which happens to be just 3% away. With so many days left, time decay wont set in till the last week of july... preferably think of buying 5500 call as a hedge for the upside... worst case scenario, u loose 36 points,..but it can counter your 5000 call short - 5400 put short leg most effectively on the up side...
5400 put short is safe as long as the low of yesterday is respected.... If that is broken, then short nifty and ride it down... with today's high as sl...
preferably have ur options plan worked out before the market starts with well defined entry and exit points... every possible what-if scenario needs to be documented...so that during market hrs, all you have to do is follow your plan...
when the premium comes down..then shorting options is a not advisable... Once volatality increases, both ur short legs can see a swelling in premium....
5500 call is trading at 36, which happens to be just 3% away. With so many days left, time decay wont set in till the last week of july... preferably think of buying 5500 call as a hedge for the upside... worst case scenario, u loose 36 points,..but it can counter your 5000 call short - 5400 put short leg most effectively on the up side...
5400 put short is safe as long as the low of yesterday is respected.... If that is broken, then short nifty and ride it down... with today's high as sl...
Bhaiya Rahul, what is your risk managment plan.. and what is your original trading plan ?
As linkon has beautifully summarised the reply, I don't have much to add to it.
But I will mentions something on your thought process. As option trader, we get so much of flexibility in selecting instrument and making adjustment to our process, that while showing our intellectual smartness or analytical skills, we end up forgetting that we are trading here and aim of trading is to make money, and manage risk.
If you get into the trap of adjusting the loosing position, and trying to turn into profitable one, you might succeed once in a while, but it develops wrong trader mindset and reinforces that thought that you can live with loosers and turn them into winners cause u have great tool of OPTION with you.
You all possible future action should be well planned before you take the trade. That's when emotioal burden is least.
now coming to your position, I don't see sense in it.. by shorting 5000 ce and 5400 PE, you are taking a position that is going to be worth 400 points real value at anytime.
And if u collect 405 points for this - where is the money. Maybe you are forgetting that for this short position, you are carrying the liability of 400 points with you. And there is no timevalue embedded, so I fail to see the profit (or maybe I am not getting the view that you have).
If you short more to adjust it, you are blocking more and more of margin. Currently u have already blocked margin of 4 contracts, for just 5 point of return over next 1 month.
Is that the Rate of Return you are expecting ? If you short 2 more PE contract, then you will block some more margin. You might make some 50/100 points on that but effectively, you have blocked the maring of 6 lots for return of 50/100 points over a month.
Any Short position used as hedge provides on limited hedge..and strategy of more shorting to cover your loss is dangerous one. Please think about it and take appropriate well thought action.
Hope this helps you in thinking like a trader. As a trader, our dharma is to
- cut the losses short
- let profit run and
- stay away from hope and fear (or manage these two emotions).
Happy Trading.
As linkon has beautifully summarised the reply, I don't have much to add to it.
But I will mentions something on your thought process. As option trader, we get so much of flexibility in selecting instrument and making adjustment to our process, that while showing our intellectual smartness or analytical skills, we end up forgetting that we are trading here and aim of trading is to make money, and manage risk.
If you get into the trap of adjusting the loosing position, and trying to turn into profitable one, you might succeed once in a while, but it develops wrong trader mindset and reinforces that thought that you can live with loosers and turn them into winners cause u have great tool of OPTION with you.
You all possible future action should be well planned before you take the trade. That's when emotioal burden is least.
now coming to your position, I don't see sense in it.. by shorting 5000 ce and 5400 PE, you are taking a position that is going to be worth 400 points real value at anytime.
And if u collect 405 points for this - where is the money. Maybe you are forgetting that for this short position, you are carrying the liability of 400 points with you. And there is no timevalue embedded, so I fail to see the profit (or maybe I am not getting the view that you have).
If you short more to adjust it, you are blocking more and more of margin. Currently u have already blocked margin of 4 contracts, for just 5 point of return over next 1 month.
Is that the Rate of Return you are expecting ? If you short 2 more PE contract, then you will block some more margin. You might make some 50/100 points on that but effectively, you have blocked the maring of 6 lots for return of 50/100 points over a month.
Any Short position used as hedge provides on limited hedge..and strategy of more shorting to cover your loss is dangerous one. Please think about it and take appropriate well thought action.
Hope this helps you in thinking like a trader. As a trader, our dharma is to
- cut the losses short
- let profit run and
- stay away from hope and fear (or manage these two emotions).
Happy Trading.
Dear Sawh, I dont know much abt opt strategies...Just for knowledge plz tell me how will it be if mkt moves upward and i sq off PUT leg of straddle (to avoid further erosion) & Buy the same again when mkt gives a DN turn (to get it cheap). Though its not wise to do so...I can very well sq off CALL leg also to avoid further loss. May be silly, i will be pleased to get your clarification...Thanks......SLM
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