Trading NR7 setup

[AW10]

Dear AW10 sir,
Is it typo?....OTM or ATM?

Vijay ,
Strangle strategy has 2 legs consisting of
Buy a Call + Buy a Put.

Now u can play around with strike price of each leg and make them ITM/OTM/ATM.

So when I buy 5100 CALL, and mkt is at 5050, it is OTM.
Similarly when I buy 5000 PUT when mkt is at 5050, it is also OTM.
hence the strangle created by 5100 C + 5000 P is OTM strangle.

In theory/books, most of the time, they talk about only ATM strangle.

OTM = market needs to move before the strike+option type (call/put) combination becomes valueable and start carrying some intrinsic value.
Till the time that move does not happen, these option have only Time value.

So, for a change, this time I did not make typo .. but OTM strangle is correct.

Why I selected OTM strike in this case ?
1) Cause I am anticipating a breakout move after extended consolidation hence one of these strikes will certainly become ITM. And once I know the breakout direction, I can adjust the position after seeing the market action.
2) They cost less
3) As they are quite near to ATM, so even if mkt goes to 5150, my 5000 put would not change drastically cause it is still within reach of market range for remaining 10 days of this month..
4) And if I am lucky and the breakout happens to be false, then I might end up winning on both the legs. Say if it breaks to prev high 5180 level..and selling comes in there.. so i can book profit on 5100 call... and still hold 5000 put.. or maybe use this profit to buy more Puts and scale in my position.

Hope it clarifies your doubt and give u insight into how I am trading. (ofcourse, I do get it wrong many times but ).

Happy Trading

 

[AW10]

IMO, stock pick plays a crucial role in this. Not all picks could perform same under given market condition. We would not be knowing it for sure. Instead of confining your stock list to certain stocks, I would suggest to confine the list to certain patterns with NR7, say a 'pennat'. Some patters that should confirm a break out.

Though we can pick stocks with NR7, further investigation on EOD should give some clue so that the list could be refined. May be I am wrong.

I agree with you. One shd scan these shortlisted NR7 stocks and further filter them out to find the best few candidates for trade.

NR7 is in no way the "holy grail" of stock picking. It just tells us the potential candidates and simplifies our job to some extent.

Happy Trading

 

[AW10]

Hi AW10,

I am regular reader of your thread & found very useful for option trading. I gone thro' your 1post many times. Basically understood your strategy & started appling from 16-10-09 (learning). Still I am confused with Strangles which you mentioned in this post. "Long OTM Strangles at 5100 call and 5000 put".

OTM means On The Money & ATM means At The Money.

1)What is difference between OTM & ATM. Example for OTM, ATM & Out Of Money
2) Please explain with figures for "Long OTM Strangles at 5100 call and 5000 put" plan & execution for us to learn & apply practically.

Thanks in advance,

Regards,
Keerthi

Thanks Keerthi, I discuss most of option related stuff in my thread "Low risk option strategy.." which is dedicated to options.
But the topic does come up in NR7 discussion.
Hope u have got the answer of your question thru other posts from Rohan and Nandan.
I have also replied about Strangle trade in prev Post.

If anything is still not clear, then fell free to raise yr doubt.

Happpy Trading

 

[rohangawale]

NR7 Stocks Triggered on 16th Nov:

[B]STOCK		HIGH		LOW[/B]
AXIS BANK	1,011.90	995.50
BHARTI		307.85		301.3
CAIRN		281.9		277.5
HDFC BANK	2793.7		2750
HDFC LTD	1749.8		1719
HDIL		370.5		360
INFOSYS		2374.7		2335.3
IDFC		173.5		171.7
JPASSOCAITE	237.85		232.1
JINDAL STEEL	721.4		703
L&T		1670		1648.9
M&M		1058.5		1035.35
RANBAXY		419		411.2
REL CAP		846.45		828.65
RIL		2161.9		2131.65
REL INFRA	1176.75		1157
UNITECH		86.9		84.35

NR7 Stock Close on 17 Nov:

		16-Nov			17-Nov	
STOCK		HIGH	LOW		Close	Trigger
AXIS BANK	1,011.90	995.50		1002.20	No Breakout
BHARTI		307.85	301.3		296.90	Down Break
CAIRN		281.9	277.5		281.65	No Breakout
HDFC BANK	2793.7	2750		1749.65	Down Break
HDFC LTD	1749.8	1719		2749.10	Up Break
HDIL		370.5	360		357.25	Down Break
INFOSYS		2374.7	2335.3		2398.30	Up Break
IDFC		173.5	171.7		170.65	Down Break
JPASSOCAITE	237.85	232.1		235.40	No Breakout
JINDAL STEEL	721.4	703		707.30	No Breakout
L&T		1670	1648.9		1656.30	No Breakout
M&M		1058.5	1035.35		1034.65	Down Break
RANBAXY		419	411.2		415.05	No Breakout
REL CAP		846.45	828.65		893.85	Up Break
RIL		2161.9	2131.65		2132.35	No Breakout
REL INFRA	1176.75	1157		1188.90	Up Break
UNITECH		86.9	84.35		85.30	No Breakout

 

[rohangawale]

NR7 Stocks Triggered on 17th Nov:

[B]STOCK		HIGH		LOW[/B]
NIFTY		5074		5010
GRASIM		2,345.00	2,300.00
ITC		256.3		252.2
MARUTI		1567.5		1537.1
POWERGRID	105.4		103.75
RANBAXY		416.9		410.45
SUZLON		73.5		70.5

 

[MurAtt]

Rohanbhai - NR4 ya NR7? Ya phir NR1xx?
(Nifty Spot)

 

[rohangawale]

Rohanbhai - NR4 ya NR7? Ya phir NR1xx?
(Nifty Spot)

SM bhai jaan aj apan 38 points ka range dekha nifty spot pe,
its NR180.
last time we got 33 points range on 19th Feb 2009.

 

[rohangawale]

NR7 Stocks Triggered on 17th Nov:

[B]STOCK		HIGH		LOW[/B]
NIFTY		5074		5010
GRASIM		2,345.00	2,300.00
ITC		256.3		252.2
MARUTI		1567.5		1537.1
POWERGRID	105.4		103.75
RANBAXY		416.9		410.45
SUZLON		73.5		70.5

NR7 Stocks Close on 18th Nov:

		[B]17-Nov			18-Nov	
STOCK		HIGH	LOW		Close	Trigger[/B]
NIFTY		5074	5010		5054.70	No Breakout
GRASIM		2,345	2,300		2292.35	Down Break
ITC		256.3	252.2		258.75	Up Break
MARUTI		1567.5	1537.1		1559.25	No Breakout
POWERGRID	105.4	103.75		104.45	No Breakout
RANBAXY		416.9	410.45		422.35	Up Break
SUZLON		73.5	70.5		73.35	No Breakout

 

[rohangawale]

NR7 Stocks Triggered on 18th Nov:

[B]STOCK		HIGH		LOW[/B]
NIFTY		5079.3		5041.65
ACC		736.00		722.10
AXIS BANK	1005		993.75
BPCL		520		510
DLF		384		372.35
GAIL		393.45		384.5
HDFC		2749.1		2715
HINDALCO	135.75		133
HIND UNILEVER	278		274.45
ICICI BANK	918		901
NTPC		215.4		213.55
SBI		2358.95		2315
SUZLON		74.5		72
TATA POWER	1334		1311.05

 

[hiteshsjoshi]

its NR180.
last time we got 33 points range on 19th Feb 2009.

And, the next day, we had a 3% down move.
In current scenario, a 3% +/- would mean 5200/4900 :thumb: