Option Trading - April 2011 (Part II)

Option Trading Call: 29.04.2011: 11.32AM

"BUY nifty call 6000CE/May 11 below 40 for a target of 90. Upon reaching of the target, BUY nifty put 5700PE/May 11 if available below 40. The target for the second part of the trade is 100/120/150."

kadiyali

Option Strategies for Paper Trade - (1)

Hello Friends,

I will be posting in this blog a few strategies for Nifty Options. Members should trade in such strategies only as PAPER TRADE without actually buying the options. My post will be based on actual trades but only in the minimum lot. Here is the first strategy:

"At the beginning of a month, if nifty shows downtrend on a continuous basis, go for OTM calls, and if nifty trades continuously with a positive bias, go for OTM puts. Buy the first lot at price below 35. If the option price goes down further, buy one more lot below 25. If you see the trend further strengthening, go for the option for the next strike rate if available below 45. For example, if you buy 6000CE at below 35, buy one more lot below 25, and if you still find the nifty continuing the trend, go for 5900CE below 45. Once this is done, wait for 6000CE to appreciate to 50, and get out of the 6000CE holding, and make 5900CE free of cost, and hold it for good target of your choice."

The above strategy is illustrated by the following trades:

29.04.2011 - Bought 6000CE one lot at 32.

02.05.2011 - Bought 6000CE one lot at 22.

02.05.2011 - Bought 5900CE one lot at 42. Total Investment Rs 4800.

Once 6000CE touches 50, both lots of this strike rate will be sold, giving the investment back, making 5900CE free of cost. This free option can be held on to a target of 100/150 without any fear of losing capital, since the investment will be already back.

Members are requested only to watch how the above strategy progresses, and get into only paper trades initially till sufficient confidence is gained.

kadiyali/02.05.2011

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Added today two more lots of 5800CE @ 19. Hence the position as on date stands as below:

29.04.2011: Bought 6000CE one lot @ 32.

02.05.2011: Bought 6000CE one lot @ 22.

02.05.2011: Bought 5900CE one lot @ 42.

04.05.2011: Bought 5800CE two lots @ 19. Total Investment Rs 6700.

Let us wait & see how this modified strategy works out.

kadiyali/04.05.2011