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
Kadiyali:
ReplyDeleteAll of us should realize first that any movement is Nifty is orchestrated and NOT natural.So a cartel decides the value at which Nifty should close for the month and accordingly move it back and forth simultaneously writing call or put options.
So it is wrong to assume that Nifty would take a U turn after moving in one direction for a few days.For example they might have planned for 5300 closing this month.
Also when we hold a OTM call say 6000 when Nifty is at 5700 and if the no.of days left is 15 or less then even if Nifty moves to 5800,the premium for 6000 would only raise by a few points.
So accumulating OTM calls at lower range may not be of much use.
Ganapat,
ReplyDeletePl note:
1. It is only a strategy to be tested.
2. Only at the "beginning" of any month with "continuous downtrend/uptrend".
3. Only 2 buying of the same strike price, and if it further falls, buying the next strike price option.
4. Investment if only around 5K and no more exposure accumulating OTM optins.
5. Paper trade to gain sufficient confidence.
This is my first strategy in nifty option, and many more will follow in the days to come. The intention is to enable investors to learn the various aspects of Option Trades, as options are high risk transaction.
Bought today 2 lots of 5800CE @ 19 taking the investment to Rs 6700.
ReplyDeleteKadiyali:
ReplyDeleteI do not see any strategy here at all!
You are hoping for something w/o any rhyme or reason and are putting your money based on that hope.On what basis you selected 5800CE?Why not 5900CE which is at half the price?
When one wants to shoot from the hip,he should waste minimum bullets!
Good Luck!
Kadiyali sir, very sorry to say that this time again you are going against the trend. After this downfall rally may come or maynot, but trend is definitely down so if anyway it rallies suppose upto 5700 (however very remote chance of rally upto there, max i am counting upto 5600), you can buy PUT.
ReplyDeleteThe one option a month has already been converted into 4 options in 4 Days and maximum money put at risk without any stoploss. The perfect ingredient to wipe out your capital.
ReplyDeleteI think the initial idea itself was the best one. Buy one OTM option and wait out the entire month without trying to manage your positions. That ways, even if we lose all amount in some months, the few Jackpot trades in between will cover up for them. In any case, the risk will be limited.
Mando25,
ReplyDeleteMy posts are very clear, I would like you to go back to the posts, and read the same and understand the same perfectly.
My strategy (1) is only for watching and not following. If the strategies turn out to be successful, even then, members should PAPER TRADE, gain sufficient confidence before venturing into actual trading under the strategies.
No doubt, one option a month can be followed with strict adherence to the guidelines given.
Pagarwal,
ReplyDeleteThe trend was spotted perfectly, and that is why 5700PE was identified. Unfortunately, the down trend started a little bit too soon, and we did not get 5700PE below 40 though it came down upto 54. That is why the first trade had to be modified.
Kadiyali,
ReplyDeleteI did not say that your posts are unclear. First you have to become clear in your mind on what strategies you are going to follow. Then only the readers of this blog will benefit. If you want to keep this blog as your personal diary, do mention it on top of the page and no one would then question your strategy.
Only the consistent can profit from the market through Trading. Investing is a different game. Coming out after three days of loss making trades and declaring that those were only PAPER TRADES does not help anybody. If you really want to help the readers here, make a sound strategy and explain to them the reasons behind your trades. Because by your trades itself, I can make out that you are yourself a beginner in Options. How can you expect readers to follow your trades when you yourself do not have any trade plan. That is Criminal for me!
I just stumbled upon this blog and could not resist to comment. Good luck to you and the the Readers of this blog. Maybe, I would be proved wrong by you in future (i would hope so, but in markets HOPE seldom helps!)
Kadiyali:
ReplyDeleteI am sorry to say this,you better focus on cash scrips for LT and leave FnO.When you can not even predict the direction of the mkt where is the question of making money here?Your time is well spent on picking shares like AMrutanjan,Hatson etc where there is scope of making good money with less risk.
FnO IS NOT YOUR CUP OF TEA
and the same is proved for the fourth time now.
Before the loss occurred due to your recs become as mammoth as your first paid venture,pl. leave this FnO game.
There is no point in saying paper trade etc and it is like a swimming coach telling his followers not to enter water but practice in the shore.
Buying something and adding the same for every 10 bucks fall CAN NOT BE CALLED AS STRATEGY.It is known as SUICIDE in options trading
My only aim of giving this warning is to caution any new comers who may enter and lose their hard earned money.They would be blaming you later.
Thanks
Mando25,
ReplyDeleteThanks. I have decided to test out any of my strategies in my personal diary, instead of an open blog like this.
My one option a month will continue.
kadiyali
ReplyDeletecame across your blog thru comments on my blog. My advise would be carry on with the paper trades. Experience will help you decide on the near best strategy. You should continue to put it up on the blog so that others too learn from your paper trades.
Happy Trading !