Best trading strategy for Futures and options

What is the best FNO trading strategy to earn atleast 1% per month. I don’t want a lot but a decent 10-12% return in FNO.
Can anyone help?

Why?

you can get 10-12% or more even in midcaps or small caps and that too without leverage.

FNO is leveraged, so returns should also be magnified.

if you are trading in FNO, you should expect atleast 100% or more per year, otherwise you are better off putting the money in NIFTY large caps or even midcaps.

heck , even some bond funds manage 10-12%.

3 Likes

You can do covered call + Nifty monthly options. Can expect around 15%.
Returns of 100% is a distant target and not achievable by many seasoned traders also. So, stay away from fantasies.
Buy non-PSU Nifty 50 liquid stock qty 1 lot. e.g. Reliance.
Reliance cash 500 qty, capital approx 7.5 lakhs
Buy 7.5 lakhs of Axis liquid mutual fund
Total capital: 15 lakhs
Pledge the shares and mutual fund. Margin approx. 13.5 lakhs avl for trading
Sell 1 lot of Reliance approx. 10% from CMP. Premium between 5 to 10, total is 500 x 5 = 2500
This will require margin of 1.2 Lakhs. Left with 12.3 lakhs.
Nifty 1 lot margin is 85K. 14 lots of Nifty can be sold with this. sell montly options with 10 Rs premium 7 lot of call and put each with Stop loss of 20. So total income from Nifty options 75 * 10 * 14=10500
Monthly income from options (reliance + nifty) - 2500 + 10500 = 13000
Yearly income from options - 13000*12 = 156000
Yearly income from Axis liquid MF @5% = 37500
Yearly appreciation of Reliance @5% = 37500
Total yearly income = 231000
Yearly Returns - 15.4%

I have been very conservative in the approach with no adjustments other than Stop loss. I expect the stop loss to be hit only once in a year.

I have not considered dividend or buy back.

Rules:
No positions during events such as Lok Sabha election and budget.
Roll over your positions on Monday of the expiry week.
Ignore stocks recommended by experts, only stick with Nifty non-PSU stocks. PSU stocks are vulnerable to Govt and Supreme court decisions which might create huge draw down in the spot price.
In case your covered call gets assigned, unpledge the shares and start selling puts with 5% below CMP for delivery.
In case stock price falls sharply, e.g Reliance goes to 1000, you will not be able to earn from Covered calls. In this case continue with the Nifty monthly calls.

4 Likes

Hey man, just becoz u can’t do it. don’t tell others the same.

your strategy doesn’t generate any better returns than midcap and smallcaps returns.

@trader_dude do a voting and ask how many people in this forum are doing 100% returns per year.

Second, the question was about 12% returns per year using FNO. My answer was directed accordingly. In Mutual Funds you can only go long. There are years when MF returns are 0 to negative. So, it is not consistent and linear.

FNO gives you the ability to profit by going short/long/neutral.

2 Likes

I was also thinking of doing the same.
Axis liquid funds show a return of 6-6.5% per year. Is this correct or it is actually less than the shown on coin. I am talking about 1 year term only.