Hope u were able to protect your capital by adjustments. But it was riskier strategy. Had it moved against u, it would’ve wiped out your capital. Rather you could’ve used Debit Spread strategies for adjustments which have limited risk.
1 Like
Sir, can we have a bit of your background please.
2 Likes
Ya. I covered my loss and net profit for the week.
Rather I could have hedged by buying 24700 ce while moving in single direction. Both 24700 and 24900 ce are itm. Difference in premium is 200/- by expiry.
Still we would have made profit
2 Likes
Thanks everyone for inputs and critical feedback. Made me understand the market scenario and helped me in being cautious when market is trending and enter when it seems neutral. Gladly, I am able to successfully deploy the short strangle strategies. Looking forward to learn and deploy short straddles during expiry day.
Will target 30% per year ensuring the capital is preserved every week.
Deploying 4.5L capital currently (begun at 1.2L) . Planning to increase to 8L if I continue to succeed for one more month
Learning: Tue, Wed, Thu are the best days for option seller as Theta helps a lot
Risk: SEBI margin rules can impact expiry day profitability. On rest of the days, I use full margin
My payoffs so far from the option selling:
(The red ones are adjustments. Earned profit for those weeks after adjustments)
Week on week return% and p&l
3 Likes
Hi bro,
Firstly congratulations on your profits.
I am also using this strategy since last 1month but I do it only on the day of expiry of each week.
I saw people giving statements like you should stay away from selling options,those are only for big players bla bla…I pity those people for not understanding the strategy.
Also some people were saying that the entire profit will be gone in case of one wild move. It’s like not riding the vehicle because an accident may happen at one time.
If we use strict risk management and SL, this strategy is 95% profitable. Only care to be taken is not selling strikes very near to the spot to gain more premium.
So keep doing this and be profitable.
1 Like
This is good way to start with
Guys Good Evening…
I’m new to the market. I have one small question.
While trading in F&O in strategy ( like Iron Condor), sequence of placing order is important ?
I believe that Iron condor strategy tells to First Sell near ATM options and then to Buy Far OTM options.
In Zerodha, in Basket orders, initially Buying option reduces margin money requirement rather than selling options.
My question is… does this matters that placing sequence of orders is important ?
You can place orders in any sequence, but if you place orders for buy leg first, you get margin benefit beforehand which reduces your margin requirement for placing orders for short leg.
To get better idea you can try changing sequence of the orders in the basket and check how required margin changes.
I agree, if u sell otm call , put 10% away , always buy 12% put and call this is perfect hedge
3 Likes
Dear Sir
Would love to see your progress and learnings on this strategy
Thanks
1 Like
It’s been going decent. Realized 14 odd percentage in ~7 months doing weekly strangles.
Now moved to monthly strangles to focus more on job and don’t get deviate from the short term market movements. It’s much peaceful now
2 Likes
I tried something similar. What I found out is that the returns are not that great, you get similar returns in a mutual fund. But the risk is much greater.
I also found out that even very deep far OTM options make losses once the price goes against us. Say you sold a call for 16000 (current market price is 15000). If the price reaches 15300, your 16000 option makes a big loss. The price does not have to reach 16000 for you to make a loss, it can happen before that.
3 Likes
@Abhiteja_Pachipulusu How’s the progress so far? . please provide some stats & figures (ROI, capital deployed etc)
2 Likes
Replying so that even I am notified when he replies.
1 Like
Naked short strangle is a drug that gets you addicted slowly and then kills you one day.
1 Like
Not necessarily, you can just change from “Normal” to “Tracking” or “Watching” just below the reply button:
2 Likes
Thanks. Noted.
this strategy should work. i have been using a similar strategy for the last 1 year and profitable.
For hedging you can do 2 x debit spreads in PE and CE each. So when the market moves against your strike - the debit spreads will offset the SL hit cost.
Do let me know if you need further info on this.
1 Like
Could you please elaborate with an example? Are you doing iron condors or did i read that wrong?
you usually take a naked short position in far OTM CE and PE right ?
i assume you keep a stop loss so that you dont run into unlimited loss. I also assume you understand when your stop loss will be hit i.e the value of the underlying or % increase in volatility that rises the premium.
So if you can derive the underlying value, why not create a long position that offsets for the SL hit value
eg: Nifty underlying is 17000
and you short 14000 PE at say Rs10 and you keep a SL of Rs3 (ie. 13 Rs strike price)
now for your SL to be hit, say the nifty should fall to 16500. then do a debit spread ie. buy 16500 PE, sell 16400 PE so that when your SL is hit - the equivalent value is offset by this spread.
If you are a serious trader you should know how to mathematically model to find these sweet spots.
cheers !
1 Like