When BNF was at 22800 in morning, I made a simple strategy bought 22900 CE and sold 23000 CE and on Put side bought 22700 PE and sold 22600 PE, by combining all these 4 trades my maximum risk came out to be around 60-62 points.
I was sure that as there are more than 4 hours are left for the day. I can easily get a movement of 200 points+ in either direction and can easily make profit of around 40 points.
But F&O works against my calculations everytime, surprised to see it stuck to 22800 for the next 3 hours, in last 30 mins it gained but it was of no use. Ended up losing 24 points.
Kindly share your option strategies on weekly expiry also so that I can learn more.
Thanks
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I am trading in BN Options but most of the times facing huge losses because of not hitting my SL (jumping on top of it). SL-M is the solution for this but has to delete SL & place SL-M takes time & by this time facing huge losses. For example 8/7/2020 afternoon.
Just place SL-M order from the start!! Why do you pul SL-L order initially and then chnage it to SL-M on the “jump”?
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Trading strategy involving Predicting market movements on daily basis is high probable way for loosing money. It’s not your analytical mistake but the nature of thing which you are doing.
Btw disregard my message if you are profitable in what you are doing .
I was trading in GTT where SL & “Price” (SL) has to mention. Here after, going to trade in CO (Bracket Order disabled in Zerodha). But still, possibilities are there to jump over the specified Price (SL) and not hitting the stop loss.
GTTs are for overnight instructions. They are not for intraday trading. The situation you describe will happen in intraday mostly. While overnight it will be gaps only.
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@Aditya_Gupta
Please be patient. The strangle that your are taking will take time to materialize. In addition the market volatility is reducing due to consolidation. In order to make a profit, the price has to move widely.
unless call or put side goes way inside the money , you wont get your 40 points even at 2.30pm on expiry day …
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It failed again. It keeps failing. Today also I tried same strategy, I bought 22700 CE and 22600 PE and sold immediate next strikes when BNF was 22635. Cost incurred was 50 points. Time was 11.30 around so one can expect a 150-200 point movement in 4 hours.
But again, why would it move when I have executed a strategy. Next week I will use Short Straddle, and then again after I will complain BNF moved 600 points, I should have used earlier strategy. Options is tough man
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@Aditya_Gupta
But, is there any basis on which you are telling BNF will easily move 150-200 points in last 3 hours. How reliable is your prediction?
- Have you backtested it, i.e. BNF movement on expiry day in last 3-4 hours?
- If yes, for how long back and what was the success %?
- Also, have you considered the volatility or VIX value and how it might affect BNF movement on those days?
- If no, then what is the basis of your assumption that BNF will move say 200+ points in 3 hours on expiry day?
Not to make any assumptions, but only from a bit of experience, the option strategy and payoff chart might look tempting, but our underlying assumption must have some sort of backing based on backtesting and the parameters considered. Once time is spent on that, i think a good strategy will follow.
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Can you tell how can I backtest my strategies?
This statement is gold in trading!
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Easiest way but time consuming is to do it manually. Get on the BNF chart or take bhav copies and check all previous expiry days BNF movements on expiry day to as long back as you can.
Also make note of other aspects like any significant news or high volatility index on those days for reference.
Once you do that then you will get an idea if generally BNF does move 200+ points on expiry day that too in last 3-4 hours. If the ratio is high, then maybe you can stick to your strategy. If not, then you’ll have to understand how markets behave usually and take a decision on your option strategy based on that.
But, before all this and taking trade in options please read and learn about it. There are different factors that affect options than just price movement. Varsity is a great place to start. Spend time on learning and backtesting your strategy. If it suits all of that then you can monitor the market on take very small trades for few days to observe and only then start to trade if you’re confident.
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Good day. You have the answer right there in front of you.
Learn to make the odds to be in your favour. The strategy you chose, has a probability of succeeding 1 in 3 times that is 32%. It has to fail 68% in current market scenario. Backtesting the strategy is the way of calculating the odds.
If going long fails 68% of the time in current market conditions, then what choice is left? If you sell the condor rather than buying it at 50 points cost, you will have a probability of winning 2 in 3 times, correct? By selling you increase the odds from 32% to 68% in current market conditions. You can back test this assumptions and find out. Market conditions determine, which strategy will work, at what odds.
I learnt this hard way, by losing tens of thousand of capital.
BnF did not ditch, the odds of your strategy were not in your favour.
Did you calculate the odds of succeeding before committing the capital? Did you take responsibility for your profit?
Trading is a probability game, like a battle, which is designed to be a win - loss. If you are long a strategy, then opposite to you there is someone or some entity shorting the same strategy. Ask who is making money? Ask what are the market conditions? Market conditions determine, which strategy will work, at what odds. Back test!!!
Happy Trading.
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