‘I will close that and sell 19500 put right away’
Did u mean 19000 Put?
Nah. I meant 19500 only. 
that’s as good as long on futures and short at 19500ce.
Jason, after you buy Niftybees, if Nifty goes down further, how do you sell covered calls? Do you sell covered calls below your buy point? If yes, do you just sell your Niftybees at a loss if CE goes ITM, and then again re-enter Niftybees or sell PE?
I think I already answered this.
If you are buying stock or bees just to sell a call against it, then you may not make even make risk free rate of return.
Jason, it means if Nifty was at a much higher level when you bought Niftybees and the current Nifty level is much lower than that level, then it may not make much sense to sell covered call, because the premiums you get might be very low. You may have to temporarily suspend selling CE until Nifty comes back to the levels where you bought Niftybees.
Obviously I won’t be selling. I sell calls only when I am ready to deliver stock at that price.
Infact I may not sell a call even if nifty is at a higher level than the level when I bought bees if I feel nifty will go further up.
Nees some guidance on this
I sell OTM calls of the stocks whose Futures I hold - basically covered calls
What do you all do in case the stock runs? I am not losing money but still losing out on potential profit. What is the best way to manage this?
Your strikes also need to run along with them. Lets say you have sold 5000ce of this month, you can roll over to at least 5400 of next month without loss of premium. You can keep doing it for 2 more months and hope the stock slows down.
Thanks!
I understand. A follow-up question. When would you typically roll over in this case? Wait till around expiry or roll over around the time the OTM calls becomes ATM/ITM.
I usually roll over when I can match the premium of this expiry with that of next for the strike I want.
Let me explain. Let’s say I hold HDFC. My target for August is 1650, September 1680 and October it’s 1720. Now if the premium of 1650 August match with 1680 of September I roll over. Logic is the first premium I collected on selling call will be my profit. If stock moves too fast then I am stuck. It’s better to deliver the stock by closing ITM position or sell futures. I usually sell in futures and once it comes down again, I switch back to selling calls. I also sell otm put if call goes deep ITM. So I make a lot of adjustments. It works out for me and not sure if it will for others.
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Bhai, cursed with engineering here, what book/video you recommend to understand this…
from my little knowledge I know what a covered call is… and i understand you applied this on index using niftybees great till this point,
But then all bouncer, you said you are doing this to make loss in F&O segment, but total EQ+FnO is 40%…
Seems like you have golden goose here, if you care to explain…
It’s just a wheel strategy. Just google or YouTube for it and you will get enough information. No golden goose and all. I have openly shared how exactly I trade in multiple posts.
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Was going though your old posts, Jason.
Thanks for doing this to community.
Is there a backup plan for this, when there is a huge gapdown, say 1500 points in nifty?
Cover your puts in loss and buy futures.
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1.Covered call and Short PE = Covered call means having a cash position in stocks + short PE + short CE = Stock in delivery ( lot size qty ) + short strangle
2. Secured Put abd Short CE = Cash in trading account ( equal to lot size value ) + short PE + short CE = Cash in trading account + short strangle
It is always more practical to avoid having stocks in holdings as a starting point in CSP + CC strategies .The starting points is to enter with either CSP ( naked short PE ) or CSP + CC (strangle ) with funds lying either in our trading account earning no interest or in some bonds which can be liquidated at short notice thereby earning 6-7 % annual interest .It is only when CSP becomes slight ITM then to enter with say 20-25 % holdings in underlying and CC and then do staggered buying if the underlying starts moving up.
Normally we can expect an Alpha of 3% when you sell nifty cov call. In stocks we may get 4 to 6% higher, but depends on what strike we choose, when we exit, etc.
When market goes down and premium at call is very less, you can buy more nifty bees to average and use the opportunity. Better to avoid selling the calls if the premium is very less. Till nifty comes back we may not be in a position to sell calls. When Nifty is low, we can sell Puts ATM or OTM.
A stock is at 100/-. You hold it. sell CE110 strike. Instead of investing 100 and doing this your question is what about selling PE110. Both caps the profit. This Short PE needs only say 20/- margin instead of the 100 to invest in the stock.
I will answer your question. In the Short PE case you get to deploy 80/- less. So you have to sell the PE110 at a discounted rate. You will not be able to get a good premium. In other words you will loose about 0.75% of 80/- say 60 paise to 70 paise when you sell the PE110 instead of the CE110. The maximum profit if you calculate will be capped 70 paise less. The break even point will also be 70 paise worse for the Short PE against the Cov Call.