Option strategy please


#1

Hello traders, can anybody please suggest me best option strategy for banknifty, if i know the breakout and breakdown points.

Let say i know that 25000 is a breakdown point and 25300 is breakout point. And if any one of them is broken, minimum 300 points movement is sure within 2 days.

Please tell the best option strategy to capture whole move in best possible way.


#2

Check Long strangle = buy OTM call and buy OTM put - in 1:1 ratio of same expiry, same underlying. If you’re selecting equidistant strikes from spot, then buy 25300CE and buy 25000PE. You make money when banknifty moves in one direction. You only lose entire premium paid if banknifty falls between the 2 strikes.

Quoting from Varsity:

The maximum loss is restricted to the net premium paid
The loss would be maximum between the two strike prices
Upper Breakeven point = CE strike + net premium paid
Lower Breakeven point = PE strike – net premium paid
Profit potentially is unlimited
So as long as the market moves (irrespective of the direction) the profits are expected to follow.

Read more in this varsity chapter.


#3

you can buy ATM call and put and sell OTM call and put as well …
“reverse iron condor”

frankly i tried both iron condor and reverse iron condor for quite sometime and net result is good brokerage for zerodha :smile:


#4

Long Strangle, as @Srinivas suggested sounds good if you believe a breakout in BankNifty is impending.


#5

Are you looking to trade in this week’s expiry or monthly expiry of Banknifty?


#6

Have you tried BNF Calender spread(or reverse ) with wkly options ? Iron condor (or reverse ) with different expiry? if yes share your opinion …I am also experimenting the same …by the by are you from TN?


#7

i tried calendar with weekly options ( current week with next week ) and its not profitable … one problem here is liquidity of the further week options…
tried reverse iron condor in weekly options and the results are inconclusive … i am 99% sure that directionless strategies like iron condor or its exact opposite reverse iron condor wont work in weekly options…

i have not tried calendar with monthly options which is not for active traders… and i tried it with nifty years back…

currently trying iron condor and reverse iron condor for intraday in bank nifty and this seems to be working … but i need increase my quantity to give full conclsuion… :slight_smile:
if premiums are relatively high then i go for iron condor and reverse iron condor if preiniums are relatively low …

another problem earlier was placing orders which was a pain , but i subscribed for kite apis and dveloped an app for placing orders easily …
now i can try short strangle or short straddle for intraday considring i can close my positions easily using my app , but seems to be risky ( might explore later ) …

i am from comibatore but now settled in bangalore … actually sengottaian is my ftahers name , i didnt bother to check the username when i created which clipped part of my name :blush:


#8

Calendar Spreads option trading on Indian exchanges! :face_with_raised_eyebrow:Guys dont waste the money in narrow experiments. Institutions themselves don’t venture into tht.

Sensibull seems to be a promising one. Wait for its arrival.


#9

people who has got surplus fund and cant trade full time can definitely do calendar trades in nifty and monthly bank nifty index…
no offesne to sensibull , but if someone has got experience in trading in options , they should do it by themselves …


#10

If a retail trader’s aim is to make risk free money, without taking a view on direction of the market GOOD LUCK…

There is a hidden strategy called box spread which could give u risk free money ( https://en.wikipedia.org/wiki/Box_spread_(options) ). Its hidden because there is no way u can make a decent money with this strategy. You will earn fraction of what a FD with a bank will earn.

I don’t think there will be much difference either with Iron condor, or long straddle.


#11

i see potential in iron condor or reverse iron condor in weekly BN doing intraday …
for 10L margin we can gain or lose 30k to -30k on any single day :wink:

people ignore because of brokerage and now with discount brokers like zerodha we can do it


#12

Have you tried Bull call/put or Bear call/put with lower margin/lower brokerage?


#13

i prefer to be on the shorter side so mostly i tried bear put or bear call when i am certain about the direction …

now i am trying to come up with directionless strategies for intraday …
if we do trade by the batch of 5 lots each , even for iron condor brokerage comes around 1.5 points per lot with zerodha


#14

Okie. It was not meant to stop u frm dng anything using ur surplus fund! Nothing to be defensive! It was a suggestion for u to gain experience with ease.
I feel, It was my right decision to not respond to ur previous reply in some other post & added details to avoid narrow interpretation. Otherwise it wud hv continued thr ages as before!


#15

Long straddle is a directionless ( or direction-neutral) strategy. It involves buying a Call and a Put simultaneously at-the-money, expecting a good move in the underlying in either direction OR a rapid expansion of IV of the purchased options.


#16

sorry edited … basic mistake :baby:


#17

Little confusion …why you need API for Iron condor…you can place it through BASKET ORDER ?


#18

we can place the orders manually as well , but if we increase the quantity it becomes difficult to place the orders… :frowning:

i want all the orders to be executed fairly at the same time…
iron condor has 4 legs and we need to put 4 orders … and we need to break the orders of 5 lots each if we are trading in higher volume ( i experimented a bit with this and decided 5 lot is the optimal during normal trading hours and 10 during peak trading hours )…

now with my app i just fill the contracts and quantity and fire the orders just by pressing the button easily … ( i am bit lazy as well :blush: )


#19

All order fired as market order or limit order. If its limit order, IT may not fill & if its market order bid/ask spread will be a problem.


#20

i have option for both … if bank nifty is very volatile then firing limit orders are really a bad idea …

i am trying to minimise the bid/ask spread losses when i am firing it as LIMIT order …
like after every 4 seconds i am checking the status of the orders and modifying the orders based on current bid/ask values…

i am still trying to optimize the ways to minimise bid/ask losses … it is definitely saving some money