I have around 75 Nifty lots i.e. 5625 quantity available for expiry day, What kind of strategy is best suited?
I typically sell 1 rupee premium which is 200-250 points away. I then set a stop-loss of 2 and don’t watch the market for the remaining day. It has worked for me most of the time. I’m just wondering if there is better strategy available, I’m open to suggestions for Nifty or Bank Nifty.
Your maths is incorrect. For 1 lot of Nifty margin required is Rs. 35000 using MIS. So total margin required is 35000 x 75 = 26L.
Still you may ask by deploying 26L why am I expecting mere 5625 only. Please understand this is all the stocks I have pledged which I don’t intend on selling in near future. Rather than it just sitting in my account, I would rather earn from it, no matter how small the amount is.
I think it’s a very good strategy given you do not want to watch the screen at all during the day and given you do it only on expiry day. You still earn ~12% a year with little risk. The cash you earn every week can be redeployed to buy long term equity. The only thing one could think about is to to sell it on both sides to see if there is few points of additional return with some minimal hedging advantage.
I want to know the real profit as1 lot costs around 20 rs (in zerodha). What is your net take away?
Since I’ve close the position as well either with loss or profit, total brokerage on both sides is Rs. 40 + taxes. I usually don’t worry too much about brokerage + taxes as long as I’m making money.
Using trigger price option.
1 - Select SL.
2 - In trigger price enter 2.
3 - In your limit price, I put a very high number something like 4 or 5 rupees. So as soon as triggers I’m out, usually I get out at 2.1 or 2.05. Don’t put very close price like 2.1 or 2.2 because many times the prices will shoot up like crazy.