Strategy for Stop Loss

Feeling upward movement & planned to buy ITM 8400 Nifty call option @ 200rupees but after the purchase suddenly it reaches to 190 but still feeling that the market will go up. I don’t want to put stop loss. But to avoid the down side risk i am planning to sell 8700/8800OTM for eg)@50(Bull spread strategy).Can i form the strategy that if 8400 ITM call premium reaches 190 then immediately four lots of 8700OTM should be sold at the Market/Limit price to avoid the downside risk? Is it possible to program the same in PI/Amibroker depends on the Market situation?(Query is that i don’t want to form the spread in the early stage but after the unexpected downside movement it should be sold at the pre determined price).

Hmmm… Best way to trade the markets by keeping it simple. If you are trade is to be bullish by going long calls, it is best to keep it that way. Just to make a wrong right, taking another trade just complicates the entire trade. The best option would be to just exit the first trade when u think you are wrong. By taking extra trades, you also automatically loose money by impact and brokerage costs.

Yes you can code a strategy on Pi/Ami, but you need to have a fixed condition to code.

Hi Vasantharam

1. Best way to do trading is If u think bullish, buy call (Never Sell first), If u think market is bearish buy put (Never Sell first).

2. It is proven and the best strategy of any traders to put stop loss for every trade. You can not predict the market. (If 10 Points downwards making you to sell to counter your position). If you trade without stop loss is very dangerous.

3. Just see the Support resistance levels of nifty/ nifty futures and as per that Rs 15 to Rs 20 Stop loss is reasonable. If stop loss touches, no problem it happens often (Do not average in that case).

4. The disadvantage of bull call strategy is that your profits are limited and if the price of the underlying rises beyond the strike price of the short call options you won't make further gains.

5. So I advice you to Bullish-Buy Call, Bearish-Buy Put (Based on some Amibroker Strategy).

Happy Trading

In Options particularly with the help of time & volatility i can profit if my direction is wrong… Can you help me in making the Buy/Sell strategy in PI once if my target loss reach?