Theta Gang - Wheel Strategy

I sell put options on the stocks I don’t mind owning, 0.2-0.3 delta with 30-45 DTE expiry on US options, if I get assigned I sell call options until the shares are called out. This I do it in US markets and I am fairly well versed with the risks, greeks and the math involved. I now would like to start something similar in indian markets, and this is where it gets very confusing, first the spread is very wide, second the lot sizes are different for each stock which is hard to remember and third obtaining margin is also not very straightforward. If anyone here does something similar, please can you give me a set of stocks/indices that are very liquid and low spreads, I initially would like to get started with selling PUT Options

4 Likes

Finally someone from the Theta Gang. I can’t properly wheel because my Capital isn’t that big enough yet, maybe one day. For a few years, I’ve just written covered calls at safe levels. Decent win rate.

What’s your Capital like? The Game is the same here as well, pick a stock you would like to have held anyway for years and write frequently. Some companies which I would’ve wanted to would be the trusted few as usual, TCS, Infy, Reliance, etc. Although not investment advice by any stretch.

1 Like

I want to start with 15 lacs but can bump it up 4-5x once I am comfortable, I trade with zerodha and I see most stocks have monthlies , do indices have weeklies ? which indices are liquid ? nifty ? bank nifty ? where can I find lot sizes ?

1 Like

You may consider nifty 50 stocks. Liquidity is good enough over here.
If you want to reduce risk sell nifty index puts. You can even sell weekly puts. If it comes ITM either convert them to futures or buy niftybees equivalent to 1 lot. And then you can start selling higher level calls.

Considering the margin involved, you can make 3 to 5 percent of margin blocked per month by doing this. The next question is what are you gonna do with the remaining balance until your position comes ITM.
You need around 9lakhs for 1 lot of nifty. You have to keep these funds ready incase you have to buy a whole lot. You may consider keeping them in debt funds. If you do this your annual return on your total investment comes around 15 to 18 percent.
Now if your capital is 15lakhs, is that enough for all the efforts that you have put in. So I feel minimum capital should be around 50lakhs to actually make decent returns.

2 Likes

my investing style is like wealth preservation :slight_smile: , I don’t chase multi baggers, I invest significant amounts of monies in blue chips and bet on ‘big getting bigger’ :-))

As mentioned I am already well versed in the theta strategies, in addition I start positions based on VIX, current IV > historic IV, support and resistance levels, so there is some margin of safety, I also buy well OTM put to protect myself from tail risk. I am more than happy with 18% returns as my end game here is to scale it up , that is to go from 15 lacs to 5 crores

1 Like

should I start selling PUTS on kite or should I try out sensibull ? is my understanding correct that sensibull replaces any workings I have in excel on max loss, return etc ? what other advantages does sensibull provide?

+1.
In addition , i add top 3 companies from all segments.