What if I did Bear Call Spread every week and hold it till expiry buying it on Tuesday post lunch, take 0.5-0.75% every week. I know if a black swan event happens I will lose 10x if not more but I feel greed spreads slower than fear so the chances of market going up 6-8% in next 2 days is much much lower than falling 6%. Please tell me why is this a bad idea.
Nifty has moved 4% plus in a week quite a few times, over the years. And when it does, considering how small your credits will be, it can take away profits of years.
It doesn’t have to go the full distance, it just has to move towards that, and your premiums will multiply faster than guppies And if it’s close-to-expiry game, how far strikes are we talking about?
Please post your strikes and calculations. I think that exercise will reveal a lot (to you)
I think @CoolBird who has had success with far OTM strategies will be able to offer more useful pointers. Not sure if he does what you are proposing though.
Any strategy has to be verified with historic data…generally frequency of markets going up is more than going down so provided you design your strikes well & sure of trend such directional strategies can hit you badly.
Any of the strategies you implement while trading should be backtested for a better result. Usually, the frequency market upward trend is more than the downward trend. So, before you invest, you need to be sure of the trend since these directional strategies you told about can result in a loss.