Day: June 26, 2021

Jun21-W4: Beats target CAGR

The last and only time I sold OTM strangle positions on Nifty was in 2nd week of April.  I then found myself caught in Covid assistance to family and then household and then office chores. It is not that I did not take any trades during that time. I took really stupid trades and lost a lot of money. Trading must be done with a free mind. 

Anyways, based on my view for Jun21-W4, I sold OTM strangle from Jun 18 to Jun 24 whose daily candles were like this:

Here are the results:

Net Profit (after deducting brokerage)Capital deployed (approx)Week’s ROIAnnualized ROI
Rs. 3,437Rs. 5,81,0000.591%35.9%
where annual return = ((1+week’s return in decimal)^52-1)*100

The following is breakdown of trades:

DISCLAIMER: I am not a SEBI registered adviser. All the information provided on this website is for educational / informational purposes only and should not be taken as investment advice.

mean reversion strategy

Jun21-W4: Reversion to mean is money

My view on Nifty 50 index for the week was mostly neutral with a tinge of bearishness. Thus, I began Jun 18th by selling calls but by the end of day the market was looking quite poised. So, I created a strangle and had no clue what could happen on Monday.

Mondays now are turning out to be ridiculous. They usually used to be dead but now they start the week with a bang. Jun 21 was again one of such weeks. There was a nice gap down which gave me opportunity to sell more puts as Nifty was far away from its intra-day mean.

Now adding more positions is something that I can do today with the power of converting a delivery (NRML) position to intraday (MIS) position. Unfortunately, SEBI is all set to snatch this power soon. Until then, I guess I should make the most of it. I ended Monday again with strangles. In my subconscious, I knew it was not a good move as I knew market was going to be positive.

But I did not exactly expected this much positivity. Tuesday was a gap up day which made my call options go in red. In scenarios like these, the other side i.e. put options don’t return as much profit as the call options show loss. Based on my homework, I believed that Nifty won’t cross resistance and mean reversion might save again.

Luckily, Nifty didn’t go up further and by Wednesday, I took 1st July strangles. Since I took positions early, I am pretty excited about next week’s P&L results. I am determined to trade Nifty strangles every week, with a hope to maintain CAGR as a high double digit positive number.