Day: October 10, 2021

Oct21-W2: Nifty to do something in this channel but what? (oct 11 to 15)

Last week’s prediction didn’t exactly go my way and Nifty went into a mild bullish mode. It was not exactly a surprise since Nifty continues to be above my green rectangle around 17400 level. Until that rectangle is cleanly broken, the bias is always going to be up

Now the following is my analysis for coming week based on what I am looking at (You may want to open image in new tab or save it for better view)

Nifty is sitting nice and tight exactly around the mid line of the black parallel channel. I have no clue what it would want to do now but if I have to make a guess, I would be bearish. The reason is that Nifty is at a double top with stochastic making a divergence type formation. A break below mid-line will take Nifty straight to the lower end of parallel channel.

Scenarios for the week ahead (highlighted as yellow box with red and greeen lines dissecting scenarios)…

ScenarioAnticipated Price Action
ConsolidationBetween 18075 and 17625
DowntrendIf breach below 17625; to drop somewhere till 17400
UptrendIf breach above 18100; to rise somewhere till 18300

India is running out of coal. Meanwhile, oil has breached the $80 mark and even $itself is nearing the 80 mark. WINTER IS COMING!!

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.

returns

Oct21-W1: Profits just happened by themselves

There is a way of managing strangles. The method requires selling call or put option at a premium which matches the opposite side. Man, I can’t explain this in simple words. Let me do that in detail in the blog section. However, I allowed trades to play out on their own while keeping a mental note to take the stop loss.

Basically, I was never in charge of the way candles were getting formed. I found market to be literally all over the place this week. But the edge in option selling is theta decay which helped in making good money.

I was trading last week in between these vertical lines

Here are the results:

Net Profit (after deducting brokerage)Capital deployed (approx)Week’s ROIAnnualized ROI for this weekTotal no. of weeks traded till todayAnnualized  return till today
Rs. 12346.95Rs. 8474491.45%112.16%1730.83%

The following is breakdown of week’s positions

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.

market, marketplace, buying

Oct21-W1: Letting the market forces decide strike selection

My view for the week was a boring consolidation. I would say that I was not correct as market was mildly bullish. In fact, it broke above the resistance range. However, that happened on Tuesday.

I have observed that any positions taken before Tuesday don’t give that much trouble if carried till Thursday. However, this idea should not be mixed with the notion that any position taken on Tuesday or later is safe for Thursday expiry. These are 2 different things.

With the support of some money management policies, I was able to not play keep my positions safe but also able to make good money (at least by my humble standards). The trick was to keep matching option premiums on both sides. If call option premium was at 7, I would sell a put strike whose LTP was 7 and vice versa.

This worked well until Wednesday. The call options started showing a loss of more than Rs. 3000 but the intra-day charts were signaling strong possibility of mean reversion. I exited my put positions and added more to the call positions. This averaged the overall selling price and I eventually exited the call positions at breakeven. Subsequently, I sold OTM strangle for Thursday expiry.

The high ROI for the week is mainly attributed to high VIX. I wonder how much would be the ROI if VIX was somewhere around the typical 13 mark. For the time being, let me make do with what I can.

I learnt one important fact, thanks to Twitter and Zerodha. The basket order feature of Zerodha helps in enjoying margin benefit of selling options with hedge. I should really make use of this feature especially when I am selling far OTM positions. The increased utilization of margin can help in making more money. Thanks again Zerodha for being best at technology and for the reply on twitter.