thats a great piece of information you brought forward OT, which i would have never thought before.

Let say there are 20 *12= 240 trading days. assuming that what happened previously of 1 out of 8 chances to hit a onesided move we get 30 (240/8) big profit days out of 240.

say if you trade for one single lot on nifty and consider that you bought a equi-distance call and put for Rs 100 and that one sided move happen you will see both the option either way at 50 and 200, you make a net profit of say 50 which is (30 such day*50net profit*50 nifties)=Rs 75000/-


On the other side those 7 times out of 8 which contribute a rangebound market where profit will be limited or may be giving small losses will be 210 days (240-30).

the way you have performed in the last few days gave you either small profit or loss of around 6 points including other charges.if you assume it will happen 5 losses out of 7 times net you get a loss of 210*5/7*6point*50nifties = 45000 less 210*2/7 *6*50 nifties( this are 2 profit making times in a range bound market)= Rs 18,000 so net loss in a range bound market is -45000+18000 = -27000

therefore net profit of around 75000-27000=48,000 per year.



...

Thanks OT for your compliment, what does hh mean.
I missed todays rally as i was not online to trade, however made some money by some other mean.

But missing this rally especially when i had a 4500 call option a day back which i covered yesterday. it gained 45 points (45*150) gone haha....

3.27 on a positive side is welcome, which mean you have beaten the market player by that many point ( actually by 10 if we include brokerage).

OT i still feel that somewhere if you had made the point to cover your put at days low on nifty in the first and would have let the call ride considering the fall in crude prices you would have made much more.



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Hi Mohanji,

stock market for me is not less then playing with fire. sometimes it gives warmth and sometimes gets burnt. but i dont want you to get scared its more like a calculated risk thing. if someone thinks they will get into markets and make money just like that then they should think again.
you need to know things what you do, decisions are to be made on study.
hats off to the people who trade in markets and make money day in and day out.
you do indeed get commensurate and sometimes even windfall gains for the risk you take only if you decision is well planned and things go as per your decision , thats the confidence you need....

hi mohanji,

I am not that good predicting things, what i talked with OT was just my view which i felt was worth questioning him about.

intraday nifty charts is what i would say i am a little better off.

what position OT had took is a secured one because time delay will not much bother his position to a great extent for next 7 trading days.but the pick is OT will largely depend on one single side moving market which will help his cause.

talking about the position of shorting both the call and put which are closer to the present nifty spot price might see a good time decay if the market trade in that range, which would be a winning situation.

say if the market move 4600 or 4200 in the next 3 days in which case things would not be that good, if you are taking positions at the early of the month.

you just have to be alert all the time think of 100 points move on either side and how are you going to make your next move if it happens. think of all possible ways in which nifty can move and decide accordingly.

best wishes to you also.

...

Oldtimer, i feel what you paid for your put while chasing for it was a little more.

however lets says that market get a huge boost due to falling of crude prices, you might get around 120-130 for your 4600 call and i wont be much sure what will put be like.

but in general case i feel that market should come down to 4300 -4335 on tuesday and wednesday, to start a upto move.

say if you are making money on your put and sure of that market will stay afloat after you cover your put, you will get a chance to make money on your call eventually if not then atleast break even .

let me know about what happen tomorrow because i will be out of station.

best wishes.



...

say i had bought 4500 call and 4300 put the lows and high of both were close to similar at around 105 and high were 135 respectively. say at 2.45pm i felt that the market was about to go down i would have hold the put option 4300 at 107 and closed the 4500 call at 131. but then you require to follow the market on intraday basis. ...

Some late gyan: The success of the strangle strategy depends on a significant move by the Nifty in either direction. Based on the transactions since last month, I figured that the move should be 3.5% move (in the same direction) if one is to make reasonable profit. I analysed the Nifty data since Jan 2007 to know how often this had happened in the past. In the 19 months (396 trading days) since Jan, 2007 there were only about 50 instances when there was a breakout greater than 3.5%. That works out to 50/396*100 = 12% of the transactions approximately. If only 1 in 8 transactions is going to be profitable, how good would this strategy be? That single transaction should be atleast 10 to 12 times as profitable as the individual losses. Comments please eshers, googol, sj and mohanji. Regards OT...

Q OT i still feel that somewhere if you had made the point to cover your put at days low on nifty in the first and would have let the call ride considering the fall in crude prices you would have made much more. UQ sj - I agree, but this time around I'm strictly sticking to my own rules, one of which is dont guess the market. The extension of this is dont have an unhedged position. Only this would allow me to estimate if this strategy works over a period of time. ...

sj, Actually that should be nearer 13 had I had the reqd. holding power and patience (a matter of 30 mins). I was anxious to exit w/o a loss so I squared when the market was taking a breather. If and buts in hindsight cannot be accommodated. So it'll have to be just 3.27 for the account. ...

hh - thats a typo -just a filler for 20 char....

I should have waited till 3.05pm. It would have made another 10 (which is damn good, considering that I made just 3 waiting for 2days). Still have to control that darned fear. Why did I close my positions and not carry the position O/N? 1. Well I had started the day @ -5 and closed the position @+10, which is fair enough. 2. In all probability the uptrend will continue tomorrow, but in the rare event of a fall tomorrow, my profit making CALL will fall faster than the rise of my PUT thus putting me back in square 1. 3. I can open a new position where the deltas are matched and low (eg. the 4200PUT and 4700CALL). Even if there is a gap-up or gap down tomorrow this will not wildly move as the earlier position. OT PS: My net is 3.27 per unit of Nifty (after brokerages) PPS: I have taken a new strangle: 4700CALL@ 72 and 4200PUT @ 61. Cost= 133. (not a bad price). ...

Squared off both CALL@ 106.7 and PUT@34.9 Total = 141.6 Initial cost CALL @75 PUT@56 Total 131 Made only 10.6 (only 3 after brokerages) :( OT PS: The Nifty was slowing down; maybe I should have waited till 3:05 ...

Dear sj, Thank so much for your veiws.Every one scares me about the great risk one can hv in shorting the options. I just wanted to know the actual pitfalls in doing so.Do you get comensurate gains in taking this risk?Your veiws please.Regards and thanks....