Hello folks, as told reviewing credit spread vs diagonal.
First of all understand why otm credit people do even after risk reward very bad. First of all better than naked as hedge loss limited and margin benefits in both.
Credit spread/dia. traded by professional when view sideways to minor directional even some room on opposite side as well. If purely directional then go 4 debit as risk low reward high.
I m talking about zero credit diagonal only go as per snap of example and see wat i m telling.
1. First of all if we compare diagonal hv better probability of profit than Credit. 2. Max profit also big in diagonal but if hit max zone, if sideways then almost same profit but pure trendy market hv to shift diagonal or winning leg. Only moving is drawback which not big issue.
3. Mostly i suggest go for put diagonal than call diagonal bcoz of iv mostly spike if fall happened. So wat ever u r seeing max profit increase and breakeven also lift. In pic increase iv by 10%. So if market goes against u r also in favor position due to vega.
4. If market goes against we hv enough credit on wrong side for any kind of adjustment but in credit only people can accept stop due to low premium cant be adjusted.
5. If we compare breakeven diagonal win by far margin. 6. Directional both hv no loss situation. But diagonal hv to manage for more credit either by move winning leg or avg multiple positions. 7. Margin benefits almost same for both.
So this is the conclusion why i suggest zero credit or credit diagonal far better than credit spread.
Note: multiple diagonal looks like that but its happen with time only.
Note: vega effect can change profile completely so careful about large iv dropped is major drawback.
Extra advice for maximize ur profit, u can sell additional otm call or put against it either position in favor or not every Wednesday (mini expiry) and Thursday (expiry) on opposite side. Keep proper stop!
Now this is magical as u know position in ur favor still want to try max profit till expiry normally i dont advice but we r at best situation and tomorrow expiry best to convert ur position almost no risk trade with buying downside risk almost nill.
Also once upside move continue in favor simply convert position as risk free projection and take another diagonal with new support.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
👉 Decision Points:
In Intra Price Action; after opening and ORB next important point is DECISION POINTS, also slowly corelated to each other topics.
Let me sumup first imp key level.
Not necessary to use each n every thing always but with context it's become important.
Normally these decision points play important role of technical to understand trend will continue if break n hold, false break and reverse or very imp level break then momentum can happen.
↪️ Opening Range Breakout (ORB):
As clear with name range breakout view after some formation in open or previously as well.
What exactly ORB mean; in formation all type of players entered in market with some view either bullish/bearish/sideways.
Normally ended with few players win and few loss. So in other word some kind of consolidation happen initially which anyone can relate big volume at initial candle.
There are various different orb setup as well timeframe, all useful but different scenarios.
From 1min to 1day orb possible context. When there is emergency in market then even 1min/3min/5min orb really useful to make decisions. 15/30/60 is most standard orb look out by various ppl but more corelation imp like opening within range or gap or after opening breaking range.
Leverage Thread 🧵
Leverage can make or break people.
Specially when we talk about derivative product which already leverage. If not aware about effect and side-effects then definitely.
Inspired by Wayne (Famous Portfolio and strategic builder).
As we know derivative product approx 6x leverage which means for 6L we normally pay 1L for taking it delivery in account. What if we take without leverage, less leverage risk exposure or even 10x leverage. Any system robustness checked by its drawdown properties.
When we can no leverage or 2x (small aggressive) most probable chance of survival in market higher, when we go by 5x-10x exposure which can easily kill in few drawdown phase, even completely.
Warren Buffett also emphasized so many times about leverage and risk.
Calendar don't work like normal straddle or vega negative. Calendar means shorting high iv and long low iv set-up if trading atm or little offset classic calendar.
Even today example, once fall create difference, then again fall make almost 5 pts iv difference as well delta mgmt avg. Eod gained quick 1% on margin within 2 hrs.
#derivatives#nse
Data analysis not an easy task as it's look like.
Today I am talking about specially long or short buildup only. Everyone knows including book says when price going up with oi up is long buildup.
But in reality only few mins or one day buildup not enough to summarise it also confirmation required after any kind of buildup.
Let's explore more...
Any big players in intra or swing trader can't enter in mkt at once it's slow process.
And took almost good time for swing trader sometimes 3-7 days even more. For intraday it's in range of 30-60 mins.
Never judge direction so soon, until after buildup range not break or if some technical combination much better (optional).