sqedoff 50% at 171 ( 197-171 = 26 = 1.6R)
sqedoff 25% at 152 ( 197-152 = 2.8R)
rest 25% SL at 190
Now how much do you sell ?
Say you have a capital of 10 lacs and your risk per trade is 0.5% per trade = Rs.5000
5000/R = 5000/16 = 300 ( 12 lots)
You sqoff 6 lots at 171, 3 lots at 152 and keep last 3 lots with 190SL
This is the position management
Maybe I am predicting a bit early, but the high of 16713 can be a top for sometime. Will get confirmation on closing ( today and tomorrow, 2 days of closings)and once this expiry gets over. Extremely dangerous negative divergences are shaping up on RSI and MFI
For TA enthusiasts, this is what I am seeing.
Negative divergences on MFI and RSI, MACD histogram.
Remember " a divergence is like a weather forecast that it may rain, but not a guarantee that it will rain. You prepare by carrying an umbrella when going out" - Martin Pring
This is a fully recorded workshop with 12+ hours of video. You also get access to all tools used in this workshop. System codes are on tradingview,
they are "invite only " indicators ( meaning you will be able to use the systems for lifetime, but the codes are locked )
You can subscribe if interested and start learning at your own pace. You will need a few weeks to understand and assimilate the concepts as they
are quite exhaustive and vast.
Today's freak trade on the Nifty 16450CE reminds me of a very recent clubhouse discussion I had. Explained a black swan risk and how even an intraday trader faces it unknowingly. By definition, a black Swan is such an unexpected event that you have no way to prepare
The person who has posted the screen shot of losing 2 lacs plus on 10 lots of 16450CE is an intraday straddle seller. His backtests did not account for 100 rupee sold options getting sqedof at 600 or 800
So, this risk was not modelled into his backtest. Hence this is a black swan for him. The funniest part is, even after this all backtesting softwares will show profits as stops will be shown at say 120 or so on backtests
Those who said intraday, say Reliance broke 2078 and you sqoff the trade, then it immediately jumps to 2085. What do you do, re enter ? then again it breaks 2078, what do you do, exit ?
This can go on for quite some time
The logic of the intraday sqoff comes from this idea that if Reliance falls say another 10-20% from 2078 by the time market closes, you are facing a bigger loss.
This idea is correct in futures/cash, but not in options
Ok, so completed the 4th day of live handholding today. We are doing positional as well as day-trading. Lots of old students repeating the handholding to practice. My methods are also getting sharper :)
Whenever some one asks me what returns they can expect after doing the course, my answer is " returns are a function of risk ". When pushed further, my standard answer is " around 3%", I never ever commit above this 😀
This is the actual performance of my day-trading calls. All trades explained with logic so that traders can now repeat the trades on their own.
Capital = 10 lacs. Returns given for 3 scenarios :
1% per trade risk, 0.5% per trade risk and 0.25% per trade risk
Reliance bull call spread
Buy 1*2100CE at 43 & sell 1*2200CE at 13
Net debit = 13 = Max loss
SL if Reliance fut breaks 2078
Technical charts on which this view is based , self explanatory
Nifty option strategy suggested :
Call ratio spread
Buy 1*16350CE ( 12 Aug expiry ) at 65 , sell 2* 16500CE ( 12th Aug expiry) at 26
Net debit = 13. Max profit at 16500
Unlimited risk > 16650
( disclaimer : we are already in this strategy)
Received quite a few questions on how to use these levels, so here are some basic rules
1. 85% of the days, the markets will remain within these levels 2. When there is a breakout/breakdown of any one side, expect a fast large move that day
3. Bullish above the Balance, bearish below it 4. If we are bearish, one can sell CALLs above the upper level and vice versa 5. If bearish, look for sells from your other indicators to buy options and vice versa 6. Expect strong resistance/support at the upper/lower levels
I had this theory that if #Bitcoin went below $30k , this time it probably won't go up again. Let's see
1. I had earlier posted a distribution analysis for bitcoin 2. Traders have been primed by the price action of the past few months where it goes below $30k on weekends and then bounces back. This dip should see heavy accumulation from retail and thus a perfect distribution point
If this is not distribution, I don't know what is. If I were trading this, would have shorted below $29k with a stop at $31k and then progressively trailed stops
Results trading is one of the biggest plays on options markets worldwide. The theory goes like this :
Before results, IVs shoot up as both bulls and bears buy options expecting a major move in their chosen direction.
Now, it has been a proven theory that IVs "generally" overstate the actual move that happens post results. This has given rise to the famous results trades for options sellers where the sell straddles or strangles in order to capture the volatility crush post results.
Their trades are based on a higher POP per trade but less absolute profits per trade. Some results obviously are totally against any market expectations and the stock makes a huge move. This gives a major delta loss as well as sometimes when IV goes up, also a vega loss whammy.
But what none of the responses have seemed to remember that there is also "generally" a vol expansion before results, generally starts 10 days before results declaration or earlier.
Look what happened to HDFCBANK IVs this time
Simple question : If there has been no vol expansion, can there be a further vol crush ?
Answer can be yes or no, both things possible. But the probabilities favour zero or minimal vol crush. Also remember, the theory of vol crush post results are "generally" , not a surety.
2. Book profits on next 25% ( 100 qty) at 2.5R( 212.5) and modify SL to 208 3. Last 25% continue chasing with a R trail of 1R below current price
You may change initial book to 2R also. But minimum profit booking has to be 1.6R or above
even if you are 50% correct on your trades, this money mgmt logic will give you net profits. Now the system/logic you are trading must have that edge and that R expectation of minimum 1.6R on a trade. Below that, you won't win in the long run
I have traded 1 lot continuously twice in my life. The first in 2003 after I blew up on my INFY trade. I traded 1 lot ACC fut consistently and made 50k in a month
The 2nd time in 2013. When I suffered continuous losses for 5-6 months due to a variety of psychological issues. Then I traded 1 lot Nifty options consistently for 3 months. After that 2 lots for next 1 month and slowly increased