iCharts Discussions

[SwingTrader]

[SwingTrader]

Here is MAR 6200 PE screenshot. The bid/ask spread is close and there are takers for the option. I feel you checked the liquidity at a wrong time. I am checking since 15-20 mins and it looks just fine. But I have faced situations when I had seen low liquidity like you pointed out. So yes, one will have to be careful when initiating diagonals. But it can be done without too much effort.

[shekharinvest]

I too am keeping an eye on 6330 PE march / 6100 PE Feb diagonal spread.

Yes you are right that there are times when liquidity is an issue. But with next months options when they get a bit deep ITM it seems like a rule.

Here is another scr shot which I took at about 11:35 AM about 2 hours later than the previous observation, you will notice that no trade happened for 10 mins.

Diagonal needs caution.

Well thanks for your views.

[SwingTrader]

[shekharinvest]

[SwingTrader]

[SwingTrader]

Anyone in LONG MAR 6300 PE - SHORT FEB 6100 PE diagonal? Signal for this diagonal was triggered on 28th Jan (based on ). P/L stats until today are attached.

This one was the safer diagonal (deeper ITM long + OTM short) with around 41% hedge. The 6200-6000 diagonal (ATM long + OTM short) had 35% hedge and would have fared similarly (around 15%+ profit).

[drsuhask]

Dear ST Sir,
If I am not wrong , your technical set up for diagonal spread has become bullish on 24/02/2014. On 24/03/2014, most eligible pair was to buy April 14 Nifty 6000 CE and sell March 14 Nifty 6200 CE, which were having costs Rs.315 & Rs.105 respectively.
My question is whether we should go for this pair which is having price Rs.210*50 with additional margin ( how much margin I don't know). Again on that day nifty was 6186 that means 6000 CE was having intrinsic value Rs.186 & time value Rs.129 while 6200 CE having only time value . The difference between two strike prices is Rs.200.
Is it worth to buy spread having intrinsic value Rs.200 by paying Rs.210.
Please forgive me if I am wrong, but I am very keen to learn this technique of diagonal spread.
Thanking you.
Dr.Suhas Kothavale

[SwingTrader]

[dine]

Dear ST,

First of all, thanks for sharing this.

I have just started going through the strategy and I have got questions in the very first post. Traded taken on 30-09-2013 with future price @ 5791.

As per your strike selection guidelines you prefer OTM, ATM, ITM in the same order for long options.

The price of 5700pe , 5500pe as of 30-09 is 176.45, 72.95 respectively. This gives a hedge pct of 40%. We could have selected this. And similarly for ATM combo 5800pe,5600pe with a hedge % of 46. Is there a reason for selecting deeper ITM combo 5900pe,5700pe ? Or am I missing something ? Please clarify.

Thanks
Dinesh S.

[SwingTrader]

[dine]

Thanks ST.

[dine]

Dear ST,

One more question and I hope you don't mind taking it up.

1. If one has a trend following strategy where the stop loss is known well in advance, say SSPS (unlike the example ema strategy posted here). Can this information be plugged into the system to come up with a better pair of options? Or is it the same rules/guidelines and reverse the trade when SL is hit.?

Regards,
Dinesh S.

[dine]

And one more pls, in continuation to my previous post.

Had I taken a long trade on 6-Mar-2014 @6430, the better spread is 6200CE APR, 6400CE MAR with a hedge pct of nearly 30. And If i decide to carry forward the trade to next month, what would be the better option.

1. Roll over short position in 6400CE MAR to 6400CE APR ? Or wind up the spread and take a fresh position tomorrow (new series start). ie.. find the diagonal spread again using same rules with tomorrow's price ?

As this is a fresh month , would it be wiser to take a fresh diagonal position as opposed to converting the current position to a vertical spread ? Please advice.

Thanks,
Dinesh S.

[SwingTrader]