iCharts Discussions

ctrade02 · White Belt Joined: 06 Jun 2014 Posts: 4

Sir, What will be margin requirement at current stage for calculation of returns?
Please reply.

SwingTrader · Posted: Wed May 11, 2016 12:14 pm Post subject:

ctrade02 · White Belt Joined: 06 Jun 2014 Posts: 4

Thank you sir for your kind reply.

I have back calculated the profit and loss for the diagonal trades from April 2015 to April 2016 based on the 13-233 EMA and pivot. I am attaching the file here.

Observations:
1. Calculation shows profit for all the months except 2-3 months(Jul, Dec and Sept (if we consider standalone sept month)).
2. Max profit in most of the months is 10-12 %( here margin I took as 35000 for all the months)

Few doubts:
1. Are my calculations correct? It looks like too good to believe!
2. When you showed profit calculation in theory part it was going upto 35%. Why it is limiting in my case less than 15%.
3. If we get signal for entry around 20th of the month. Will we able to initiate the diagonal for next and far month( my question is about liquidity) for example I get signal on 20th May, will I be able to initiate June and July Diagonal.
4. Once we close the diagonal for a month can we not initiate for next moth next day to expiry. or should we wait for fresh signal.

ST sir, it would be too kind of you if you please check the attached sheet and clarify my doubts.

Thanks in advance.

Hydrogen · White Belt Joined: 18 Feb 2014 Posts: 87

Hello ctrade02

What is the timeframe you used for this testting (13 EMA/ 233 EMA) ?

ctrade02 · White Belt Joined: 06 Jun 2014 Posts: 4

SwingTrader · Posted: Thu May 12, 2016 4:28 pm Post subject:

ctrade02 · White Belt Joined: 06 Jun 2014 Posts: 4

Thank you sir, for taking time to reply.

Last Crusade · White Belt Joined: 09 Jan 2010 Posts: 38

Hi ST,
based on Thursday expiry closing price of NF, which strike prices could have been selected to initiate Diagonal BULL spread and Vertical Bull spread, considering 30% hedge.
Trying to understand the thread

SwingTrader

JAYSHREEHARI · White Belt Joined: 30 Jan 2010 Posts: 22

Hi ST ,
Do you want to say long july 8100CE & sell JUN 8300 CE ? May contract has been already expired.

Thanks.

SwingTrader · Posted: Tue May 31, 2016 8:07 pm Post subject: Re: vertical and diagonal spreads

Last Crusade · White Belt Joined: 09 Jan 2010 Posts: 38

Hi ST,

Case1:
a) As you suggested " long July 8100CE & short June 8300 CE", if i had taken this position on 26th may, what would you suggest now? Close the diagonal and open vertical?
Below is the snap shot of the performance.

Case2.
My actual position. Long JULY16 8000 CE and Short JUNE 8200 CE

a) Is it the time to shift to Vertical Bull Spread by closing above position?(Hoping still bull run continues). Kindly suggest Vertical bull spread strike prices if you suggest to shift.
b) What would be the position adjustment possibilities in this case since the short option is now ITM?

Case3:
a) On the 25th may2016, considering suitable hedge%, below shown Diagonal bull spread strike prices is also the correct one?

Thanking you
-Crusader

SwingTrader · Posted: Thu Jun 09, 2016 9:10 am Post subject:

Last Crusade,

I usually take when I see such profits (> 20%). Adjustments can be made to capture further profit but then risk increases after such an adjustment. For example, one simple adjustment is to widen the spread between strikes. You could close existing short option and initiate another short one strike above making the diagonal three strikes wide. But a reversal of trend would eat up profits very fast.

As you mentioned, I some times do change this to a vertical (close existing short option position and initiate next month short for the same strike, turning the position into a vertical). This could again be useful in capturing more profit if price continues upwards or goes sideways. But even in this case a reversal could reduce profits very fast.

So, think about it and either take profits (close the diagonal) or widen it or convert to vertical. It has to be as per your preference.

Last Crusade · White Belt Joined: 09 Jan 2010 Posts: 38

Thank you ST,
Covered my Diagonal Bull spread.

My Trading set up Signals "SELL",

As you suggested 10days after expiry it wise to initiate vertical spread.
The below selection of strike price is suitable to initiate Vertical Put spread?

JUNE 16 8400 PE@ 193.00
JUNE16 8100 PE@ 60.00

Thank you
-Crusader

NiftyTracer · White Belt Joined: 05 Feb 2015 Posts: 14

Hi ST,

Now since BankNifty weekly Options have started and we have liquidity in these, can we consider these by going long on monthly and short on weekly (week 1 or 2 or 3 or 4 - as the case may be, like June had 4 weekly + 1 monthly). What is your opinion and how would you suggest trading them.