iCharts Discussions

[parray]

The following strategy is quite effective and gives regular monthly return of +5 to 7% per month without much stress of daily race. Strategy is comparatively much more effective then direct investment in equity where you are not sure about any direction and particularly at this point of time. With this strategy we can make money in both the directions.

Entry:
1) Buy (Long ) one lot near expiry nifty future (Example: now we are in July, buy Aug expiry future) .

2) Buy one lot current month put( Example PE5500 - 50 or 100 points below current month future level now future is 5600).

3) Sell (short)one lot near expiry call (Example CE 5700 – 50 to 100 points higher than current future month level).

Strategy tested for more than a year some of the trades for reference:

Trade : 01
04/05/11 : Long Jun future at 5550, bought May PE5400 at 52 and short Jun CE5600 at 146
09/05/11 : Exited all three positions future @ 5605 ( +55 points), PE5400 @ 32 (-20 points) and CE5600 @157 (-11 points ) = overall +24 points profit.

Trade: 02
On 09/5/11 : Re-entered all three positions : Jun future @5512, May put PE5400 @ 55 and Short Jun call CE5600 @119.
On 10/05/11 : Exited all three positions Jun future @5614 ( +102 points) , PE5400 @27 (-28 points) and CE5600 @165 (-44 points) = overall total profit +30 points.

Trade : 03
On 11/05/11 : Long Jun future @5555, May put PE 5500 @68 and Short call CE5600 @141
On 13/05/11 : Exited all three positions Jun future @ 5634 (+79 points), May put @ 29 (-39 points) and Jun call CE 5600 @164 (-23 points) = overall profit + 17 points.

Trade: 04
On 16/05/11 : Long Jun future @ 5503, May put PE5500 @ 73 and Short Jun call CE5500 @ 146
On 25/05/11 : Exited all three positions : Future @ 5342 (-161 points), May put PE 5500 @ 150 ( +77 points) and Short call CE5500 @ 59 (+87 points) = overall profit +03 points.

Trade : 05
On 26/05/11: Long July future @ 5370, bought put PE 5300 @ 98 and short July call CE 5500 @ 110
On 27/05/11: Exited all three positions future @ 5481 (+111 points), put PE5300 @50 (-48 points) and short call CE5500 @ 142 (-31 points) = overall profit + 32 points.

Total profit in 5 trades within 23 days : 24 +30+17+3+32 = +106 points x 50 (one lot) = Rs 5300 – Brokerage approx. 5 x3 trades (1 rs + 0.50 + 0.5 = 02 rs) 2 = Rs 4700 on investment of Rs 50,000/- = +9% per month x 12 months approx. 100%.

We can make this kind of returns without much worry about direction of the market, performance of company or industry doing good or bad or striking good or bad news.

If you are good at covered calls than no limit in profits.

If you are not an expert do not exit abruptly one sided, always make sure that you are exiting all three positions same time. After exiting all three position take new entry only after – or + 30 points nifty move (same day or next day).

Book the profits at every +20 points or up or down move of + or -100 points.

God has given us abundance of Health, Wealth and Happiness all you have to do is claim (don’t beg) it with joy and love as son of a supreme soul.

Be blessed with peace and love.

Om Shanthi ( I am a peaceful soul)

[amanaujla]

The method looks interesting, can you please post the logic behind the strategy.

Awaiting your reply.

Regards

[kiranlegend]

[parray]

Logic is it is very low risk. If u have already burned u r hands with different strategies and tired of day trading then use this strategy.

If u r successful in day trading then this is not for u. If u think day trading in high volume is not good then this is for u. u can pump in as much as and sleep peacefully in the night not thinking about the direction of the market.

If you have patience for strategic growth than doubling money every year means 1 lakh investment can fetch 5 carores in 10 years. Just give a thought.

Covering at every 20 points means in index move of +60 to 70 points in either direction so it is healthy to take profits when it's available.

[amanaujla]

Hello, It is me again and sorry for pestering again with same question.

I am really interested in understanding your strategy, I am trying to understand how getting into 3 trades will help reduce the risk.

I trade in options on daily basis and am constantly looking to improve my results.

Does getting into Calls with different theta values help us hedge against some sudden moves. I am not an expert by any means so it is bit difficult for me to understand your strategy,

Regards

[parray]

Strategy works both the sides becose u r short with ce & pe and long on future and sinking intrisinc time value of short with ce helps in profits.

pls do paper trading for one month as per strategy u will understand better.

[parray]

In down trend market when short side of call value beomes Rs.10 to 15 cover CE & PE (if overall trades are not in profit, keep the future as it is) and initiate new trades of CE (short) & PE (Buy) as per strategy.

[tanhadil1984]

[tanhadil1984]

[Arjun20]

hi Parray,
UR strat is intersting, but i did not understand -
in all ur trades , except trade no.4, u benefitted by Long position in Futures (means from mkt being in uptrend) and in trade no.4, inspite of mkt going down, u still managed to end game in marginal green.
But what i did not understand, in all the trades ,except trade no.4, u bought/sold OTM options. BUT in trade no.4 , u played with ATM options.(5500 pe and ce)
Can u pls explain this?
Also u r writing a blog 'NF 670points'.....will u pls share it.

regards
Arjun

[parray]

TANHADIL, we are very close to expiry date u should have opted for Aug PE and SepCE. always make sure that CE money value is aroud +120 to 140 and buy the PE buy around the value of 60 to 70 level 50% value of the CE. now u have option of the doubling the qty of ce & pe to protect down side or if u r good in identifying the trend exit both ce & pe positions at the first opertunity and take the new position of Aug and Sep at the resistance level.

[parray]

Arjun, hope my earlier answer clears u r doubt, with ref to swing system by the end of the month i will be posting the same.

[seshareddy]

HEDGE THINKING WILL COME FROM DOUBT AND FEAR IT IS VERY CLEARLY THAT WE ARE NOT SURE OF OUR SIGNAL ALSO PLEASE DONT MISTAKE ME WITHOUT KNOWING THE PERFECT MOVE DOING TRADING IS NOT GOOD

SORRY ONCE AGAIN TO ALL

SESHAREDDY

[rksharma1091]

i did paper trading on several strategy yes it works .i tried on reliance it works .now from today i will try your.

[parray]

RK what is the roi on u r trail. pls do post u r experiences so others will benefit from the same. wish u good luck.