Iron condor option trading strategy is a non-directional trading strategy.
I will put forth my way of trading this strategy.
I am not well versed in option trading.
I cannot employ any type of(technical/fundamental) analysis.
I cannot monitor my positions keenly.
Still I want to meddle with stock market.
Observe option chain in NSE website.
Observe which strike prices (call and put) are having maximum open interest.
Those strike prices are to be treated as resistance and support level.
These are the strike prices I will short.
To hedge my short position I will go long with a strike price 100 points away.
I will not try to employ any adjustments, if my any position goes bad.
On 27th Jan closure option chain for NIFTY Feb 1 expiry.
Call side maximum OI was for 9000 strike and for Put 8400.
So I will treat the NIFTY will oscillate between these two prices.
So I will consider 9100 Call and 8300 Put for shorting and 9200 Call and 8200 Put for hedging.
The premium for these strike is as follows:
8300 PUT 37.45
8400 PUT 54.35
9000 CALL 28.00
9100 CALL 16.80
I will get credit of 28.00 + 54.35 = 82.35
I will spend 16.80 + 37.45 = 54.25
Net credit = 82.35 - 54.25 = 28.10
This is my profit, if nifty stays between 9000-8400.
If things go wrong my maximum loss
100.00 - 28.10 = 71.90
My intention is once I am able to retain at lest 70% of my profit I will close my position.
Let us see what happens.
I will trade only in NIFTY due to its high liquidity.
I will choose strike which is 30-45 days away, because it carries adequate time value.
As time lapses the option premiums goes on reducing.
A day may come I can close my position when premium is considerably low.
I will close my entire position in one go, no legging in at any stage.
I wish to update this diary once a week.
Due to my poor knowledge I may not be able to contribute more on this.
I welcome other knowledgeable friends to explain.
But I will stick to my this trading plan.
I will put forth my way of trading this strategy.
I am not well versed in option trading.
I cannot employ any type of(technical/fundamental) analysis.
I cannot monitor my positions keenly.
Still I want to meddle with stock market.
Observe option chain in NSE website.
Observe which strike prices (call and put) are having maximum open interest.
Those strike prices are to be treated as resistance and support level.
These are the strike prices I will short.
To hedge my short position I will go long with a strike price 100 points away.
I will not try to employ any adjustments, if my any position goes bad.
On 27th Jan closure option chain for NIFTY Feb 1 expiry.
Call side maximum OI was for 9000 strike and for Put 8400.
So I will treat the NIFTY will oscillate between these two prices.
So I will consider 9100 Call and 8300 Put for shorting and 9200 Call and 8200 Put for hedging.
The premium for these strike is as follows:
8300 PUT 37.45
8400 PUT 54.35
9000 CALL 28.00
9100 CALL 16.80
I will get credit of 28.00 + 54.35 = 82.35
I will spend 16.80 + 37.45 = 54.25
Net credit = 82.35 - 54.25 = 28.10
This is my profit, if nifty stays between 9000-8400.
If things go wrong my maximum loss
100.00 - 28.10 = 71.90
My intention is once I am able to retain at lest 70% of my profit I will close my position.
Let us see what happens.
I will trade only in NIFTY due to its high liquidity.
I will choose strike which is 30-45 days away, because it carries adequate time value.
As time lapses the option premiums goes on reducing.
A day may come I can close my position when premium is considerably low.
I will close my entire position in one go, no legging in at any stage.
I wish to update this diary once a week.
Due to my poor knowledge I may not be able to contribute more on this.
I welcome other knowledgeable friends to explain.
But I will stick to my this trading plan.
IRON CONDOR-option trading strategy
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