Options Trading Strategy by an Ex Investment Banker #Face2FaceEmerge
hello hello, this is Vivek Bajaj. Another episode of face2face emerge and another emerging star who will share a great strategy for the share market..Emerge has become a great capsule I find emerge more learning than face2face because we can see so many emerging stars. I am so proud that India has such a lot of talent in every part So our guest has been doing full-time trading after leaving his job, which needs a lot of guts and confidence that will be able to manage so the more we know it is better. We should give happiness as much as we can. One common philosophy in my series is that we believe in the act of giving
you have given a different name for the strategy, it is definitely a productive strategy can you come in the front, so that I can hear your voice better. Is it better now? Yes, it is. can you be louder? I am sure you must be having a loud voice, you are an investment banker no one must have described the 2008 fall so well that depression came, and then corona. So life is going on so you spent time in investment banking after your job. Why? I had a travel business at first. so 13 years in the market, and 8-9 years of loss. Must be so frustrating with only 4-5 years of profit. So watch the video till the end to observe this learning experience. so basically my strategy is very common, which is used by many traders. Iron condor.
I will talk about what is in the slide and also give a practical demonstration wow! so you also use opstra..that's great two of my friends Raghunath and Prashant also use opstra. If you want I will make you talk to them they will love to interact with you. I think they did recent episodes with you they are very nice people. Yes, so whatever you do intraday or options, this is really good for that it also has a simple version, this one is complicated, which will be explained so iron condor is basically a strangle, let's say it is 150 so we will take any. Let's say the strangle will cross here There are many users if you think it will cross so you sold it, you will also sell a put. It is 800 and you think the next day it will not break
if it goes up from here then you have to check if you take a call here. Please pause once. Can you delete the call, I want to see the margin and the conceptual idea it is 800, so you have to see how it will go. Some percent return you will get from this only so coming back to the margin so you sold the put and call, similarly any type of scandal has to go to maximum no matter how much loss you had people know that if they do it for 10 weeks then they will get an open in 8 weeks so normally your nifty stays for 2-3 weeks, which is a massive range this is a bit from greeks, which I am telling but it is not necessary it means if it goes up down then it will react accordingly before we move ahead we need to know about the calendar spread we will take the at the money strike, which is buying in the market rate so you can take it after doing a round-off. So we are selling this. Why do we like put because it has more volatility?
in the last face2face on calendar spreads that I liked it was said that more high IV leads to more money because the impact of gamma is higher the effect of gamma is really high, which affects the money. Definitely! so what we have done is we have sold the option in the money strike the loss here is similar, which is 1:1 The number is very large for me because I cannot manage such loss that is why I have a preference for trading weekly you can use your risk-reward how you like basically, the strike is the same you can see the put there is contrast, this is safer but less money every person with capital has a strategy, people who know how to handle it. This is the best-case scenario if you come down then you will see that your profit is 1600 this is 5% especially after 41 weeks of this the risk-reward is really better, here it is 1:1.8 if theta rises then your money automatically rises without any directional a lot of people use this strategy for pairing volatility you have seen 2 strategies, one hand has a certain set of benefits and another has other sets of benefits Vivek bhai, I still need to make money this is not rocket science, I am taking 2 basic things together. it is so nicely explained, it is so picture perfect should I start from scratch, from the existing setup, or from here? what we will do is we add the iron condor on top no one told me this before, this is a very good observation. Great job we are a little competitive so we will take the strike you can do exactly the downside in the market this is what the software says, the way I am doing here also we will go a little slower because it is 400 before it was 500, now it is 400, but the drawdown is that my ratio was 1:1 and it stayed the same my risk reward is the total cost that was in an iron condor this is a loss when compared to iron condor so which was 1% theta now it is 5% obviously, you can reduce the number of the strike but what is this functional expiry, when we sell, this is what happens on a daily basis basically, we have positive theta, similarly, you will do the same in the market by the iron condor, it is 500 rupees what is the blue dotted line trying to indicate? and now the market falls by 100 points it is showing 460 by the end of the day this is for the expiry but the blue line depicts your daily movement value is there but it is 11-12%. Correct correct!
yes yes. The volatility is increasing, same with theta decay. if the market falls then the warranty will also be there and the delta will fall if the market is going up then you can this calendar strategy and if it is going down then you can use iron condor so coming back to the slide, you have 2 greeks but in our particular case, we do not need a margin obviously, this will also come down now we come to the main area, first of all this is a self-control strategy similarly, if now you want to go up then this is the green area that is why I said the initial margin will be for adjustments you have Friday, Monday and Tuesday. You have 3 days to make calendar spread you have to sell the maximum price, which is the calendar so another question arises is that let us say it is Wednesday so what will happen is that your iron condor will be on the last day on Wednesdays, it is much much faster some concepts you will understand during the video but some concepts you need to revisit the video in the calendar towards the end, it will maximize the profit if you are using iron condor then it will go like this I never heard this before, I think this is really innovative a large sum of money that goes into the strategy. I was unable to backtest. you will see that the strategy is profitable in most cases I know many traders who like this strategy we can also start off Monday we have to wait for it to come to a certain point people will like to get in touch with you you can go and check his telegram channel to know what he is doing exactly So i will take some of the credit that you have seen my videos and you understand my motive looking at you and your persona I can say you are peaceful and doing good in life