Tuesday, 23 November 2021

Day6-trading update on Banknifty Option trading strategy

What is the trend of Banknifty?

 Banknifty took support 36680 twice. If BNF holds this level, we can see relief movement till 3900, which is around 50% of last fall. 

Astroview - The market will be bullish tomorrow


Monthly strategy 

Not a good time for a non-directional options trading strategy. 

Loss booked -54000

Current pay off chart

Current position  after today's adjustment 

Dec future 1 lot

38500 Put Dec 2 lots 

37000 Put short 18 lots

38000 Call fast 18 lots

Range 36100 - 38800 

Strategy greeks

  • Delta -5
  • Theta 9780
  • Vega - 38949
  • Gama -0.16

This strategy has negative vega. This will benefit from the fall of volatility.

Possible adjustment - 

As the market is volatile, I will take any adjustment decision near breakeven points on either side. I will use the future to adjust the position. 

To convert the position to a short straddle whenever BNF crosses the breakeven points on either side

Mistakes :

1. Yesterday, I adjusted the position before 3:20 PM. I broke my rule 

2. Yesterday, I created an unbalanced straddle at 3700. This has a pretty extensive range; I should have continued with that strategy.

Weekly strategy - No change made in weekly Ironfly.

Total PnL:170000

I got a few questions like Which investment gives returns as per market rise?

My view is traders should select a volatile index and deploy option trading strategies. A properly managed strategy gives a good return of investment in a rising market, falling market, and while the market is consolidating. Traders need to understand delta and volatility to adjust the option trading strategies to get a consistent return from the market. 

I want to test and document my belief in options strategy.

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