What I do? | Stocks and Commodities

April 7, 2016
Time: 8.15 am

What I do?

1. Sometimes I write in my blog that I am taking certain positions.
2. Some people wanted to know what I am doing.
3. Normally I sell both Put option and Call option at the same time. This strategy is called "Short Strangle"
4. First I decide a range, for example, I decided a range of 14500 to 17500 for Bank Nifty this month.
5. So I sold both the options for about Rs 50 rupees.
6. In case if markets move, I will be selling additional Call options or Put options to manage.
7. As the time goes I make profit.
8. In between I exit the positions if I suspect big moves.
9. This strategy is only for HNIs who have lot of cash to pump in.
10. Once I sold Dr Reddy Put option and Call option for Rs 1 Lakh and had to pump in another Rs 24 lakhs to save the postions as Dr Reddy kept falling due to US FDA warning.
11. Sometimes I take more speculative positions.
12. This time, I sold Bank Nifty 16200 Put and 16300 Call for a combined premium of Rs 800.
13. So my loss will start only if Bank Nifty falls below 15400 or rise above 17100.
14. After taking this position, as I am monitoring the markets continuously, I take some actions when markets move violently.
15. After RBI policy I have turned negative for Bank Nifty.
16. Now on Tuesday, I have sold, Bank Nifty 16200 Call, 16500 Call, 16600 Call, 16700 Call, 16800 Call, 16900 Call, 17000 Call, 17200 Call.
17. All these positions are in profit as these positions were taken on Tuesday after RBI policy.
18. If market reverses, I can exit these positions with some profits and when market reverses my Bank Nifty 16200 Put and 16300 Call will yield better returns.
19. If Bank Nifty continue to fall, then I will go short in Bank Nifty if Bank Nifty falls below 15400 and at that point I will square up all these Call options or will maintain stop loss.
20. In that case, if Bank Nifty falls below 15400 and after I go short, if Bank Nifty reverses then shoots up beyond 16200, then I may be in trouble again.
21. In order to avoid this, usually when I go short, I will be selling one more Put option at 15000.
22. So this way I will be managing but with lot of money.
23. Sometimes I may give some suggestions in the morning but during the market hours I may change my view if markets move violently.
24. I still have Bank Nifty 14500 Put and 14000 Put but with some profits.
25. So simply saying, if you want to follow my system make sure you have lot of money.
26. Otherwise selling of options is a risky business.
27. But one can make good money only in selling options.
28. I have following positions in Nifty. Nifty 7100 Put, 7200 Put, 7300 Put, 7400 Put, 7850 Call, 7900 Call, 7950 Call, 8000 Call, 8100 Call, 8200 Call. 
29. To optimise the returns in options one need at least Rs 10 lakhs.