Nifty-Bank Nifty options trading strategies

This blog post will have links to freely available information to explain about options and options trading  YouTube series from Zerodha on Basics of Options ->  Basics of Options Trading Trading System A system is defined as a set of rules which you follow in trading. It essentially has below components: Instrument : The instrument such as Stock, Futures or Options Entry criterion : When are you going to take a Sell/Buy position in the instrument. It can be time based such as 0930 AM or it can be based on indicator e.g. if an instrument/stock price moves above 50 day moving average etc. Exit Criterion : When are you going to exit the position. Exit can be based on a stop loss, a target or a particular time e.g. in intraday systems positions need to be exited before market close Power of large numbers : All systems are based on belief that if you keep doing same thing again and again then you will make money in long term. Here back testing is of good use where once a system...

Entry: To be taken 17 trading days before expiry day (expiry day to be excluded). Please exclude any trading holidays also while counting 17 trading days Instrument: Sell a Nifty Monthly PUT rounded to near by 100 which is away from ATM by 1.5 times the combined premium of ATM CE + PE monthly option on the entry day e.g. Say Nifty ATM on day of entry is 16400 and the combined premium of 16400 Monthly PE and CE option is 700. Then 700 *1.5 = 1050. 16400 - 1050 = 15350 so we can either sell 15300 or 15400 Nifty monthly PUT. Stop-Loss : 100 points. E.g. if the Nifty PUT was sold at 70 and the price reaches 170, position has to be exited Exit : Whenever the PUT's premium reaches below Rs. 5 or on monthly expiry day at 1520  Slippage: 0% Capital Needed: At entry time a capital of 65-70 k is needed to trade 1 lot. In case the option starts going towards ATM, capital needed might go to 1 Lakh for same.  Back testing & Actual profit/Loss (Updated as of 26 Nov 2022) Back testing...

Entry Time: 0919 Instrument : Sell 1 Lot ATM CE and 1 Lot ATM PE based on spot price at 0919 Stop-Loss: SL 50% on each leg, adjust SL to cost for remaining leg when the SL of a leg is hit. Overall strategy Stop-Loss:  1000 on lot size of 25 Exit Time: 1455 Slippage: 0.5% Capital Needed: 125k to 130k per CE + PE lot. Returns mentioned in back testing and actuals are based on 130k margin Note (11-Sep-22): Current Drawdown in back testing has gone beyond historical max draw down however in actual trades it is still below max drawdown because of using supertrend based exit in actual trades. Note (17-Oct-22): Strategy has recovered from max drawdown and hence re-started it without supertrend exit.  Note (25-Feb-23): Not running this strategy on Thursdays and hence actual is considered as 0 for Thursday while comparing with back test results Note (25-Sep-24): This strategy was stopped in 2023 as it was giving losses but it recovered well in 2024 Back testing and actual trades rep...