No Loss Option Strategy? Yes, This Is Possible…
With this strategy, you will almost always make money trading options. No matter what the trend is. To make money, you must be on the selling side, which means you must write options. Find out more about this best option trading strategy.
The Rules of the No-Loss Option Strategy Are As Follows:
- This strategy will produce results in a month, so you need to sit tight (have patience) :).
- The entry period begins at the beginning of the expiration month or a few days before the month ends.
- The Exit Will Be During Expiry Hours Or 1-2 Days Before The Expiration Date.
- For stock options, a minimum of 2 lakhs in capital is needed. While for the index option, around 1 lakh is enough to get 10-20%.
No-Loss Option Strategy: “In this strategy, you must simultaneously write extreme in-the-money call and put options and hold them before they expire. This strategy consistently pays a 10-20% average return on capital.”
This strategy of selling call & put simultaneously also know as “Short Strangle“. In above , example I am selling “Reliance” out the money call option of strike price 2040 (2040 ce) and put option of strike price 1820 (1820 pe). I believe, Reliance won’t cross boundaries of both strike prices in this circumstances.
- Max profit is ₹. 5513 because you are receiving premium of ₹. 5513 by writing both options.
- Total fund requirements is around ₹. 1 Lakh. So basically you will gain 5% from your capital at the end of the month.
- There is upside & downside risk in rare circumstances.
You can also apply same strategy in index options like Nifty, Banknifty or Finnifty.
Best Option Strategy For Intraday
Honestly, I don’t want to mention any complex strategy for several reasons. We will just start with call & put options, but with a twist 🙂
Setting up a Trade with Bollinger Band
The Bollinger Band theory is intended to represent a stock’s volatility. It is very basic, consisting of a simple moving average and upper and lower “bands” separated by two standard deviations. Standard deviations are a mathematical instrument for measuring the movement or “deviation” from an average value. Keep in mind that the Bollinger Band theory is just a reference or gauge and should be used in conjunction with other indicators.
So, how can we put the Bollinger Band principle to use?
The Bollinger Band theory will not tell you when to buy or sell an option or stock. It is intended to be used as a guide (or band) to gauge the volatility of a stock.
When the price of a stock is extremely volatile, the Bollinger Bands would be far apart. When there is little market fluctuation, and therefore low volatility, the Bollinger Bands will be in a tight range.
Possible Buy Signal
When the price falls below the lower Bollinger Band, a trader can place a buy order.
Possible Sell Signal
When the stock, futures, or currency price pierces below the upper Bollinger Band, a possible sell is suggested.
Cautious while playing the Bands
Buying and selling exactly when the price reaches the Bollinger Band is treated as an aggressive trading strategy.
It could be easier for a trader to wait to see if the price moves above or below the Bollinger Band. When the price returns to within the Bollinger Band, a possible trigger to buy or sell can occur.
Strategies for Option Volatility
This segment explains how traders can use Bollinger Bands to execute volatility-based options trades.
A trader can trade volatility in one of two ways:
- Traders attempt to purchase options with low volatility in the expectation that volatility will rise and then sell those options at a higher price.
- Traders attempt to sell options with high volatility in the expectation that volatility will fall and then repurchase those same options at a lower price.
Table of Contents
- No Loss Option Strategy? Yes, This Is Possible…
- Best Option Strategy For Intraday