By Jegathesan,

Consistent 60 day Challenge Winner

(10 times) in Zerodha
Training
 Why Option Selling?
 Myths about Option Selling
 Hedging Types and Scenarios for your folio
 Market Analysis (Technical & FNO)
 Why to trade in Options? Why in Indices?
 Option Strategies (Positional and Intraday)
 Market View Vs Strategies with position size
 Various Delta Neutral Hedging Methods
 Risk Management and Margin Management
 Trading Psychology
Why is the Edge in Option Selling?
 Person who exploits an edge in current setup.
 List of options for a FNO trader
 Trading in Future
 Option Buying
 Option Selling
 Future player relies more on prediction for edge.
 Option sellers have a default edge (Time Decay).
 Statistics say that more than 80% options will
expire worth less.
 Most institutional traders do option selling
How to increase my return?
 Better way to increase the return is to reuse your
money.
 Get extra feature (exposure margin waiver and
exposure) from your broker and maximize your
return
 As a first step, invest your money in any asset which
can be pledged to NSE.
 Asset can be Stocks, MF (Equity or Debt), Bonds
and FD
 Never ever leave money liquid in your trading
account
Various Returns from money
 There are 4 types of return you can get
 Yield from your asset (Collateral) – 12%
 Return from Hedging – 4%
 Return from your option selling – 12%
 Return from using extra exposure given by broker – 12 %
 We can achieve 40 per anum collectively
Myths About Option Selling
 Unlimited Risk – It is only for naked option selling.
With proper hedging model, one can define the risk
 Return is too less – Make use of collateral, margin
and exposure benefits and return would be decent
 Limited profit – You can always roll up or down your
options. Can make better return
 Need special software for option Greek and other
stuffs – No need to have paid software. Free
software are available if needed.
 Only for big boys – People with 5L capital can do
Trader Types

 Hedger – Aims to protect capital and minimize loss

 Speculator – Taking market view & betting
 Strategies to capture all views
 Trend-following

All will be done through option selling

Hedging Types for Investor

 Buying Put Option – Limit Loss

 Do this is “make or break” scenarios to protect your folio.
 Selling Call Option - Can compensate limited Loss
 Do this regularly to get rental if market is not moving up
 OR Both – Limit both Profit and Loss.
 Suits when you have a view of range-bound or bearish
 Sell ATM CE and buy ATM PE
 Do this at market price if there is a sudden bleeding in
the market
Market Analysis

 Technical Analysis
 FNO Data Analysis
Divergence (For Stock Option)
Click Here to Watch My Talk in Traders Carnival About
Divergence
Divergence (For Stock Option)

 A behaviour when price is not aligned with

indicator.
 Used for trend reversal and continuation.
 Apply divergence 3 indicators
 Force Index – Based on Volume
 MACD – Based on Moving Average
 Stochastic – Based on Supply and Demand
Classic Bullish Divergence

 A bullish divergence occurs when the underlying

security makes a lower low and Indicators form a
higher low.
 Indicators do not confirm the lower low and this
shows strengthening momentum.
Classic Bullish Divergence
Classic Bearish Divergence

 A bearish divergence occurs when the underlying

security makes a higher high and Indicators form a
lower high.
 Indicators do not confirm the higher high and this
shows weak momentum.
Classic Bearish Divergence
Facts about Divergences

 Divergence is not a holy grail of trend reversal and

continuation.
 It indicates only momentum lost.
 It is only for option sellers, not for future player and
option buyer.
 Use option selling with expiry date always.
 Go always protected while selling stock options
ADX Signal for intraday
 If ADX should be in uptrend below 25 with good
volume in force index
 ADX is directionless, but Force Index will signal
direction. Go long if Force Index is positive and Go
short if Force Index is negative.
 Preferably MACD and signal lines should cross or about
to cross zero line from below for long signal & MACD
and signal line should cross or about to cross zero line
from above for short signal
 Book or Exit if ADX looses its momentum or force
index comes to zero.
 Use short time frame below 5 minutes. Don’t use longer
time frame.
Force Index Indicator
 Can replace volume bar.
 Helps to understand the intention behind volume
 Uses price and volume to assess the power behind a
move or identify possible turning points.
 Developed by Alexander Elder, Author of “Trading
for Living”
 Positive value indicates that it is in accumulation
 Negative value indicates that it is in distribution.
 In most Softwares, it is named as Elders Force Index
Reading Price with Force Index

 Price goes up & FI goes up above 0– Long

 Price goes down & FI goes down below 0– Short
 Price goes up & FI goes up below 0 – Short covering
 Price down & FI goes down above 0 – Profit booking
Example with Price and Force Index
Option Selling using ADX signal
 Sell naked PE for long signal or sell naked CE for short
signal.
 Sell weekly options. No need to hedge in opposite side.
 Do this trade only from 9:30 am to 3.00 pm.
 Enable this chart in expiry day.
 Exit all sold CEs if you get long signal.
 Exit all sold PEs if you get short signal.
 You can also buy ATM or ITM options based on force
index direction to hedge your sold out options.
 Used this ADX indicator to exit my positions in expiry.
Future Vs Option
 Operational cost/Margin is too high
 Margin is too high 60K vs 50K
 MTM loss should be paid in cash
 There is a roll over charge if you are in long.
 Very difficult to capture the profit in sideways and
volatile market.
 Long term trading is not possible in future (Dec
month not available)
 Two Evils (Greed and Fear)
Stock option vs Index Option
 Margin is too high for stock
 Stock is highly volatile
 When you do delta hedging, you will run out of
your margin
 It may come on FNO ban at any time
 There is no circuit limit to stocks
 Liquidity Issue & Cannot do huge volume
 Hedging in next month is tedious
FNO Data Analysis

 Future Position – Current speculation of Nifty and

Banknifty stocks.
 Highest IO – Acts as support and resistance.
 Recent Winding and Unwinding of OI – Recent
pulse of option writers.
 Put Call Ratio (PCR) – Indicates the mood of option
market for the market direction.
 MAX Pain – The point where most options will
become worthless.
FNO Data Analysis Key Points
 Consider stock weightage while analysing stock future.
 Consider delivery volumes along with speculation.
 PCR should be seen for each strike price for better clarify.
 Recent Winding and Unwinding of OI can be ignored if
it is far OTM near expiry.
 Consider OI changes near OTMs.
 PCR from 1 to 1.1 generally indicates neutral. Below 0.90, it
is bearish.
 PE premium is generally higher.
 Strong trend will move along with MAX Pain, PCR and
high OI
Diversification & Positional size (Positional)

 Butterfly/Twisted Sister/Iron Condor – 50%

 Calendar spread – 30%
 Call ratio – 25 %
 Credit Spreads – 25%
 Short Straddles/Strangles – 10%
 Free cash – 10%

All numbers represent margin for option selling

Diversification & Positional size (Intraday)

 Strangles/Straddles – 50%
 Iron fly – 50%
 Calendar Spread – 25%
 Call Ratio – 25 %
 Trend-following – 25%
 Put Calendar – 25%

All numbers represent margin for option selling

My Premium in Nifty
 25 – First Week
 20 – Second Week
 15 – Third Week
 10 – Last Week
 5 – 2 days before expiry
 2 – On Expiry

It is a net premium if it is spread

My Premium in Banknifty
 50 – First Week
 40 – Second Week
 30 – Third Week
 20 – Last Week
 10 – 2 days before expiry
 5 – On Expiry

It is a net premium if it is spread

My Premium in Weekly Banknifty (Intraday)

 25 – Monday
 20 – Tuesday
 15 – Wednesday
 5 – On Expiry

It is a net premium if it is spread. Never do intraday in

Friday
Option Strategies
 Short Strangle
 Short Straddle
 Ratio Spreads
 Butterflies
 Twister Sister
 Iron Condor
 Calendar Spreads
 Intraday Strategies
Short Strangle
Definition: Selling CE /PE in OTM strike price
When: IV is high, market is range bound
Greek: 20% delta in CE/PE
Target/SL: 50% of Total Premium
Volume: 5-10%
Exit: Roll up/Down CE and PE to match the premium
Duration: 10 days or more away to expiration
Premium: As per the table given
Example: Sell 10000 PE & 11000CE when Nifty is at
10500
Short Straddle
Definition: Selling CE /PE in same strike price - Short
straddle
When: IV is high, market is range bound
Greek: 50% delta in CE/PE
Target/SL: 10% of Total Premium
Volume: 5-10%
Exit: Create more SS if market comes down, add more
call ratio. If market goes, book profit in SS
Duration: 45 days or more away to expiration
Premium: above 350 (nifty) and 900 (Banknifty)
Example: Sell 10000 CE and PE when Nifty is at 10000
Disclaimer about Straddle/Strangle
 Strangles/Straddles come under risk undefined strategies
 The loss is unlimited and vulnerable for downside risk in
black swan event.
 Never ever do more than 10% total volume in
straddle/strangle totally put together
 If your capital is huge & you are very conservation person, I
would advise not to implement this strategies for positional
trading
 Better to replace with Iron Condor/Twister Sister/Double
butterfly
 Double Calendar is not advisable as both sides will be in loss
if there is a violent movement in one side
Iron Condor
Definition: Selling CE /PE in OTM strike price and
buying CE and PE 200 points away for protection
When: IV is high, market is range bound
Greek: 20% delta in CE/PE
Target/SL: 50% of Total Premium
Volume: 25%
Time : Minimum 45 DTE
Adjustment: Roll up or Down credit spread
Premium: As per the table given
Example: Sell 10000 PE, Buy 9800 PE & Sell 11000CE,
Buy 11200 CE when Nifty is at 10500
Twisted Sister
Definition: It is same as Short Strangle, but there is a
protection only in PE (200 points away from short strike)
When: IV is high, market is range bound
Greek: 20% delta in CE/PE
Target/SL: 50% of Total Premium
Volume: 25%
Time : Minimum 45 DTE
Adjustment: Roll up or Down credit spread
Premium: As per the table given
Example: Sell 10000 PE, Buy 9800 PE & sell 11000CE when
Nifty is at 10500
Long Call Butterfly
Definition: Buy near ATM call, sell next OTM call in
multiple quantities and buy far OTM call for
protection
When: IV is high, market is slightly bearish
Greek: 20-25% delta in CE
Duration: At 2-3 days before expiration
Volume: 25% of your folio
Target: 0
Exit: Make it double long butterfly if view goes wrong
Example: Long Call 25000 1 lot, short call 25200 6 lots
and buy Call 25400 5 lots. Works better in Banknifty
Long PUT Butterfly
Definition: Buy near ATM PUT, sell next OTM PUT in
multiple quantities and buy far OTM PUT for
hedging
When: IV is high, market is slightly Bullish
Greek: 20-25% delta in PE
Duration: At 2-3 before expiration
Volume: 25% of your folio
Target: 0
Exit: Make it double long butterfly if view goes wrong
Example: Long PUT 25000 1 lot, short PUT 24800 6
lots and buy PUT 25400 5 lots. Works better in
Double Butterfly
Definition: It is a combination of Long CALL and
Long PUT butterfly, but first leg Long options should
be ITM.
When: IV is high, market is range-bound
Greek: 20-25% delta in PE/CE
Duration: At 2-3 before expiration
Volume: 50% of your folio
Target: 0
Exit: If market moves up, roll Long PUT Butterfly up.
If market comes down, roll Long Call butterfly down.
Example: Long PUT 25000 1 lot, short PUT 24800 6
Broken Wing Butterfly
Definition: It is same as double butterfly, but last leg
option (for protection) should be bought in far OTM
When: IV is low, market is range-bound
Greek: 20-25% delta in PE/CE
Duration: At 2-3 before expiration
Volume: 25% of your folio
Target: 0
Exit: If market moves up, roll Long PUT Butterfly up.
If market comes down, roll Long Call butterfly down.
Example: Long PUT 25000 1 lot, short PUT 24800 6
lots and buy PUT 25400 5 lots & Long Call 25000 1
Facts about Butterfly Strategies
 Butterfly strategies work better very near to expiry
in Banknifty.
 Always buy options for protection while creating
butterfly because in intraday Banknifty can fall 400
points with no time.
 Historically broken wing butterfly will give return
than regular one. But risk is bit more, it is worth
taking it.
 In all butterfly strategies, the risk is defined.
 Make sure that you receive credits while creating
butterfly, hence form ratios accordingly
PUT Calendar Spread
Definition: Selling PE option in current month and
buying the in same strike price in next month.
Strike Price: One strike price above market.
When: When marker is slightly bullish.
Target: When market view changes to bearish.
Volume: 10%
Adjustment: Keep rolling short PE if market goes up.
Add call ratio spread if market comes down.
Duration: below 20 days to expiration
Example: market is at 10000. Sell 10100 PE in current
month and sell buy 10100 PE in next month
Managing Put Calendar Spread
 If market moves up violently
 Roll up short PE up
 If market moves down
 Sell and additional CE. You can also roll down sold CE.
 Have SL if overall calendar spread hits 10% of max
loss.
Managing PCS (Example)
 Ex: Sell 10500 in current month & Buy in next
month.
 If market moves up
a. Book profit 10500 PE in current month & sell 10600 PE
 If market moves down
 Sell CEs to match with excess premium of 10500 PE.
Assume that you sold 10500 for 50, right now it is 80. Sell
CE which has 30 premium in current month.
 Manage the positions till your SL hits
Put calendars for various Scenarios
 OTM put calendar – Bearish
 ATM put calendar – Mild Bullish <–> Range-bound
 Diagonal put calendar – Bullish
 ITM put calendar – Bullish to Ultra Bullish
PUT Calendar (One Day before Expiry)
Definition: Selling PE option in current week and buying the
in same strike price in next week.
Strike Price: One strike price below market.
When: When marker is slightly bullish and OI is high in PE
side
Target: When market view changes to bearish.
Volume: 10%
Adjustment: Keep rolling short PE if market goes up. Add call
ratio spread if market comes down.
Duration: 1 DTE
Example: market is at 26000. Sell 26000PE in current week
and buy 26000 PE in current month
What to buy PE (Next week or Month)
 It depends on your view
 If you are ultra bullish, buy in next week
 If you are slightly bullish, buy in monthly
contact.
 Generally if CE OI is high, I buy in monthly
options or Weekly options
Call Ratio Spread
Definition: Buy OTM call and sell more far OTM calls
to receive more credits
Strike Price: One strike price above market.
When: When marker is bearish.
Target: Credits received
Volume: 10%
Adjustment: Book profit if market comes down. Add
put calendar or long PE butterfly if market goes up.
Duration: below 10 days to expiration
Example: Market is at 10000. buy 10000 CE and sell
Intraday strategies
1. Earning Trade – Earning Month
2. One Before Expiry – Every Wednesday
3. Expiry Trade – Every Thursday
4. Strangle
5. Straddle
6. Straddle (Expiry)
7. Put Calendar (Expiry)
8. Iron-fly
9. Call Ratio
10. Covered Call Or Covered Put
Earnings
Click Here to Watch My Talk in Traders Carnival About
Earnings Trade
IV Rank and Percentile

 IV Rank - Implied volatility rank (IV rank)

compares a stock's current IV to its IV range over a
certain time period (typically one year).

 IV Percentile - Implied volatility percentile (IV

percentile) tells you the percentage of days in the
past that a stock's IV was lower than its current IV.
Earnings Trade
 Can be done only in result month.
 Do this trade for the stock for which result is coming in
market hours.
 IV rank should be more than 50%.
 Calculate ATM Short Straddle premium.
 Sell CE at Spot + ATM SS Premium and Sell PE at Spot -
ATM SS Premium
 Sell multiple lots in multiple time frame before result.
 Ex: Infy at 1000 with ATM SS premium 100. Sell 900 PE and
1100 CE.
 Exit all the positions once the result is out
 Exit if the premium doubles in either side
Delta Neutral Strategies

 Sell CE/PE in Opposite Side

 Exit CE/PE and go to next strike price
 Buy option one strike price below
 Buy option in the strike price in next month
 Go long or short in future
Sell in Opposite side to make
delta neutral

 If market moves in a direction significantly, sell

options in opposite side.
 If market moves up, sell more OTM PE. If market
comes down, sell more OTM CE.
 The premium should be same in CE and PE with
volume
 Don’t sell more than 4 times volumes in one side.
 Choose OTM options to make delta neutral
 Balance CE and PE till either one goes to ITM
DHN using Option Selling

 While balancing CE and PE, if either one goes to

ATM, then exit and go to next strike price.
 Risky trader can fight more by selling ATM option
in opposite side. Ex: If CE goes ATM, then sell ATM
PE and try to manage the position.
 Exit completely if you are closer to expiry.
 Check ADX signal and be ready to sell in opposite
side.
 Take lot of prevention action before it goes to ITM
DNH using Option Buy
 Only HNI (> 25L) can do this.
 Do all these as precaution steps before your strike price goes
TO ITM
 Buy options this month or next month gradually to hedge
sold out options.
 Gradual buying will save from sudden reverse.
 Will hedge sold options if market moves continuously in the
same direction
 If bought option profit compensates sold option loss, exit
both of them.
 Buy option in next month if you feel that market will go in
the same direction.
 Buy option one strike price below if market moves violently.
DNH using futures
 Only HNI (> 25L) can do this.
 Do all these as precaution before your strike price goes ITM
 Go long or short in futures gradually to hedge sold out
options.
 Do this if market does break-out.
 If you are not clear, do only with option buy. It is preferred.
 Gradual future will save from sudden reverse.
 Will hedge sold options if market moves continuously in the
same direction
 If future profit compensates sold option loss, exit both of
them.
 Sudden reverse will hurt future position, hence have a SL
DNH Example for Short Strangle
Market is at 1000, Sold below 10400 and 9600
CE - 20 & PE - 20
Market went up, Now Premium
CE - 40
PE - 10
Balance positions - sell option it in opposite side –Collect 40 premium in
PE as premium in CE went upto 40.
CE - 40 -1 lot
PE - 10 - 1 lot
PE - 30 - 1 lot or (2 lots * 15) (Sell this additionally)
Buy option or go long future gradually if market moves up violently
10400 CE Already Sold 10 lots
For each 50 points move up above 10200, buy 2 lots option 10200 CE or go long
in future gradually
Expiry Trading
 Check how quantities (10K to me) can be sold in intraday.
 Divide it by 20. Approximately it is 2400 to me.
 Sell options slowly in both side one by one (I do 2400
quantities) and follow delta neutral hedging rule.
 Exploit weighted average price kicked in after 3.00 pm
 Sell options premium with the following values with time.
 Rs 5 at 9:15 am
 Rs 4 at 11 am
 Rs 3 at 12:30 pm
 Rs 2 at 2 pm
 Rs 1 at 3 pm
 Rs 0.50 at 3:12 pm.
Cardinal Rules for Expiry Trading
 Do not sell further CE if market goes up
 Do not sell further PE if market goes down.
 Never sell more than 4 times option than Opp0site.
 Be ready to exit the positions if ADX is getting triggered.
 After 3 pm, have SL for all your positions.
 Avoid future.
 Better not to initiate trading after 3 pm initially.
 Always choose OTM options.
 Don’t play with ITM option. It will become illiquid near
expiry.
 Get more exposure and go far OTM to reduce the risk.
One Day Before Expiry
 Make sure that you used 80% or below of your margin
utilization or below.
 Sell options in both sides as we do for expiry with premium
 Rs 10 at 9:15 am
 Rs 8 at 11 am
 Rs 6 at 12:30 pm
 Rs 4 at 2 pm
 Follow all other expiry day rules.
 Book your profits wherever it is. Carry forward your position
which is loss.
 Tomorrow is expiry. Get intraday limit and defend your
positions as per expiry day trading rules.
One Day Before Expiry Example
 Your capital is 10L. Existing positions occupy 8L margin.
 Sell CE and PE from 9:15 am to 2.00 pm in both sides based
on market movements.
 Assume that you sold CE and PE with 2L margin each.
 Now you have taken position for 12L now.
 Suppose market went up at 3:15 pm. Hence PE will be profit
and CE will be in loss.
 Book profit in PE (2L is margin released) and carry forward
the CE position for tomorrow expiry. Hence only 10L margin
will be blocked.
 Don’t do much volume.
 Exit if it goes to ITM in the market hours.
Short Strangle (Intraday – Banknifty)
Definition: Selling CE /PE in OTM strike price
When: IV is high, market is range bound
Greek: 20% delta in CE/PE
Target: 25-50% of Total Premium
SL: 50% of Total Premium
Volume: 25%
Adjustment: DNH
Premium: As per the table given
When: ADX is coming down
Carry Forward: Make it Iron condor or twisted sister or
butterfly
Example: Sell 26000 PE & 27000 CE when Banknifty is at
Short Straddle (Intraday – Banknifty)
Definition: Selling CE /PE in same ATM Strike Price
When: IV is high, market is range bound
Greek: 20% delta in CE/PE
Target: 10-25% of Total Premium
SL: 10% of Total Premium
Volume: 25%
Adjustment: DNH, Convert in to strangles if needed.
When: ADX is coming down
Premium: NA
Carry Forward:
Example: Sell 26500 PE & CE when Banknifty is at 26500
Adjustment in straddles in intraday
 Book profit if market stays in range-bound
 Make it Iron-fly if you are in profit in expiry day
 Sell it in opposite side if market moves in a direction
 If it comes back to straddles
 Book profit in straddles
 Make it strangles by selling in opposite side

 Make condor if you want to carry forward your

positions
 If it does not come back, keep selling in opposite till SL
hits
Short Straddle (Intraday – Expiry after
2:45 pm)
Definition: Selling CE /PE in same ATM Strike Price
When: When both premium is higher than 50.
OI: OI in Next strike price to ATM in CE &PE High OI > (30L)
Target: Leave to expiry
SL:
Volume: 10%
Adjustment: DNH, explained in next slide
Example: Sell 26500 PE & CE when Banknifty is at 26500
Managing Straddle in expiry day
 Straddle can be averaged if market moves 100 points before
2:30 pm
 If straddle is in profit, covert into Iron-Fly
 If straddle touches break-even after 3 pm, it is better to go
short or long so that it may end up in no profit and no loss.
Iron Fly (Intraday – Banknifty - Expiry)
Definition: Selling CE /PE in same ATM Strike Price and buy
CE & PE in both sides for protection.
When: IV is low and range-bound
Greek: 20% delta in CE/PE
Target: 10-25% of Total Premium
SL: 10% of Total Premium
Volume: 25%
Adjustment: DNH, Convert in to strangles if needed.
When: ADX is coming down
Premium: Total debit
Carry Forward:
Example: Sell 26500 PE & CE when Banknifty is at 26500
Ratio Spread(Intraday – Banknifty -
Expiry)
Definition: Buy ATM or near OTM option and sell multiple far
OTM options
When: OTM option (Rs 6-10) has more than 30L OI. Near
OTM option may have premium 20-30.
Time: After 1:30 pm
Target: Leave to expiry
SL: Have SL 30 for OTM options
Volume: 25%
Adjustment: DNH, Convert into double ratio and sell in
opposite side
Example: Market is at 28180. Buy 28200 CE at 25 and sell 28300
CE at 8 with ratio 1:8 at 2:30 pm
Covered CE or PE (Intraday – Banknifty
- Expiry)
Definition: Buy/Sell Future & sell multiple far OTM options
When: OTM option (Rs 6-10) has more than 30L OI. Near
OTM option may have premium 20-30.
Time: After 2:30 pm
Future Long OR Short: Based on ATM CE/PE OI
Target: Leave to expiry
SL: Have SL 30 for OTM options
Volume: 25%
Adjustment: DNH
Example: Market is at 28180. buy Future and sell 28300 CE at
6-10 with ratio 1:20 at 2:30 pm
Iron-Fly Rules
 Never create Iron-Fly in the morning, it is costly.
 It works only in expiry trade
 Never create Iron-fly in single execution
 Always convert your short straddle to Iron-Fly if you are in
profit of Rs 20 in straddle
 Make sure that you get least debit less than Rs after
considering the ITM option discount premium
View Vs Strategies

 Bullish
 ATM, ITM, Diagonal Put Calendar
 Credit spread in PE
 Long Put Butterfly
 Bearish
 OTM Put Calendar
 Call Ratio in CE
 Credit Spread in CE
 Range-bound/Non-Directional
 Strangles/Straddles/Iron Condor/Iron Fly/Twister Sister
Implied Volatility Vs Strategies
 Low IV
 Butterfly (Range-Bound)
 ATM Put Calendar (Bullish)
 Call Ratio (Bearish)
 Iron-Fly
 High IV
 Iron Condors (Range-Bound)
 Twister Sister/Strangles/Straddles (Range-Bound)
 ITM Put Calendar (Bullish)
 Sell CE (Bearish)
Trading Goal

 Overall Goal – 3% per Month

 Positional – 1 per Month
 Intraday – 2% per Month
 Intraday (0.25% per Week)
Notional Value
 The total contract value of naked sold option without leverage.
 Example:
 You have 10L capital
 You sold 10 PE Banknifty options
 1 Banknifty option notional value is around 10L
 Hence notional value of your positions 1 crore
 It is 10X notional value
 If there is a 10% gap down, your capital may be wiped out.
 Never ever allow your notional value more than 2.5 times
 Know your notional value before creating any positions
Cardinal Rules for strategies
 Always be protected in downside (PUT side).
 Make sure that you have 1 long PE for each short PE.
 Exception would be a short straddle because we collect high
premium.
 Be ready to accept 10% lower freeze.
 Create more broken wing butterfly.
 Deploy not more than 25% of folio in any strategy.
 Do call ratio spreads, but not put ratio spread. Instead make it
long PUT butterfly or PUT calendar spread.
 Don’t use more 10% volume in strange/straddle for positional.
Instead make it butterfly, Iron condor or twister sister
 Never do lizards as downside is not protected
Risk Management
 Have Portfolio SL (2%)
 Diversify positions
 Generally don’t have much position during
weekend
 Never Borrow and Trade
 Don’t trade when there is a mega event
 Respect possible black swan event
 Concentrate on less premium
Trading Psychology
 Arrogance once profit is made
 Scan and Repair
 Reset your brain and do unlearn
 Draw Blueprint and Flow chart for your positions
 Draw Candle stick pattern for your brain
 Program your brain to get more of Dogis ☺
 Understand your divergence periods
 Be warrior to fight with market till your SL hits.
 Understand your Volume and Money Power
 Self Reflection