Strategy for Nifty Options in October 2009 Expiry

Story continued in Sept expiry also. But what was the story? Very simple...story of making losses again and again either in stock deliveries or option trading. Never traded in Nifty Futures as dont have enough margin to trade into it. But for a change very less loss incurred compared to the previous months (reason: amount left was less :)).

Now its high time to recover losses which I incurred till date (figures I wont disclose, as I myself don't want to know or better to say I don't want to realize). But billion dollar question is how to recover losses?? Do I need to devise some strategy?? WOW...hehehe...

One drawback in all my previous option trades were, "I never hedged my trades". So decided will do this time.

If I try to see the broader range of nifty movement in Oct expiry, it shall be 4500 - 5500. And please dont ask me how I derived this range. This range is totally based on my readings of articles/blogs/TAs views/FAs views etc. etc..

I will keep updating this post with all strategies which I may follow in this expiry.

As per the current market trend/ expectation, nifty is about to touch much higher levels (highly bullish signals as per TAs). And as per my understanding and observations, any megamove in share/indices have to undergo some corrections. Also, nifty in sept has moved straight away from 4580 levels to 5003 without having any corrections. Hence, point is, correction is on the cards but when....NO IDEA !!!! It might happen in sept expiry also or in the initial weeks of Oct. As, now only 3 trading sessions are left in sept expiry...so chances are null in sept expiry. Hence, initial weeks of October can get this golden chance.

Strategy 1 A.
Nifty correction in initial weeks of oct and thereon bull will again give the major rally. Hence, will watch the premiums of 5500CE (CMP = 20) and 4500PE (CMP = 38).

Step 1. Buy this straddle at the suitable time when the combined cost shall be less (considering premiums shall be high in first few days of any new expiry due to time value).

Step 2a. If nifty reaches 4500/4600 level first, then square off 4500PE positions and hold 5500CE.

Step 2b. Average 5500CE position with 5000CE when nifty is at 4500/4600 levels.

Step 3a. If nifty reaches 5400/5500 level first, then square off 5500CE positions and hold 4500PE.
Step 3b. Average 4500PE position with 5000PE when nifty is at 5400/5500 levels.

One can enter into this type of straddle with any combination of strike price depending on the investment capability.

Strategy 2A

Nifty will definetly cross 5000 mark in one of the remaining session in sept series and then in first few days of Oct and will be pulled back for 300 points corrections, so that its megaupmove will be easy and smooth.

Step1. When Nifty crosses 5000 mark, 4500PE can be bought (less than 30).

Step 2a. If nifty tanks towards the level of 4600/4500, one can come out of the put option positions and book profits.

Step 2b. If nifty move up after crossing 5000 without any correction and touces 5200, then average your 4500PE trade with 4700PE. Book profits when nifty will tank to 4600 levels

Step 3a. Buy 4800/4900CE (at watever the price is available) when nifty is at 4600/4500 level. Book profits when nifty will cross 5200.

Note: I may update the Nifty range in Oct Expiry in due course. Hence, if any change in range, will impact the purchase of strikes of put/calls for the given strategy, averaging of trade and profit booking.

All above given strategies are just my views. One should not trade as per the given strategy. If at all, they do, that will be at their own risk.